Mrs. J.Ilavarassi, Mannargudi V. DCIT, CHENNAI

ITSSA 92/CHNY/2006

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2525 (ITAT-CHENNAI)
• Duration Of Justice: 10 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 03-08-2016
• Assessment Year: misc
• Appeal Filed On: 02-05-2006
• Court: TRIBUNAL
• Assessee Lawyers: G SIRARAMAN
• Keywords: Unexplained cash credit; Unexplained investment; Value adopted by valuation officer; Gift; Depreciation; Principle of natural justice; Source of fund; Difference of opinion; Valuation report; Block assessment; Change of opinion
• Section: 143(3); 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , . ! '# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER I.T.(SS)A.NO.92/MDS./2006 BLOCK PERIOD: 01.04.1986 TO 24.09.1996 ITA NOS.314, 315 & 316/MDS./2011 / ASSESSMENT YEARS :2000-01,2001-02 & 2004-05 SMT.J.ELAVARASI, 218,T.T.K.ROAD, CHENNAI 600 018. VS. THE ASSISTNAT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(2), CHENNAI. [PAN AAGPE 5670 J ] ( $% / APPELLANT) ( &'$% /RESPONDENT) / APPELLANT BY : MR.G.SIRARAMAN, ADVOCATE /RESPONDENT BY : MR.T.R.SENTHIL KUMAR, STANDING SENIOR COUNSEL, D.R. / DATE OF HEARING : O4 - 0 8 - 201 6 / DATE OF PRONOUNCEMENT : 28 - 10 - 2016 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL IN IT(SS)A NO.92/MDS./2006 IS FILED B Y THE ASSESSEE, AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 30.03.2 006 PASSED U/S.143(3) R.W.S.158BC OF THE ACT FOR THE BLOCK PER IOD 01.04.1986 TO MRS.J.ILLAVARASSI :- 2 -: 24.09.1996 AND THE OTHER TWO APPEALS OF ASSESSEE IN ITA NOS.314 & 315/MDS./2011 ARE DIRECTED AGAINST THE COMMON ORDER OF LD.CIT(A)-II, CHENNAI DATED 12.11.2010 PASSED U/S.143(3) R.W.S 2 54 OF THE ACT FOR ASSESSMENT YEARS 2000-01 & 2001-02. ANOTHER APPEAL OF ASSESSEE IN ITA NO.316/MDS./2011 IS DIRECTED AGAINST THE ORDER OF LD.CIT(A)-II, CHENNAI DATED 01.11.2010 PASSED U/S.143(3) OF THE ACT FOR ASSESSMENT YEAR 2000-01. SINCE THE ISSUES IN ALL T HESE APPEALS OF THE ASSESSEE ARE COMMON IN NATURE, THEY ARE CLUBBED & H EARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE. IT(SS)A NO.92/MDS./2006 2. THE BRIEF FACTS OF THE CASE ARE THAT ORIGINALLY IN THIS CASE, THE BLOCK ASSESSMENT ORDER WAS PASSED U/S.143(3) R.W.S.158BC OF THE ACT ON 30.09.1997 WHEREIN THE AO DETERMINED THE UNDISCLOSE D INCOME AT ` 3,93,05,780/- CONSEQUENT TO SEARCH U/S.132 OF THE A CT AT THE ASSESSEES PREMISES ON 24.09.1996. THIS ORDER WAS S UBJECT MATTER BEFORE THIS TRIBUNAL IN IT(SS) NOS.237/MDS./1997. T HE TRIBUNAL VIDE ORDER DATED 07.12.2004 REMITTED THE ISSUE TO THE FI LE OF LD. ASSESSING OFFICER VIDE OBSERVING AS FOLLOWS:- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE, AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE MAJOR ADDITION WAS MADE WITH REGARD TO COST OF CONSTRUCTION MRS.J.ILLAVARASSI :- 3 -: ON THE BASIS OF THE REPORT OF THE DVO. ADMITTEDLY, THE REPORT OF THE DVO IS DATED 29.9.97. THE ASSESSMENT ORDER WAS PASSED ON 30.09.97. NO MATERIAL IS AVAILABLE ON RECORD TO SHOW THAT THE COPY OF THE REPORT OF THE DVO WAS FURNISHED TO THE ASSESSEE FOR MAKING HER OBJECTION. SIMILARLY WITH REGARD TO CASH CREDIT THE CONFIRMATION LETTERS FILE D BY THE ASSESSEE WERE REJECTED WITHOUT MAKING ANY ENQUI RY. THE CONFIRMATION LETTERS WERE ADMITTEDLY FILED ON 29.9. 97. IN VIEW OF THE ADMITTED FACTS IT IS VERY CLEAR THAT THE AO HAS NOT GIVEN ANY OPPORTUNITY TO THE ASSESSEE TO FILE HER OBJECTION W ITH REGARD TO ESTIMATION OF COST OF CONSTRUCTION. THEREFORE, IN OUR VIEW, THERE WAS A CLEAR VIOLATION OF PRINCIPLES OF NATURAL JUST ICE. IN OUR VIEW, THE AO OUGHT TO HAVE FURNISHED THE COPY OF THE REPO RT OF THE DVO AND GIVEN ADEQUATE OPPORTUNITY TO THE ASSESSEE TO FURNISH HER OBJECTION IF ANY. SINCE SUCH AN EXERCISE IS NO T DONE BY THE AO, WE HAVE NO OTHER OPTION EXCEPT TO SET ASIDE THE ORDER OF THE AO AND REMAND BACK THE ISSUE TO THE FILE OF THE AO. ACCORDINGLY WE SET ASIDE THE ORDER OF THE AO AND RE MAND BACK THE ENTIRE ISSUE TO THE FILE OF THE AO. THE AO SHA LL GIVE ADEQUATE OPPORTUNITY TO THE ASSESSEE TO FURNISH OBJ ECTION WITH REGARD TO COST OF CONSTRUCTION AND OTHER CASH CREDI T, IF ANY AND THEREAFTER DECIDE THE ISSUE AFTER TAKING NECESSARY ENQUIRIES IN ACCORDANCE WITH LAW. 2.1 CONSEQUENT TO THIS, THE ISSUE WAS ONCE AGAIN T AKEN UP BY THE AO AND HE HAS PASSED THE PRESENT IMPUGNED ASSES SMENT ORDER ON 30.03.2006 U/S.143(3) R.W.S.158BC R.W.S 254 OF THE ACT WHEREIN HE COMPUTED THE INCOME FOR THE BLOCK PERIOD AS FOLLOWS :- MRS.J.ILLAVARASSI :- 4 -: (A) ASSESSMENT YEAR 1992-93: ASSESSEE HAD PURCHASED TWO PLOTS AT MOHAN RAJ NAGAR , MANNARGUDI AT A COST OF RS.38,638/- INCLUSIVE OF STAMP AND REGIST RATION CHARGES. IN THE ABSENCE OF ANY EXPLANATION REGARDING THE SOURCE FOR PURCHASE OF THIS PROPERTY, THE SAME IS HELD AS UNEXPLAINED INVE STMENT OF THE ASSESSEE DURING THE YEAR OF ACCOUNT AND THE SUM OF RS.38,640/- IS BROUGHT TO TAX. (B) ASSESSMENT YEAR 1993-94: A SUM OF RS.30,000/- CLAIMED AS SERVICE CHARGES PAI D TO M/S.RAJASEKARAN & ASSOCDIATES, C.AS. THE SERVICE CH ARGES CLAIMED IS NOT ALLOWED AS DISCUSSED IN THE ORDER DATED 30.09.1 997. THE COMPUTATION OF TAXABLE INCOME FOR THIS ASSESSME NT YEAR ARE AS UNDER:- RS. CAPITAL GAINS: NIL CAPITAL GAINS ADMITTED RS.68,193/- IS IGNORED AND CONSIDERED SEPARATELY. BUSINESS : A) HIRE CHARGES ON VAN HIRED OUT 25,000 LESS: DEPRECIATION & INSURANCE PREMIUM CLAIMED 82,389 (-) 57,369 OTHER SORUCES: A) ALLEGED RECEIPT OF MONIES FROM BROTHERS AS DISCUSSED ABOVE 5,50,000 B) ALLEGED RECEIPT OF MONIES THROUGH SAE OF JEWELLERIES TO BROTHERS AS DISCUSSED ABOVE 3,50,000 MRS.J.ILLAVARASSI :- 5 -: C) ALLEGED RECEIPT OF PRESENTS FROM BROTHERS AS DISCUSSED ABOVE 60,000 D) ALLEGED RECEIPT OF SHARE FROM FAMILY FUNDS AS DISCUSSED ABOVE 64,000 E) AMOUNTS BROUGHT IN AS AGRICULTURAL INCOME AS DISCUSSED ABOVE 1,55,150 INTEREST RECEIVED 1,848 11,80,998 LESS: DEDUCTION U/S.80L 11,23,629 1,848 TOTAL INCOME 11,21,781 ` ROUNDED OFF TO 11,21,780 ASSESSMENT YEAR 1994-95 : THE TAXABLE INCOME FOR THE YEAR IS COMPUTED AS UND ER: INCOME FROM HOUSE PROPERTY AS ADMITTED 24,000 INCOME FROM BUSINESS AS ADMITTED 1,75,148 OTHER SOURCES: A) PRESENTS FROM BROTHERS BROUGHT TO TAX AS DISCUSSED ABOVE 40,000 B) SHARE FROM FAMILY LANDS AS DISCUSSED ABOVE 69, 000 C) AMOUNTS BROUGHT IN AS AGRICULTURAL INCOME (RS.1,96,000-RS.43,125) AS DISCUSSED ABOVE 1,5 2,875 D) BANK INTEREST RECEIVED 16,621 E) COMMISSION RECEIVED 60,000 F) INVESTMENT FIRM IN MINOR SONS NAME AS DISCUSSED ABOVE 1,00,000 4,38,496 LESS:DEDUCTION U/S.80L 6,37,644 10,000 TOTAL INCOME 6,27,644 ROUNDED OFF TO 6,27,640/- (C) ASSESSMENT YEAR 1995-96 : THE TAXABLE INCOME FOR THE YEAR IS COMPUTED AS UNDE R: I) INCOME FROM HOUSE PROPERTY AS ADMITTED 96,000 II) INCOME FROM BUSINESS AS ADMITTED 2,22,901 III) OTHER SOURCES: MRS.J.ILLAVARASSI :- 6 -: A) PRESENTS FROM BROTHERS AS DISCUSSED ABOVE 30,000 B) SHARE FROM FAMILY LANDS AS DISCUSSED ABOVE 68, 000 C) AMOUNTS BROUGHT IN AS AGRICULTURAL INCOME (RS.1,96,000-RS.47,925) AS DISCUSSED ABOVE 1,4 7,075 D) UNEXPLAINED CASH CREDIT IN THE NAME OF 22,00,00 0 M/S.BHARANI BEACH RESORTS (P) LTD E) BANK INTEREST RECEIVED 10,823 F) COMMISSION RECEIVED 3,00,000 G) TOTAL INVESTMENTS IN MINOR SONS NAME AS DISCUSSED ABOVE 9,25,312 36,81,210 TOTAL INCOME [ I) + II) + III) ] 40,00,111 ADD. INCOME OF MINOR SON CLUBBED 86 40,00,197 LESS: 80L DEDUCTION 10,000 39,90,197 ROUNDED OFF TO 39,90,200/- (D) ASSESSMENT YEAR 1996-97 : THE TAXABLE INCOME FOR THE YEAR IS COMPUTED AS UNDE R: I) INCOME FROM HOUSE PROPERTY AS ADMITTED 96,000 II) INCOME FROM BUSINESS AS ADMITTED 2,51,527 III) OTHER SOURCES: A) PRESENTS FROM BROTHERS AS DISCUSSED ABOVE 30,000 B) SHARE FROM FAMILY LANDS AS DISCUSSED ABOVE 68, 000 C) AMOUNTS BROUGHT IN AS AGRICULTURAL INCOME (RS.1,97,000-RS.53,250) AS DISCUSSED ABOVE 1,4 7,075 D) UNEXPLAINED CASH CREDIT IN THE NAME OF 15,00,00 0 M/S.BHARANI BEACH RESORTS (P) LTD E) MONIES BROUGHT IN AS SALE OF SHARES AS DISCUSSED ABOVE 3,80,000 F) UNEXPLAINED CASH CREDIT BROUGHT IN THROUGH M/S.AYYAPPA PROPERTY DEVELOPMENT 26,05,000 AS DISCUSSED ABOVE G) UNEXPLAINED CASH CREDIT BROUGHT IN THROUGH M/S.JAYA PUBLICATIONS 4,15,000 H) BANK INTEREST RECEIVED 9,356 I) COMMISSION RECEIVED AS PER REVISED CASHFLOW STATEMENT FILED 2,40,000 G) INVESTMENTS IN THE NAME OF MINOR SON AS DISCUSSED ABOVE 1,22,626 55,13,732 MRS.J.ILLAVARASSI :- 7 -: TOTAL INCOME [ I) + II) + III) ] 58,61,259 ADD: INCOME OF MINOR CHILD 7,127 58,68,386 LESS: DEDUCTION U/S.80L 9,356 TOTAL INCOME 58,59,030 (E) ASSESSMENT YEAR 1997-98: A) INCOME FROM OTHER SOURCES: 1. DEPOSIT IN THE NAME OF CHILDREN 39,000 2. UNACCOUNTED JEWELLERY HOLDINGS 1,72,430 3. INVESTMENT IN HOUSE SITE INCLUDING THE REGISTRATION CHARGES 28,000 4. BROKERAGE RECEIVED 1,000 5. UNACCOUNTED INVESTMENT IN THE CONSTRUCTION AT BUNGALOW AT SIRUTHAVUR 2,73,88,057 6. UNEXPALINED INVESTMENT IN THE CONSTRUCTION OF PROPERTY AT ANNA NAGAR 40,000 TOTAL INCOME 2,76,68,487 ROUNDED OFF TO RS.2,76,68,490/- 2.3 THUS THE INCOME IN THE ABOVE BULK PERIOD WAS C OMPUTED AS BELOW:- A.Y TOTAL INCOME (RS.) RETURNED/ UNDISCLOSED INCOME UNDISCLOSED INCOME (RS.) 1992 - 93 38,640 NIL 38,640 1993 - 94 11,21,780 NIL 11,21,780 1994 - 95 6,27,640 NIL 6,27,640 1995 - 96 3 9,90,200 NIL 39,90,200 1996 - 97 58,59,030 NIL 58,59,030 1997 - 98 2,76,68,490 NIL 2,76,68,490 TOTAL 3,93,05,780 NIL 3,93,05,780 2.4. NOW, THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGIN G THE ABOVE ADDITIONS BY WAY OF FOLLOWING GROUNDS:- 1. THE A.O. ERRED, BOTH IN LAW AND ON THE FACTS OF THE CASE, IN COMPLETING THE ASSESSMENT AND IN MAKING ADDITIONS AGGREGATING TO RS.3,78,81,915/- AS SET OUT IN ANNEX URE. MRS.J.ILLAVARASSI :- 8 -: 2. HE COMPLETELY OVERLOOKED TO CONSIDER THE PRELIMI NARY LEGAL OBJECTION RAISED BY THE APPELLANT REGARDING JURISDI CTION THAT IT WAS A WELL SETTLED PRINCIPLE OF LAW THAT IN A BLOCK ASSESSMENT, ONLY SUCH OF THOSE ITEMS WHICH ARE REFERABLE TO SEI ZED MATERIALS COULD HAVE FORMED THE SUBJECT OF ASSESSME NT AND, THEREFORE, CANNOT FORM THE BASIS OF THE ASSESSMENT. 3. HAVING HELD THAT NO ASSETS OR INCRIMINATING MATE RIALS HAD BEEN FOUND OR SEIZED RELATING TO THE ADDITIONS MADE , HE SHOULD HAVE DESISTED FROM MAKING THE ADDITIONS. 4. IN ANY CASE, WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT MAKES THE FOLLOWING SUBMISSIONS: 4.1 HE OVERLOOKED THAT THERE WAS NO VALUATION REPOR T AT ALL AS THE ONE DATED WAS NOT IN CONFORMITY WITH THE STATUT ORY PROVISIONS AND THAT A.O. HAD NO AUTHORITY TO REFER THIS TO THE VALUATION CELL NOR HAS THE VALUATION OFFICER COMPLI ED WITH THE PROCEDURES LAID DOWN IN LAW. 5. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT WO ULD LIKE TO EXPLAIN THAT IN RESPECT OF THE MAJOR ITEMS OF ADDIT IONS, VIZ. CASH CREDITS, PERSONS_ARE ASSESSEES WITH THE SAME A .O. OF THE DEPUTY COMMISSIONER OF INCOME-TAX, COMPANY CIRC LE II(2), CHENNAI AND COPIES OF THE APPELLANTS ACCOUN T AS APPEARING IN THEIR BOOKS OF ACCOUNT AND THEIR ADDRE SS HAD BEEN FURNISHED. 6. AGRICULTURAL INCOME. MRS.J.ILLAVARASSI :- 9 -: 6.1 THE EXISTENCE OF LAND AND THE AGRICULTURAL INCO ME THEREFROM, HAS SINCE BEEN ACCEPTED IN THE SUBSEQUEN T ASSESSMENT YEARS. 7. TAKING INTO CONSIDERATION OF THE STATUS OF THE F AMILY, ETC. THE VALUE OF THE JEWELLERY CANNOT BE CONSIDERED AS UNACCOUNTED 8. THE A.O. OVERLOOKED THAT HER BROTHERS HAVE CONFI RMED THE SALE OF JEWELIERY AND AMOUNTS GIFTED BY THEM ON FES TIVAL OCCASION OF RS.5,50,000/ RECEIVED FROM THEM. 9. HE ALSO OVERLOOKED THE SALE OF SHARES HELD IN RA MRAJ AGRO MILLS LIMITED HAS BEEN CONFIRMED BY THE MANAGING DI RECTOR. 3. BEFORE US, THE LD.A.R SUBMITTED THAT:- 1. THERE WAS A SEARCH ON 24.9.1996 IN THE PREMISES OF THE APPELLANT U/S.132 OF THE ACT. ACCORDING TO THE PANCHANAMA (RE FER PAGES 5 TO 8 OF THE PAPER BOOK), NO INCRIMINATING MATERIALS WE RE FOUND. 2. HOWEVER, THE SPECIAL COUNSEL FOR THE DEPARTMENT HAD FILED, DURING THE LAST HEARING, COPY OF THE STATEMENT IN TAMIL (A ND A TRANSLATION IN ENGLISH) OF THE STATEMENT RECORDED U/S.132(4) FR OM THE APPELLANT ON 24.9.1996. 3. THE ASSESSMENT ORDER HAS NOWHERE REFERRED TO THE SAID STATEMENT. THEREFORE, THE ADDITIONS ARE NOT BASED ON THE SAID STATEMENT. 4. FURTHER, THE STATEMENT RECORDED U/S.132(4) CANNO T BE CONSIDERED FOR BLOCK ASSESSMENT. THE A.O. ALSO SEEMS TO HAVE F ELT THAT THE MRS.J.ILLAVARASSI :- 10 - : STATEMENT RECORDED U/S.132(4) CANNOT BE CONSIDERED AS EVIDENCE FOUND AS A RESULT OF SEARCH. 5. THE APPELLANT, THEREFORE, SUBMITS THAT THE STATE MENT RECORDED U/S.132(4) ON 24.9.1996, WHICH HAS NOT BEEN RELIED UPON BY THE A.O., AT ANY STAGE, CANNOT BE THE SUBJECT MATTER OF CONSIDERATION BY THE HONBLE TRIBUNAL. 6. THE A.O. HAD NO MATERIAL TO HOLD THAT THE APPELL ANT HAD ANY TRANSACTION WHICH WOULD NOT HAVE BEEN DISCLOSED. 7. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SU BMITS THAT THE PORTIONS RELATING TO THE FINANCIAL MATTERS REFERRED TO IN THE SAID STATEMENT RECORDED U/S.132(4) ARE SUMMARIZED AS UND ER (I) QUESTIONS (2) AND (4) REFER TO THE JEWELLERY OF 100 SOVEREIGNS HELD BY THE APPELLANT AND NO ADDITION HAS BEEN MADE. (II) (A) QUESTION (3) REFERS TO A HOUSE PROPERTY AT NO.7, 4/130, EAST COAST ROAD, NEELANKARAI, IN RESPE CT OF WHICH NO ADDITION HAS BEEN MADE. (B) QUESTION (3) THE APPELLANT HAS STATED TH AT I VAGUELY REMEMBER THAT WHEN MY HUSBAND WAS ALIVE, HE ONCE TO LD ME THAT HE HAD PURCHASED A PLOT AT MANNARGUDI. HOWEVER , I DO NOT KNOW ANY FURTHER DETAILS ABOUT THIS. (III) THE STATEMENT DOES NOT SAY AS TO WHO THE OWN ER WAS; NOR HAS THE A.O. PERUSED THE MATTER. THEREFORE, THIS VAGUE STATEMENT CANNOT BE CONSIDERED AS EVIDENCE. MRS.J.ILLAVARASSI :- 11 - : (IV) QUESTION (4) THE APPELLANT HAS REPLIED THAT THERE WAS A LAND IN ALATHUR WHERE A HOUSE WAS BEING CONSTRUCTED AFTER T AKING A LOAN OF RS.50.00 LAKHS. (V) THE ADDITIONS ARE NOT COVERED EITHER BY THE PAN CHANAMA OR THE SAID STATEMENT. (VI) THE ONLY REFERENCE IN THE STATEMENT WAS TO THE CONSTRUCTED PROPERTY AT SERUVATHUR NEAR ALATHUR TO THE EXTENT O F RS.50.00 LAKHS. 8. THE APPELLANT RELIES ON THE DECISIONS, LISTED IN ANNEXURE I & II FOR THE PROPOSITION THAT ITEMS WHICH ARE NOT GATHERED A S A RESULT OF SEARCH U/S.132 CANNOT BE CONSIDERED IN A BLOCK ASSE SSMENT. 9. ASSUMING BUT NOT ADMITTING THAT THE BUILDING CON STRUCTED AT SIRUVATHUR CAN BE CONSIDERED IN A BLOCK ASSESSMENT, THE ONLY MATERIAL THAT WAS GATHERED WAS THAT THE SUM OF RS.5 0.0O LAKHS HAS BEEN BORROWED AND SPENT FOR CONSTRUCTION. THE APPEL LANT HAD ACCOUNTED FOR RS.1,01,23,519/ WHICH HAS BEEN ACCEP TED. 10. THE A.OS STATEMENT (IN PARA.4.4 OF THE ASSESSM ENT ORDER) THAT DURING THE COURSE OF SEARCH ON 24.9.1996, THE ASSE SSEE WAS FOUND TO BE IN POSSESSION OF THE PROPERTIES AT SIRUTHAVUR AND ANNA NAGAR, HAS NO RELEVANCE FOR INCOMETAX PURPOSES BECAUSE TH EY WERE ALL ASSETS FROM WHICH NO INCOME HAS BEEN RECEIVED. 11. SEC.158B DOES NOT REFER TO ESTIMATED INCOME BUT ACTU1 CONCEALED INCOME AND THE VALUATION BY THE DEPARTM ENTAL VALUATION OFFICER IS MERELY AN ESTIMATE. THE APPELL ANT RELIED ON VARIOUS DECISIONS LISTED IN ANNEXURE III WHICH I S KEPT ON RECORD. MRS.J.ILLAVARASSI :- 12 - : 12. THE SUPREME COURT IN 262 ITR 407 HAD HELD THAT THE REFERENCE TO THE VALUATION OFFICER IS NOT AUTHORIZED BY LAW A ND, THEREFORE, THE REFERENCE ITSELF WAS WITHOUT JURISDICTION. 13. HOWEVER, EVEN UNDER AMENDED SEC.142A, THE A.O. CAN REFER TO THE VALUATION OFFICER FOR THE PURPOSES OF ESTIMATIN G THE VALUE OF ANY INVESTMENT REFERRED TO IN SEC.69, 69A AND 69B. SECTIONS 69A AND 69B, WHICH REFER TO ANY BULLION, JEWELLERY OR O THER VALUABLE ARTICLE AND IS NOT APPLICABLE TO AN IMMOVABLE PROPE RTY. 14. SEC.69 PRESUPPOSES THAT THE ASSESSEE HAD MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS ND THE EXPLANATION OFFERED BY THE ASSESSEE REGARDING THE VALUE OF IN VESTMENTS IS NOT SATISFACTORY. SEC.158BB DEALS WITH UNDISCLOSED SPEC IFIC INVESTMENTS AND NOT WITH ESTIMATED INVESTMENTS. 15. THEREFORE, THE REPORT OF THE VALUATION OFFICER IS VOID AB INITIO. 16. EVEN OTHERWISE, THE VALUATION OFFICER HAS NOT F OLLOWED THE PRESCRIBED PROCEDURE. 17. ACCORDING TO SECTION 16A OF THE WEALTHTAX ACT, THE VALUATION OFFICER SHOULD ADOPT THE FOLLOWING PROCEDURE :- (I) HE SHOULD SERVE ON THE ASSESSEE A NOTICE REQUIR ING HIM TO PRODUCE ACCOUNTS, ETC. (II) IF HE IS OF THE OPINION THAT THE VALUE OF THE ASSET IS HIGHER THAN THE VALUE DECLARED, HE SHALL SERVE A NOTICE ON THE ASSESSEE INTIMATING THE VALUE WHICH HE PROPOSES TO ESTIMATE AND GIVE THE ASSESSEE AN OPPORTUNITY TO STATE HIS O BJECTIONS AND THEREAFTER SHALL PASS AN ORDER ESTIMATING THE V ALUE. MRS.J.ILLAVARASSI :- 13 - : 18. IN THIS CASE, THE VALUATION OFFICER HAS FINALIZ ED THE REPORT WITHOUT GIVING AN OPPORTUNITY OF HEARING TO THE APPELLANT. 19. THEREFORE, THE VALUATION REPORT ON THE BASIS OF WHICH THE ASSESSMENT IS MADE IS NON EST AND VOID BECAUSE (I) THE A.O. HAD NO POWER TO REFER TO, AND (II) EVEN IF HE HAD, THE POWER, THE D.V.O. HAS NOT FOLLOWED THE PRESCRIBED PROCEDURE, AND (III ) JN ANY CASE, THE REPORT IS OPPOSED TO PRINCIPLES OF NATURAL JUSTICE. 20. THEREFORE, TO ESTIMATE THE VALUE OF THE ASSETS ON THE BASIS OF AN ESTIMATED VALUE IS NOT WARRANTED AND THE ASSESSMENT U/S.158BB OF THE ACT IS NULL AND VOID. 4. NOW THE LD.D.R PUT FORTH THE FOLLOWING POINTS FOR OUR CONSIDERATION. A) DURING THE SET ASIDE ASSESSMENT, THE AR CONTEND ED THAT THE BLOCK ASSESSMENT HAS TO BE CONFINED TO THE MATERIAL SEIZE D ONLY. THE A.O. JUSTIFIED THIS ADDITION AT PARA 4.4. AT PAGE 4 & 5 OF THE ASST. ORDER. FOR BREVITY THE SAME ARE NOT REPRODUCED. REGARDING VALU ATION REPORT NOT FURNISHED BEFORE ASSESSMENT, THE A.O. JUSTIFIED IN PARA 4.7 & 4.8 AT PAGE 5 & 6 OF THE ASSESSMENT ORDER. B) THUS THE ASSESSEE NEVER FILED ANY RETURN OF IN COME DECLARING ANY OF THE INCOME BEFORE THE SEARCH ACTION AND DEPOSED U/S 132 [4] AT THE TIME OF SEARCH [QUESTION NOS. 3 & 4] ABOUT THE OWNERSHIP TWO PROPERTIES WHICH IS SUFFICIENT TO INCLUDE TFI SARNE AS TE UIIT 1DSEA INCOME OI TNE ASSESSEE WHICH WERE ACQUIRED DURING THIS BLOCK PERI OD ONLY FURTHER THE TERM UNDISCLOSED INCOME IS DEFINED IN SUB-SECTION [B] OF SECTION 158 B OF THE INCOME TAX ACT AS: MRS.J.ILLAVARASSI :- 14 - : UNDISCLOSED INCOME INCLUDES ANY MONEY, BUILLION, J EWELLERY OR OTHER VALUABLE ARTICLE OR THINGS OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES OF T HIS ACT OR ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE. C) THUS THE TWO PROPERTIES ARE VERY MUCH FALLS UN DER THE DEFINITION OF UNDISCLOSED INCOME. FURTHER THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS AND EXPENSES DETAILS, IN THE ABSE NCE OF THE BOOKS AND DETAILS THE ASSESSING OFFICER IS CORRECT IN REFERRI NG TO THE DISTRICT VALUATION OFFICER TO VALUE THE TWO PROPERTIES. IT IS ADMITTED FACT THAT THE ASSESSEES REPRESENTATIVE AND HER ARCHITECT APPEARED ALONG WIT H THE DVO ON THE DATE OF INSPECTION OF THE SIRUTHAVUR PROPERTY ON 13 -09-1997 AND ANNA NAGAR PROPERTY ON 08-09-1997 AND CO-OPERATED FOR TH E VALUATION OF THE TWO PROPERTIES. THEREFORE THE CASE LAWS RELIED BY T HE ASSESSEE ARE NOT APPLICABLE TO THE PRESENT CASE AND DISTINGUISHABLE WITH FACTS OF EACH CASE. THUS THE ADDITIONS MADE ON THESE COUNTS ARE S USTAINABLE IN LAW, WHICH DOES NOT REQUIRE ANY INTERFERENCE. D) RELIANCE IS PLACED ON THE JUDGEMENT OF THE JURI SDICTIONAL HIGH COURT IN THE CASE OF KAILASH SARDA VS- CIT REPORTED IN [201 4J 363 ITR 36 MDS WHEREIN IT WAS HELD THAT BLOCK ASSESSMENT IN SEARCH CASES - UNDISCLOSED INC OME OF ANY OTHER PERSON (APPLICABILITY OF) - BLOCK ASSESSMENT YEARS 1986-87 TO 1995-96 - ASSESSEE CARRIED ON A PROPRIETORSHIP BUSI NESS - THERE WAS A SEARCH OPERATION IN PREMISES OF R - INCIDEN TALLY, ASSESSEE WAS ALSO RESIDING IN SAME PREMISES, WHERE SEARCH WA S CONDUCTED - BASED ON MATERIALS RECOVERED PERTAINING TO ASSESSEE , NOTICE UNDER SECTION 158BC(A) WAS ISSUED CALLING UPON ASSESSEE T O FILE RETURN - FINALLY, ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3), READ WITH SECTION 158BC - IN APPELLATE PROCEEDINGS, ASSESSEE CONTENDED THAT THERE WAS NO - SEARCH OPERATION IN HIS PREMISES AND THAT SEARCH MRS.J.ILLAVARASSI :- 15 - : WARRANT NOT BEING IN NAME OF ASSESSEE, ASSESSMENT M ADE UNDER SECTION 158BC WAS WITHOUT JURISDICTION - TRIBUNAL R EJECTED OBJECTION RAISED BY ASSESSEE - WHETHER MERE FACT THAT ASSESSM ENT WAS MADE ON BASIS OF MATERIALS SEIZED IN COURSE OF SEARCH OP ERATION OF OTHER PERSON, DID NOT MEAN THAT ASSESSMENT WAS NOT UNDER SECTION 158BD - HELD, YES - WHETHER EVEN OTHERWISE, IN VIEW OF FA CT THAT ASSESSEE HAD RESPONDED TO NOTICE, FILED RETURN, PARTICIPATED IN BLOCK ASSESSMENT PROCEEDINGS AND SUFFERED AN ASSESSMENT, TRIBUNAL WAS JUSTIFIED IN REJECTING CONTENTION RAISED BY ASSESSE E AT A LATER STAGE THAT BLOCK ASSESSMENT FAILED FOR WANT OF JURISDICT ION-HELD,YES [PARA 19] [IN FAVOUR OF REVENUE] E) CLAIM OF RECEIPT OF MONIES THROUGH SALE OF JEWE LLERY OF RS.3.5 LAKHS. AOS FINDINGS AT PARA 6.11 TO 6.13 [AT PAGE 11] DOE S NOT REQUIRE ANY INTERFERENCE. CLAIM OF RECEIPT OF AGRICULTURAL INCOME: AOS FINDI NG AT PARA 6.22 AT PAGE 15, ESTIMATION MADE BY THE AO BASED ON THE STATISTI CS OF NABARD WHICH IS IN ACCORDANCE OF LAW AND DOES NOT CALL FOR ANY I NTERFERENCE. F) CLAIM OF RECEIPTS FROM M/S. BHARANI BEACH RESOR TS PVT LTD., M/S.AYYAPPA PROPERTY DEVELOPMENT, M/S HOUSING AND R EAL ESTATE DEVELOPERS P LTD AND JAYA PUBLICATIONS. AOS FINDIN G AT PARA 6.28 AT PAGE 16; PARA 6.32 AT PAGE 17; PARA 6.35 AT PAGE 18 AND PARA 6.35 AT PAGE 18 AS THE CREDITWORTHINESS AND GENIUSES IS NOT PROVED WITH EVIDENCES THE ADDITIONS MADE BY THE A.O. DOES NOT CALL FOR ANY IN TERFERENCE. G) CLAIM OF SALE OF SHARES OF RS.3.8 LAKHS. THE AS SESSEE COULD/DID NOT PRODUCE ANY EVIDENCE DURING THE 2ND ROUND OF SETASI DE ASSESSMENT PROCEEDINGS. AOS FINDINGS AT PARA 6.40 & 6.41 [AT PAGE 19] DOES NOT CALL FOR ANY INTERFERENCE. MRS.J.ILLAVARASSI :- 16 - : H) UNEXPLAINED JEWELLERY OF 1201 GMS OF GOLD JEWELL ERY. AOS FINDINGS AT PARA 7.3 TO 7.6 [AT PAGE 26] DULY GIVEN CREDIT FOR 50 SOVEREIGNS RECEIVED AT THE TIME OF MARRIAGE AND 50 SOVEREIGNS RECEIVED AFTER MARRIAGE THAT [400 +400= 800 GMS] AND THE BALANCE 401 GMS OF GOLD JEWELLERY WAS ADDED AT THE UNEXPLAINED JEWELLERY WHICH IS IN ACCO RDANCE WITH LAW AND DOES NOT REQUIRE ANY INTERFERENCE. I) THUS THE ASSESSEE HAS FAILED TO MAKE OUT A CASE , EVEN AFTER THIS HONBLE TRIBUNAL SET ASIDE THE ORIGINAL ASSESSMENT. NO EVIDENCES WERE PRODUCED BY THE ASSESSEE DURING THE DENOVA ASSESSME NT. THEREFORE THE PRESENT BLOCK ASSESSMENT DOES NOT C ALL FOR ANY INTERFERENCE BOTH ON LAW AND FACTS. THEREFORE, DEP ARTMENTAL REPRESENTATIVE PRAYED THAT THE APPEAL FILED BY TH E ASSESSEE IS TO BE DISMISSED WITH HEAVY COST AND THUS RENDER JUSTICE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THE SEARCH CASE U/S.132 OF THE ACT, BLOC K PERIOD FOR WHICH THE ASSESSMENT IS TO BE MADE UNDER CHAPTER XIV-B ME ANS THE PERIOD COMPRISING PREVIOUS YEARS RELEVANT TO TEN ASSESSMEN T YEARS PRECEDING A PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED U NDER SECTION 132 OR ANY REQUISITION WAS MADE UNDER SECTION 132A, AND ALSO INCLUDES IN THE PREVIOUS YEAR IN WHICH SUCH SEARCH WAS CONDUCTE D OR REQUISITION MADE, THE PERIOD UP TO THE DATE OF THE COMMENCEMENT OF SUCH SEARCH OR, AS THE CASE MAY BE, THE DATE SUCH REQUISITION. THEREFORE, THE ASSESSMENT FOR THE BLOCK PERIOD UNDER CHAPTER XIV-B CAN BE MADE OF THE UNDISCLOSED INCOME ONLY UP TO THE DATE OF COMME NCEMENT OF MRS.J.ILLAVARASSI :- 17 - : SEARCH OR THE DATE OF THE REQUISITION AND NOT OF TH E PERIOD THEREAFTER. SECTION 158BA PROVIDES FOR ASSESSMENT OF UNDISCLOSE D INCOME AS RESULT OF SEARCH FOR THE BLOCK PERIOD AND COMPUTATION OF I NCOME AND THE COMPUTATION OF UNDISCLOSED INCOME FOR THE BLOCK PER IOD TO BE MADE AS PER THE PROVISIONS OF SECTION 158BB AND ASSESSMENT HAS ALSO TO BE MADE UNDER SECTION 158BC OF THE BLOCK PERIOD. THE UNDISCLOSED INCOME FOR WHICH THE ASSESSMENT IS TO BE MADE, IS DEFINED IN SECTION 158B(B) WHICH INCLUDE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY I N THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS, WHERE S UCH MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES, THING ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTION REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THIS ACT AND AFTER THE AMENDMENT BY FINA NCE ACT, 2002 W.E.F. 1-7-1995 WHICH INCLUDES ALSO THE ANY EXPENSE S, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS TO BE FOU ND TO BE FALSE. 5.1 SECTION 158BB PROVIDES FOR COMPUTATION OF UNDIS CLOSED INCOME TO BE THE AGGREGATE OF THE TOTAL INCOME OF THE PREV IOUS YEAR FALLING WITHIN THE BLOCK PERIOD, COMPUTED IN ACCORDANCE WIT H THE PROVISIONS OF THIS ACT, ON THE BASIS OF EVIDENCE FOUND AS A RESUL T OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MRS.J.ILLAVARASSI :- 18 - : MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE AS REDUCED BY THE AGGREG ATE OF THE TOTAL INCOME OR AS THE CASE MAY BE AS INCREASED BY THE AG GREGATE OF THE LOSSES OF SUCH PREVIOUS YEARS DETERMINED AND PROVID ED IN CLAUSES (A) TO (F) OF SECTION 158BB(1). WHAT IS CRUCIAL TO BE D ETERMINED IS THAT THE UNDISCLOSED INCOME WHICH CAN BE ASSESSED UNDER CHAP TER XIV-B SHOULD BE THAT AMOUNT WHICH IS COMPUTED ON THE BASI S OF EVIDENCES FOUND AS A RESULT OF SEARCH AND SUCH OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATA BLE TO SUCH EVIDENCE. THE MAIN THING TO BE SEEN IS THE EVIDENCE FOUND WHI CH WILL BE THE BASIS FOR MAKING THE ASSESSMENT. IF THERE IS NO EVI DENCE OR THE EVIDENCE HAS ALREADY COME ON RECORD OR HAS BEEN DIS CLOSED BY THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS, THEN THAT E VIDENCE CANNOT THE SAID TO BE HAVE BEEN FOUND AS A RESULT OF SEARC H AND IN THAT CASE, THE MATERIAL OR INFORMATION AVAILABLE WITH THE ASSE SSING OFFICER AND RELATABLE TO SUCH EVIDENCE COULD ALSO NOT HELP IN C OMPUTING UNDISCLOSED INCOME. THE SEARCH IN THIS CASE WAS UN DERTAKEN ON 24TH SEPTEMBER, 1996 U/S.132 OF THE ACT ON THE PREMISES OF THE ASSESSEE. THE BLOCK PERIOD IS 01.04.1986 TO 31.03.1996 AND 01 .04.1996 TO 24.09.1996. THE MAIN CONTENTION OF THE LD.A.R IS T HAT THERE IS NO RELEVANT INCRIMINATED SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH U/S.132 OF THE ACT AND DEPARTMENT HAS COLLEC TED CERTAIN MRS.J.ILLAVARASSI :- 19 - : MATERIALS SUBSEQUENT TO SEARCH ACTION AND IT WAS N OT VERY MATERIAL RELEVANT FOR FRAMING THE ASSESSMENT UNDER CHAPTER XIV-B OF THE ACT BECAUSE OF THE MANDATE GIVEN UNDER SECTION 158BB, I T HAS TO BE THE INCOME COMPUTED ON THE BASIS OF INCRIMINATED MATERI ALS AND EVIDENCE FOUND AS A RESULT OF SEARCH AND NOT OTHERWISE. IF A NY MATERIAL IS COLLECTED BY THE REVENUE AFTER THE SEARCH, THAT MAY NOT GIVE AUTHORITY TO DEPARTMENT TO MAKE THE COMPUTATION OF UNDISCLOSE D INCOME UNDER SECTION 158BB OR ASSESSMENT UNDER SECTION 158BC OF THE ACT. THE ADDITION CANNOT BE SOLELY MADE ON THE BASIS OF STAT EMENT RECORDED DURING THE COURSE OF SEARCH FROM THE ASSESSEE OR A NY EMPLOYEES OF THE ASSESSEE UNLESS IT IS CORROBORATED OR SUPPORTED BY THE INDEPENDENT PIECE OF INCRIMINATED SEIZED MATERIAL. THE STATEME NTS THOUGH COLLECTED, MAY CONSTITUTE INFORMATION AVAILABLE WIT H THE ASSESSING OFFICER, THE SAME CAN BY NO STRETCH OF IMAGINATION BE TREATED TO BE RELATABLE TO SUCH EVIDENCE I.E. TO THE EVIDENCE FOUND AS A RESULT OF SEARCH, INASMUCH AS, THE STATEMENT RECORDED DURING SEARCH WOULD NOT BE SAID TO BE AN EVIDENCE FOUND AS A RESULT OF SEA RCH THOUGH THE SAME MAY BE AN EVIDENCE OBTAINED DURING SEARCH. A CCORDINGLY, IN VIEW OF THE PROVISION OF SECTION 158BB(1) AS IT STA NDS AMENDED W.E.F. 1ST JULY, 1995 NO ADDITION ON THE BASIS OF STATEMEN T RECORDED DURING THE SEARCH, COULD BE MADE IN THE BLOCK ASSESSMENT. THIS VIEW WAS FORTIFIED BY ORDER OF JODHPUR BENCH OF TRIBUNAL IN THE CASE OF CHITRA MRS.J.ILLAVARASSI :- 20 - : DEVI V. ASSTT. CIT [2002] 77 TTJ 640 . SIMILAR VIEW WAS TAKEN BY THE INDORE BENCH OF THE TRIBUNAL IN THE CASE OF INDORE CONSTRUCTION (P.) LTD. V. ASSTT. CIT [1999] 71 ITD 128 WHEREIN IT WAS HELD THAT SUCH COMPUTATION SHOULD BE ON THE BASIS OF EVIDENC E FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOU NT OR DOCUMENTS AND SUCH OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH ASSESSING OFFICER. IT IS IMPORTANT T O NOTE THAT THE WORDS USED ARE SUCH OTHER MATERIALS. THE LEGISLAT URE HAS NOT USED WORDS ANY OTHER MATERIALS. THE WORD SUCH H AS BEEN DEFINED IN BLACKS LAW DICTIONARY, SIXTH EDITION AS UNDER : SUCH OF THAT KIND, HAVING PARTICULAR QUALITY OR CH ARACTER SPECIFIED. IDENTICAL WITH, BEING THE SAME AS WHAT H AS BEEN MENTIONED. ALIKE SIMILAR, OF THE LIKE KIND. SUCH REPRESENTS THE OBJECT AS ALREADY PARTICULARIZED IN TERMS WHICH ARE NOT MENTIONED, AND IS DESCRIPTIVE AND RELATIVE WORD, RE FERRING TO THE LAST ANTECEDENT. AGAIN THE WORD USED IN THE SECTION ARE AS ARE AVAI LABLE THE EXPRESSION AVAILABLE HAS BEEN DEFINED TO MEAN IN BLACKS LAW DICTIONARY, SIXTH EDITION AS PRESENT OR READY FOR IMMEDIATE USE. 5.3 SIMILARLY, THE MUMBAI BENCH IN THE CASE OF HAR AKHCHAND N. JAIN V. ASSTT. CIT [1998] 61 TTJ (MUM.) 2231 ARE ALSO TO THIS EFFECT:- THE WORDS SUCH OTHER MATERIAL USED IN SECTION 15 8BB(1) DOES NOT MEAN THAT THE ASSESSING OFFICER HAS GOT UNFETTE RED POWERS TO OVERRIDE THE RULES OF EVIDENCE SO AS TO MAKE HYP OTHETICAL AND AD HOC ADDITIONS. IT WAS HELD THAT THE ASSESSING O FFICER CANNOT MAKE ROVING ENQUIRES IN RESPECT OF ASSESSMENTS COMP LETED MRS.J.ILLAVARASSI :- 21 - : WITHOUT ANY INFORMATION OR MATERIAL IN POSSESSION D URING THE BLOCK PERIOD. IN THE ABOVE BACK GROUND, NOW WE PROCEED TO THE ADD ITION MADE BY THE AO FOR EACH ASSESSMENT YEAR COVERING THE BLOCK PERIOD 01.04.1986 TO 31.03.1996 AND 01.04.1991 TO 24.09.19 96. 5.4 ASSESSMENT YEAR 1992-93: THE AO HAS MADE AN ADDITION OF ` 38,653/- TOWARDS PURCHASE OF TWO PLOTS AT MOHAN RAJ NAGAR AND MANNARGUDI AT A C OST OF ` 38,653/-. THE AO DISCUSSED THIS ISSUE IN PARA NO.6.1 & 6.2 OF HIS ORDER. HE HAS NOT MENTIONED ANY SEIZED MATERIAL WHICH SUGGESTS TH IS ADDITION. UNLESS THE AO ESTABLISHED NEXUS OF SEIZED MATERIAL TO THIS ADDITION, WE ARE NOT IN A POSITION TO CONFIRM THE ADDITION MADE BY T HE AO. THE AO HAS NOT MENTIONED ON THE BASIS OF WHICH SEIZED MATERIAL , HE HAS MADE THIS ADDITION. THERE IS NO WHISPER IN THE PARA NO.6.1 & 6.2 OF HIS ORDER. CONSIDERING THE NON-AVAILABILITY OF REFERENCE TO SE IZED MATERIAL, WE ARE INCLINED TO DELETE THIS ADDITION. 5.5 ASSESSMENT YEAR 1993-94 : 5..5.1 THE AO MADE FIRST ADDITION IS WITH REGARD T O ALLEGED RECEIPT OF MONEY OF RS ` 5.5 LAKHS FROM HER BROTHERS. THE ASSESSEE FILED A LETTER FROM HER BROTHER SHRI K.ANNADURAI BE FORE THE AO AND AO MRS.J.ILLAVARASSI :- 22 - : ALSO EXAMINED THE ASSESSEES BROTHER, SHRI K.ANNADU RAI ON 11.09.1997. ACCORDING TO AO HIMSELF, ASSESSEES BROTHER SHRI K. ANNADURAI HAS NOT EXPLAINED THE IMMEDIATE SOURCE OF FUND AVAILABLE TO HIM FOR MAKING THE INVESTMENTS ON BEHALF OF ASSESSEE AND FOR GIVIN G CASH TO THE ASSESSEE. THIS IS A BLOCK ASSESSMENT AND ONCE THE ASSESSEE EXPLAINED THE INVESTMENT AS RECEIVED FROM ASSESSEES BROTHER, BURDEN CAST UPON THE ASSESSEE IS DISCHARGED TO PROVE THE SOURCE OF RECEIPT. THE AO RELYING ON THE CERTAIN DISCREPANCIES IN THE STATEME NT OF SHRI K.ANNADURAI AND THAT WAS PROVOKED HIM TO DISBELIEVE THE CONFIRMATION GIVEN BY SHRI K.ANNADURAI THAT HE HAS GIVEN AN AMO UNT OF ` 5.5 LAKHS TO THE ASSESSEE. IN OUR OPINION, UNLESS THERE IS CO NCRETE SEIZED MATERIAL TO SUGGEST THAT THIS IS ONLY AN ACCOMMODAT ION ENTRY, WE ARE NOT IN A POSITION TO SUSTAIN THE ADDITION IN VIEW O F CLEAR MANDATE OF PROVISIONS 158BB(1) OF THE ACT. ACCORDINGLY, THIS A DDITION IS UNWARRANTED. 5.5.2 THE NEXT ADDITION IS WITH REGARD TO ALLEGED RECEIPT OF MONEY OF ` 3.50 LAKHS THROUGH SALE OF JEWELLERIES TO BROTHERS. THE ASSESSEE HAS EXPLAINED THAT THE SOURCE OF INVESTMENT IS SALE OF JEWELLERY OF 115 SOVEREIGN OF GOLD, WHICH IS SHOWN IN THE CASH FLOW STATEMENT BY THE ASSESSEE. IT WAS ALSO BROUGHT ON RECORD BY THE AO T HAT THERE WAS AN AFFIDAVIT DATED 13.09.1997 BY SHRI K.ANNADURAI, BRO THER OF ASSESSEE THAT HE HAD PURCHASED THIS JEWELLERY IN JULY,1993 F OR THE ASSESSEE AND MRS.J.ILLAVARASSI :- 23 - : FOR THIS PURPOSE, HER BROTHERS WERE PROVIDED RS.70, 000/- IN EACH AND THIS WAS SOLD TO ASSESSEES BROTHER AND THE ASSESSE E GOT A SUM OF ` 3.5 LAKHS IN JANUARY, 1993 AT MANNARGUDI. BECAUSE OF C ERTAIN DISCREPANCIES IN THE STATEMENT, THE AO MADE THIS AD DITION DISBELIEVING THE STATEMENT GIVEN BY THE ASSESSEES BROTHER. IN O UR OPINION, THIS ADDITION HAS NOT BASED ON ANY SEIZED MATERIAL AND T HE ENTIRE AMOUNT FOUND IN CASH FLOW STATEMENT FILED BY THE ASSESSEE TO EXPLAIN THE INVESTMENT WHIC CANNOT BE REASON TO MAKE AN ADDITIO N IN THE BLOCK ASSESSMENT IN VIEW OF THE PROVISIONS OF THE SECTION 158BB OF THE ACT. THIS ADDITION IS DELETED. 5.5.3 THE NEXT ADDITION IS WITH REGARD TO ALLEGED RECEIPT OF ` 60,000/- PRESENTS FROM HIS BROTHERS. THE ASSESSEE STATED THA T THE ASSESSEE RECEIVED A SUM OF ` 60,000/- FOR THIS ASSESSMENT YEAR FROM HER BROTHERS AS A GIFT WHICH WAS SHOWN IN THE CASH FLOW STATEMENT FILED BEFORE THE ASSESSING AUTHORITY AFTER THE SEARCH. TH E AO WAS OF THE OPINION THAT THERE IS NO DOCUMENTARY EVIDENCE IN SU PPORT OF RECEIPT OF THIS AMOUNT. AS DISCUSSED IN EARLIER PARA OF THIS ORDER, THERE IS NO SEIZED MATERIAL TO DISPROVE THE RECEIPT OF THIS GIF T BY THE ASSESSEE FROM HER BROTHER. ACCORDINGLY AS DISCUSSED IN EARLIER, T HIS ADDITION IS NOT BASED ON ANY SEIZED MATERIAL IN TERMS OF SEC.158BB( 1) OF THE ACT. ACCORDINGLY, THE ADDITION IS DELETED. MRS.J.ILLAVARASSI :- 24 - : 5.5.4 THE NEXT ADDITION IS WITH REGARD TO ALLEGED RECEIPT OF SHARE OF ` 64,000/- FROM FAMILY FUNDS. THIS ADDITION IS ALSO MADE ON THE BASIS OF NON FILING OF DOCUMENTARY EVIDENCE IN SUPPORT OF RECEIPT OF FAMILY FUNDS. HOWEVER, THERE IS NO SEIZED MATERIAL WHATSOE VER TO DENY IT. BEING SO, THE ADDITION CANNOT BE MADE AS DISCUSSED ABOVE. ADDITION IS DELETED. 5.5.4 THE NEXT ADDITION IS WITH REGARD TO AGRICULT URAL INCOME OF ` 1,55,150/- AS AGAINST DECLARATION OF INCOME BY THE ASSESSEE AT ` 1,88,000/-.THE AO ACCEPTED THE AGRICULTURAL INCOME AT ` 32,850/- AND TREATED THE BALANCE AMOUNT OF ` 1,55,150/- AS UNDISCLOSED INCOME. HEREIN ALSO, THE AO HAS NOT BROUGHT ANY MATERIAL TO SUGGEST THE NON AGRICULTURAL INCOME. MORE SO, THE AO NOT ALL DOUBTE D THE LAND HOLDINGS OR CARRYING OUT THE AGRICULTURAL OPERATIONS IN THE SAID LAND. HAD IT BEEN ANY SEIZED MATERIAL IN THE HANDS OF AO TO SHOW THAT THE ASSESSEE DISCLOSED NON AGRICULTURAL INCOME AS AGRICULTURAL I NCOME TO AVOID THE TAX, THEN WE COULD HAVE VERY WELL APPRECIATED THE F INDINGS OF THE AO. IN THE ABSENCE OF ANY SEIZED MATERIAL, WE ARE NOT I N A POSITION TO SUSTAIN THE ADDITION. ACCORDINGLY, THIS ADDITION IS DELETED. 5.6 ASSESSMENT YEAR 1994-95: THE FIRST ADDITION IS WITH REGARD TO ` 40,000/- PRESENTS FROM BROTHERS. AS DISCUSSED IN EARLIER PARA RELATING TO ASSESSMENT YEAR MRS.J.ILLAVARASSI :- 25 - : 1994-94, THERE IS NO SEIZED MATERIAL TO MAKE THIS A DDITION ON THIS COUNT. ACCORDINGLY, THE ADDITION IS DELETED. 5.6. 1 THE NEXT ADDITION IS WITH REGARD TO AGRICU LTURAL INCOME OF ` 1,52,875/- TREATING THE AGRICULTURAL INCOME AS NON AGRICULTURAL INCOME. THE ASSESSEE DISCLOSED THE AGRICULTURAL INC OME OF ` 1,96,000/-. THE AO TREATED ` 43,125/- AS AN AGRICULTURAL INCOME AND BALANCE OF ` 1,52,875/- IS TREATED AS UNDISCLOSED INCOME. WE HAV E DISCUSSED SIMILAR ISSUE IN ASSESSMENT YEAR 1993-94, THIS ADDI TION IS UNWARRANTED AS THERE IS NO SEIZED MATERIAL REPRESENTING THIS AD DITION. THIS ADDITION IS DELETED. 5.6.2 THE NEXT ADDITION OF ` 1 LAKHS TOWARDS INVESTMENT IN FIRM IN MINOR SONS NAME. THE ASSESSEE SHOWN ` 1 LAKH INVESTMENT IN THE NAME OF MINOR SON IN CASH FLOW STATEMENT FOR ASSESS MENT YEAR 1994- 95 AND THERE IS NO SEIZED MATERIAL RELEVANT TO THIS ADDITION AND THE ADDITION IS BASED ON THE ENTRY IN CASH FLOW STATEME NT AS DISCUSSED BY THE AO IN PARA 6.42 AT PAGE 19. BEING SO, WE ARE IN CLINED TO DELETE THE ADDITION AS THERE IS NO SEIZED MATERIAL SO SUPPORT THE ADDITION. 5.7 ASSESSMENT YEAR 1995-96: THE FIRST ADDITION IS WITH REGARD TO ` 30,000/- TOWARDS RECEIPT OF PRESENTS FROM BROTHERS. AS DISCUSSED IN ASSESSMENT YEAR 1993-94, THIS MRS.J.ILLAVARASSI :- 26 - : ADDITION IS DELETED AS THERE IS NO SEIZED MATERIAL TO SUGGEST THIS ADDITION. 5.7.1 THE NEXT ADDITION IS WITH REGARD TO ALLEGED R ECEIPT OF SHARE OF ` 68,000/- FROM FAMILY FUNDS. AS DISCUSSED IN ASSESS MENT YEAR 1993- 94, THIS ADDITION IS DELETED, SINCE THERE IS NO SEI ZED MATERIAL WHATSOEVER TO DENY IT. 5.7.2 THE NEXT ADDITION IS WITH REGARD TO AGRICUL TURAL INCOME OF ` 1,47,075/- TREATING THE AGRICULTURAL INCOME AS NON AGRICULTURAL INCOME. THE ASSESSEE DISCLOSED THE AGRICULTURAL INC OME OF ` 1,95,000/-. THE AO ACCEPTED AGRICULTURAL INCOME AT ` 47,927/- AND TREATED THE BALANCE AMOUNT OF ` 1,47,075/- AS UNDISCLOSED INCOME. AS DISCUSSED IN ASSESSMENT YEAR 1993-94, THERE IS NO SEIZED MATERIA L BROUGHT ON RECORD TO SUGGEST THIS ADDITION. THE AO MADE THIS A DDITION ON ESTIMATE BASIS. ACCORDINGLY, THIS ADDITION IS DELETED. 5.7.3 THE NEXT ADDITION TOWARDS UNEXPLAINED CASH C REDIT IN THE NAME OF M/S.BHARANI BEACH RESORTS (P) LTD. AT ` 22 LAKHS. THE ASSESSEE SHOWN THIS AMOUNT IN CASH FLOW STATEMENT FILED BEFO RE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS RECEIPT OF ` 22 LAKHS FROM M/S.BHARANI BEACH RESORTS (P) LTD., THE AO SOUGH T THE ASSESSEE TO EXPLAIN THE SAME. THE ASSESSEE FILED A CONFIRMATION LETTER FROM MRS.J.ILLAVARASSI :- 27 - : M/S.BHARANI BEACH RESORTS (P) LTD. ACCORDING TO AO , M/S.BHARANI BEACH RESORTS (P) LTD. RAISED A BANK LOAN ON THE SE CURITY OF NRNR DEPOSITS HELD BY SMT.SUSELA RAMASAMY, MALAYSIA. ACC ORDING TO AO, ULTIMATE SOURCE OF RECEIPT WAS SMT.SUSELA RAMASAMY, MALAYSIA,AND IT WAS NOT M/S.BHARANI BEACH RESORTS (P) LTD. ACCORDIN GLY, THE AO DOUBTED THE GENUINENESS OF THE TRANSACTIONS AND MAD E THIS ADDITION. FURTHER, HE WAS OF THE OPINION THAT SMT.SUSELA RAMA SAMY, MALAYSIA HAS NO CAPACITY TO ADVANCE THE MONEY TO THE ASSESSE E, AS SHE WAS A HOUSE WIFE AND NOT AN INCOME TAX ASSESSEE IN MALAYS IA. IN OUR OPINION, THIS IS A BLOCK ASSESSMENT . THE ASSESSEES LIABILI TY IS TO EXPLAIN THE SOURCE OF RECEIPT, WHICH HAS BEEN RECEIVED FROM M/S .BHARANI BEACH RESORTS (P) LTD. AND THERE IS CONFIRMATION FROM THE PARTY. THE AO WANTS FROM ASSESSEE TO EXPLAIN THE SOURCE OF SOURC E. IT CANNOT BE UNEXPLAINED RECEIPTS IN THE HANDS OF ASSESSEE IN TH E BLOCK PERIOD AS THE SOURCE HAS BEEN EXPLAINED AS RECEIVED FROM M/S. BHARANI BEACH RESORTS (P) LTD., BY AVAILING BANK LOAN ON NRNR DEPOSITS HELD BY SMT.SUSELA RAMASAMY, MALAYSIA. ACCORDINGLY, ADDITI ON IN THE HANDS OF ASSESSEE IS UNWARRANTED AND THIS ADDITION IS DELETE D. 5.7.4 THE NEXT ADDITION OF ` 9,25,312/- TOWARDS INVESTMENT IN MINOR SONS NAME. THIS ADDITION IS BASED ON THE ENTRY IN CASH FLOW STATEMENT AND AS DISCUSSED IN PARA 6.42 AT PAGE-19 OF ASSESS MENT ORDER, THERE MRS.J.ILLAVARASSI :- 28 - : IS NO SEIZED MATERIAL AS WE HELD IN ASSESSMENT YEA R 1995-95 OF THIS ORDER. THEREFORE, THIS ADDITION IS DELETED. 5.8 ASSESSMENT YEAR 1996-97: THE FIRST ADDITION IS WITH REGARD TO ALLEGED RECEIP T OF ` 30,000/- PRESENTS FROM HIS BROTHERS. AS DISCUSSED IN ASSESS MENT YEAR 1993-94, THE ADDITION IS DELETED AS THERE IS NO SEIZED MATER IAL. 5.8.1 THE NEXT ADDITION IS TOWARDS SHARE F ROM FAMILY LANDS. AS DISCUSSED IN ASSESSMENT YEAR 1993-94, THE ADDITION IS DELETED AS THERE IS NO SEIZED MATERIAL. 5.8.2 THE NEXT ADDITION IS WITH REGARD TO AGRICUL TURAL INCOME OF ` 1,43,750/- TREATING THE AGRICULTURAL INCOME AS NON AGRICULTURAL INCOME. THE ASSESSEE DISCLOSED THE AGRICULTURAL INC OME OF ` 1,97,000/-. THE AO ACCEPTED AGRICULTURAL INCOME AT ` 53,250/- AND TREATED THE BALANCE AMOUNT OF ` 1,43,705/- AS UNDISCLOSED INCOME. AS DISCUSSED IN ASSESSMENT YEAR 1993-94, THERE IS NO SEIZED MATERIA L BROUGHT ON RECORD TO SUGGEST THIS ADDITION. THE AO MADE THIS A DDITION ON ESTIMATE BASIS. ACCORDINGLY, THIS ADDITION IS DELETED. 5.8.3 THE NEXT ADDITION OF `1 5 LAKHS TOWARDS UNEXPLAINED CASH CREDIT IN THE NAME OF HOUSING & REAL ESTATE DEVELOPERS (P) LTD. THE AO MRS.J.ILLAVARASSI :- 29 - : MADE AN ADDITION OF `1 5 LAKHS BASED ON THE ENTRY IN CASH FLOW STATEMENT FILED BEFORE THE AO. ACCORDING TO AO, TH E ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THIS RECEIPT. THE ASSE SSEE FILED CONFIRMATION LETTER DATED 12.09.1997 ON 29.09.1997. ACCORDING TO AO, THE CONFIRMATION LETTER DOES NOT HAVE TELEPHONE NUM BER AND ACCORDING TO AO, THE IDENTITY OF THE HOUSING AND REAL ESTATE DEVELOPERS (P) LTD IS NOT ESTABLISHED. IN OUR OPINION, THE ASSESSEE SA ID TO BE RECEIVED FROM MONEY FROM COMPANY REGISTERED UNDER THE COMPAN Y ACT AND THE AO COULD NOT HAVE MADE ADDITION, AS THERE IS NO SE IZED MATERIAL TO SHOW THE BOGUS NATURE OF RECEIPT OF MONEY FROM THE SAID COMPANY. ACCORDINGLY, IN OUR OPINION, THE DOUBT EXPRESSED BY THE AO IS UNWARRANTED. HENCE, THIS ADDITION IS DELETED. 5.8.4 THE NEXT ADDITION IS WITH REGARD TO SALE OF SHARES AT ` 3,80,000/- THE ASSESSEE HAD SHOWN THE TRANSACTION IN CASH FLOW STATEMENT FOR THIS ASSESSMENT YEAR. ACCORDING TO AO, THERE IS NO EVIDENCE TO SUPPORT THIS RECEIPT. HOWEVER, WE ARE OF THE OPINION THAT U NLESS THERE IS SEIZED MATERIAL IN THE HANDS OF AO, THE ADDITION CANNOT BE MADE. ACCORDINGLY, THE ADDITION IS DELETED AS DISCUSSED IN EARLIER PAR A OF THIS ORDER. 5.8.5 THE NEXT ADDITION IS TOWARDS UNEXPLAINED CAS H CREDIT OF ` 26.05 LAKHS BROUGHT IN THROUGH M/S.AYYAPPA PROPERTY DEVE LOPMENT. THE AMOUNT IS SAID TO BE RECEIVED BY ASSESSEE THROUGH M/S.BHARANI BEACH RESORTS (P) LTD. IN TURN M/S.BHARANI BEACH RESORTS (P) LTD. AVAILED MRS.J.ILLAVARASSI :- 30 - : LOAN BY PLEDGING NRNR DEPOSITS OF SMT.SUSELA RAMASA MY, MALAYSIA WITH INDIAN BANK ABIRAMIPURAM BRANCH. AS DISCUSSED THIS ISSUE IN EARLIER PARA IN ASSESSMENT YEAR 1995-96, WE ARE INC LINED TO DELETE THE ADDITION. 5.8.5 THE NEXT ADDITION IS TOWARDS UNEXPLAINED C ASH CREDIT OF ` 4.15 LAKHS BROUGHT IN THROUGH M/S.JAYA PUBLICTIONS. THI S ENTRY WAS FOUND IN CASH FLOW STATEMENT FOR ASSESSMENT YEAR BY THE AO D URING THE COURSE OF ASSESSMENT PROCEEDINGS AND SINCE THE ASSESSEE HA S FAILED TO FURNISH LETTER OF CONFIRMATION FROM JAYA PUBLICATIONS, THE ADDITION WAS MADE. AS DISCUSSED IN EARLIER PARA, THE ADDITION IS NOT BASED ON ANY SEIZED MATERIAL AND ONLY BASED ON CASH FLOW STATEMENT, WH ICH IS CANT NOT SAID TO BE SIZED MATERIAL. HENCE, THE ADDITION IS U NWARRANTED AND ADDITION IS DELETED. 5.8.6 THE NEXT ADDITION IS WITH REGARD TO INVESTME NTS IN THE NAME OF MINOR SON AT ` 1,22,626/-. AS DISCUSSED THIS ISSUE IN EARLIER PARA IN ASSESSMENT YEAR 1994-95, WE ARE INCLINED TO DELETE THE ADDITION. ASSESSMENT YEAR 1997-98: 5.9. THE FIRST ADDITION IN THIS YEAR IS WITH REGAR D TO UNACCOUNTED INVESTMENT IN CONSTRUCTION OF BUNGALOW AT SIRUTHAVO OR AT 2,73,88,057. THE AO MADE THIS ADDITION SINCE THE ASSESSEE FAILED TO FURNISH THE DETAILS OF COST OF CONSTRUCTION AND ADDITION WAS BA SED ON THE VALUATION MRS.J.ILLAVARASSI :- 31 - : REPORT FURNISHED BY THE DVO, WHO HAS ESTIMATED THE COST AT ` 3,09,87,500/- AS AGAINST DECLARED BY THE ASSESSEE A T ` 1,04,47,569/- ACCORDING TO AO, HE IS AT LIBERTY TO REFER THE MATT ER TO DVO FOR ASCERTAINING THE COST OF CONSTRUCTION AND HE COULD BE MADE THE ADDITION ON THE BASIS OF VALUER REPORT. IN OUR OPIN ION, IF WE ARE ACCEPTING THE CONTENTION OF THE AO THEN THERE WOULD BE NO FINALITY AND IT WOULD BE LEAD TO THE CONCLUSION THAT THE DEPART MENT COULD BE PERMITTED TO ASSESS THE INCOME OF ASSESSEE ON THE B ASIS OF THE DVO REPORT OBTAINED SUBSEQUENT TO THE SEARCH ACTION. A DMITTEDLY, IN THIS CASE UNDISCLOSED INCOME IS NOT ON THE BASIS OF ANY SEIZED MATERIAL FOUND DURING SEARCH ACTION U/S.132 OF THE ACT AND I T WAS ON THE BASIS OF CHANGE OF OPINION PARTICULARLY ON THE BASIS OF D VO REPORT WHO HAD GIVEN DIFFERENT COST OF CONSTRUCTION AS COMPARED WI TH THE VALUE DECLARED BY THE ASSESSEE. IN OUR OPINION, THIS KIND OF ADDITION CANNOT BE PERMITTED IN THE BLOCK ASSESSMENT AS HELD BY THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VINODDANCHAND REPORTED IN 247 ITR 448 AND DELHI HIGH COURT IN THE CASE OF CIT VS. RAVI KA NT JAIN IN 250 ITR 141 AND RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. RAJENDRA PRASAD GUPTA IN [2001] 248 ITR 350 (RAJ),. ACCORDINGLY, TH IS ADDITION IS DELETED. MRS.J.ILLAVARASSI :- 32 - : 5.10 THE NEXT ADDITION IS WITH REGARD TO DEPOSIT O F ` 39,000/- IN THE NAME OF CHILDREN. AS DISCUSSED EARLIER IN ASSESSMEN T YEAR 1993-94, THIS ADDITION IS DELETED AS THERE IS NO SEIZED MATE RIAL. 5.11 THE NEXT ADDITION IS WITH REGARD TO UNACCOUNT ED JEWELLERY HOLDINGS OF ` 1,72,430/- THE ASSESSEE IS BEING A MARRIED LADY AN D CONSIDERING HER SOCIAL STATUS AND RECEIPT OF JEWEL LERY ON VARIOUS OCCASIONS FROM HER FAMILY MEMBERS AND FRIENDS, IN O UR OPINION THE ADDITION IS UNWARRANTED, UNLESS THERE IS SEIZED MAT ERIAL TO SUGGEST THAT THE ASSESSEE HAS ACQUIRED IT DURING THE BLOCK PERIO D FROM UNDISCLOSED SOURCE. ACCORDINGLY, THE ADDITION CONSIDERING THE SMALL AMOUNT AND SOCIAL STATUS OF ASSESSEE, IT IS DELETED. 5.12 THE NEXT ADDITION IS ` 28,000/- AT BHARATHIDASAN NAGAR PURCHASE OF PROPERTY. THE ASSESSEE FILED A SALE DEED DOCUM ENT NO.732/1996 THE ASSESSEE HAS NOT EXPLAINED THE SAME IN HER CASH FLOW STATEMENT AND BEING THERE IS A SEIZED DOCUMENT IN THE FORM OF REGISTERED SALE DEED, THIS ADDITION IS JUSTIFIED. 5.13 THE NEXT ADDITION IS WITH REGARD TO UNEXPLAIN ED INVESTMENT IN ANNANAGAR PROPERTY AT ` 40,000/-. THE ASSESSEE HAS SHOWN THE CONSTRUCTION COST OF ` 19.80LAKHS. THE DVO VALUED AT RS.20.20 LAKHS THE AO HAS BROUGHT THE DIFFERENCE OF ` 40,000/- AS UNDISCLOSED MRS.J.ILLAVARASSI :- 33 - : INCOME. AS DISCUSSED IN EARLIER PARA WITH REGARD T O SIRUTHAVOOR PROPERTY, THE ADDITION IS DELETED. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY A LLOWED. ITA NOS.314 & 315/MDS./2011 6. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GR OUNDS IN BOTH THESE APPEALS FOR OUR CONSIDERATION. 1. THE COMMISSIONER OF INCOME-TAX (APPEALS), ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN NOT ACCEPTING THE ANNUAL L ETTING VALUE OF THE TWO PROPERTIES AS DECLARED BY THE APPELLANT. 2. HE FAILED TO APPRECIATE THAT THE PROPERTIES AT A NNA NAGAR EAST AND AT NEELANKARAI HAD BEEN LETOUT AND, THEREFORE, THE RE NT RECEIPTS SHOULD HAVE BEEN ACCEPTED AS GROSS ANNUAL LETTING V ALUE AS AGAINST ANNUAL LETTING VALUE COMPUTED, BASED ON THE RENTAL RECEIPTS OF EARLIER YEARS. 3. HE OVERLOOKED THE SPECIFIC DIRECTION OF THE HON BLE TRIBUNAL. 4. HE ERRED IN IGNORING THE COPIES OF THE LEASE DEE DS PRODUCED BEFORE HIM AND AO AND IN STATING THAT THE APPELLANT FAILED TO PRODUCE ANY EVIDENCE OF ACTUAL RENT RECEIVED. 5. IN ANY CASE, HE SHOULD NOT HAVE IGNORED THE ACTU AL RENT RECEIVED AND ANNUAL VALUE, DETERMINED BY LOCAL AUTHORITIES. 6. HE HAD NO MATERIAL ON RECORDS TO DISMISS THE APP ELLANTS CLAIM. 7. THE APPELLANT, THEREFORE, PRAYS THAT THE ADDITIO N TO THE INCOME RETURNED MAY BE DELETED, MRS.J.ILLAVARASSI :- 34 - : 7. THE FACTS OF THE CASE ARE THAT IN THE ORIGINAL ASSESSMENT ORDERS FOR THE ASST.YEARS 2000-01 AND 2001-02 ANNUA L LETTING VALUE (ALV) IN RESPECT OF ANNA NAGAR PROPERTY WAS TAKEN A T `1,80,000F- AND ALV IN RESPECT OF NEELANKARAI PROPERTY WAS TAKEN AT `1,20,000/- AS AGAINST RENT RECEIPTS RETURNED BY THE APPELLANT OF `48,000/- IN RESPECT OF ANNA NAGAR PROPERTY AND ` 18,000/- IN RESPECT OF NEELANKARAI PROPERTY. THE ASSESSMENT ORDERS WERE CONFIRMED BY T HE CIT(A) AND ON FURTHER APPEAL BY THE APPELLANT, THE HONBLE ITAT, CHENNAI SET ASIDE THE ASSESSMENT ORDERS FOR BOTH THE ASSESSMENT YEARS WITH A DIRECTION TO TAKE INTO ACCOUNT THE EVIDENCES PRODUCED BY THE APPELLANT IN RESPECT OF RENT RECEIPTS AND DECIDE THE ISSUE AFRES H PROVIDING ADEQUATE OPPORTUNITY TO THE APPELLANT. THE A.O CONCLUDED THE SET ASIDE ASSESSMENTS WHEREIN HE CONSIDERED ` 1,80,000/- AS THE ALV OF ANNA NAGAR PROPERTY AND ` 1,20,000/- AS ALV OF NEELANKARAI PROPERTY. AGGRIEVED BY THE ASSESSMENT ORDERS, THE APPELLANT C ARRIED THESE APPEALS BEFORE THE LD.CIT(A). 7.1 DURING THE SET ASIDE ASSESSMENT PROCEEDINGS, T HE APPELLANT SUBMITTED TO THE A.O THAT THE PROPERTIES AT ANNA NA GAR AND NEELANKARAI WERE VACANT FOR MOST OF THE PERIOD AND THAT THE PROPERTIES WERE ATTACHED BY THE DVAC. IT WAS SUBMITTED THAT IN VIEW OF ATTACHMENT BY DVAC, THE APPELLANT COULD NOT FIND A SUITABLE TENANT BECAUSE OF WHICH THE APPELLANT ADMITTED THE RENT RE CEIVED AS THE MRS.J.ILLAVARASSI :- 35 - : ANNUAL VALUE. THE A.O REJECTED THE CONTENTION OF TH E APPELLANT STATING THAT U/S.23 OF THE I.T.ACT,1961, RENT RECEIPTS OR R ECEIVABLE WHICHEVER IS HIGHER HAS TO BE ADOPTED AS ALV AND THAT THE APPELL ANT HERSELF WAS ADMITTED `1,80,000/- AS ALV OF ANNA NAGAR PROPERTY AND ` 1,20,000/- AS ALV OF NEELANKARAI PROPERTY IN EARLIER ASSESSMEN T YEAR 1999-2000 AND ALSO IN LATER ASST YEAR 2002-03. ACCORDINGLY, H E ADOPTED ALV OF ANNA NAGAR PROPERTY AT ` 1,80,000/- AND ALV OF NEELANKARAI PROPERTY AT ` 1,20,000/-. 7.2 ON APPEAL, THE LD.CIT(A) OBSERVED THAT THE ASS ESSEE HAS FAILED TO PRODUCED ANY EVIDENCE OF THE RENT RECEIPTS EITHE R BEFORE THE A.O DURING THE SET ASIDE PROCEEDINGS OR IN THE FIRST AP PELLATE PROCEEDINGS BEFORE ME. THE CONTENTION OF THE ASSESSEE THAT THE RENT RECEIVED BECAME SUBSTANTIALLY REDUCED DURING THE ASSESSMENT YEARS 2000-01 & 2001-02 DUE TO ATTACHMENT OF THE PROPERTIES BY THE DVAC IS THEREFORE NOT SUBSTANTIATED BY THE ASSESSEE. THE ASSESSEE HE RSELF RETURNED ALV OF ` 1,80,000/- (ANNA NAGAR PROPERTY) AND ` 1,20,000/- (NEELANKARAI PROPERETY) FOR ASST.YEAR 2002-03 DURING WHICH PERIO D ALSO THE ATTACHMENT BY THE DVAC WAS THERE. THE ASSESSEE HAD ALSO RETURNED ALV OF ` 1,80,000/- (ANNA NAGAR PROPERTY) AND ` 1,20,000/-. (NEELANKARAI PROPERTY) IN THE RETURN OF INCOME FILE D FOR THE AST.YEAR 1999-2000. THE REASONS FOR THE CLAIM OF STEEP FAL L IN THE ALV MRS.J.ILLAVARASSI :- 36 - : BETWEEN ASST.YEAR 1999-2000 AND ASST.YEAR 2002-03 H AVE NOT BEEN EXPLAINED WITH ANY EVIDENCES WHATSOEVER. 7.3 THE OPERATIVE PORTION OF THE ORDER OF THE HONB LE ITAT SETTING ASIDE THE ORIGINAL ASSESSMENTS READS AS BELOW: AS THE EVIDENCE FURNISHED BY THE ASSESSEE WAS NOT CONSIDERED AND SUFFICIENT OPPORTUNITY WAS NOT PROVIDED TO EXPL AIN THE CASE, IN THE INTEREST OF JUSTICE SET ASIDE THE IMPUGNED ORDE R AND RESTORE IT TO THE FILE OF THE AO WITH DIRECTION TO DECIDE IT A FRESH IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORT UNITY TO THE ASSESSEE OF BEING HEARD. FURTHER, THE LD.CIT(A) OBSERVED THAT IT IS NOT DISP UTED THAT AS PER THE DIRECTIONS OF THE ITAT, THE A.O GAVE ADEQUATE OPPO RTUNITY TO THE ASSESSEE. THE ASSESSEE FAILED TO PRODUCE ANY EVIDE NCE OF THE ACTUAL RENTS RECEIVED AND THE REASONS FOR THE STEEP FALL O F ALV JUST FOR 2 YEARS BETWEEN A YS 1999-2000 TO 2002 03 (IN FACT THE APPE LLANT HAS NOT PRODUCED ANY EVIDENCE EVEN DURING THE APPELLATE PRO CEEDINGS). THE CONTENTION OF THE ASSESSEE THAT THE AO HAS NOT FOL LOWED THE DIRECTIONS OF THE HONBLE ITAT IS, THEREFORE, NOT VALID. 7.4 THE LD.CIT(A) OBSERVED THAT THE DECISION OF TH E HONBLE MADRAS HIGH COURT RELIED BY THE APPELLANT IS FOR THE ASSES SMENT YEAR 1977-78 AND IN THE CONTEXT OF RENT CONTROL LEGISLATION WHER E THE PROPERTY IS MRS.J.ILLAVARASSI :- 37 - : SITUATED IN A PLACE COVERED BY THE RENT CONTROL LEG ISLATION AND FAIR RENT IS FIXED U/S 4 OF THE TAMIL NADU BUILDINGS (LE ASE AND RENT CONTROL) ACT, 1960. IT HAS NOT BEEN SHOWN BY THE AP PELLANT THAT THE APPELLANTS PROPERTIES ARE COVERED UNDER THE RENT C ONTROL LEGISLATION AND THE RECEIPT FOR ASST YEARS 2000-01 AND 2001-02 ARE ACCORDING TO THE FAIR RENT FIXED UNDER THE RENT CONTROL LEGISLAT ION THEREFORE, ON THE FACTS OF THE CASE, THE NOT APPLICABLE TO THE CASE O F THE ASSESSEE. THEREFORE, LD.CIT(A) ARRIVED AT A CONCLUSION THAT T HE COMPUTATION OF INCOME FROM HOUSE PROPERTY BY TAKING ` 1,80,000/- AS ALV OF ANNA NAGAR PROPERTY AND ` 1,20,000/- AS ALV OF NEELANKARAI PROPERTY MADE IN A.Y 2000-01 AND 2001-02 BY THE A.O IS SUSTAINED. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LD.A.R SUBMITTED THAT THE ORIGINAL ASSESSME NT WAS COMPLETED ON 24.2.2003 WHEREIN THE AO HAD ESTIMATED THE ASSESSEES INCOME FROM THE TWO PROPERTIES FOR BOTH THE YEARS A S BELOW: PROPERTY AT RETURNED ESTIMATED BY AO RAJA NAGAR, NEELANKARAI 18,000 1,20,000 L66, 24TH STREET, ANNA NAGAR 48,000 1,80,000 MRS.J.ILLAVARASSI :- 38 - : THE LD.A.R SUBMITTED THAT THE ESTIMATE BY THE A.O. WAS BASED ON THE RENT RECEIVED IN THE EARLIER YEARS. FURTHER, LD.A.R PLACED RELIANCE ON THE DECISION OF TRIBUNAL IN ASSESSEE'S OWN CASE IN ITS ORDER DATED 11,11.2005 (PAGES 2 & 3) WHEREIN THE ASSESSMENT WA S SET ASIDE WITH THE FOLLOWING REMARKS:- .... THEREFORE, IT WAS INCUMBENT ON THE A.O. THAT THE ACTUAL AMOUNT OF RENT RECEIVED AND NOT THE AMOUNT RECEIVED IN THE PREVIOUS YEAR. AS THE FACTS ADDUCED WERE NOT CONSID ERED AND SUFFICIENT OPPORTUNITY WAS NOT PROVIDED TO EXPLAIN THE CASE THE HONBLE TRIBUNAL SETASIDE THE ORDER. ACCORDING TO LD.A.R, TT IS NOT DISPUTED THAT THE A SSESSEE HAD RECEIVED ONLY ` 18,000 AND ` 48,000 : (I) FROM THE PROPERTIES AT RAJA NAGAR, NEELANKARAI; AND (II) FROM THE PROPERTY AT L-66, 24TH STREET, ANNA N AGAR RESPECTIVELY. THE LD.A.R VEHEMENTLY ARGUED THAT DESPITE SPECIFIC DIRECTION OF THE TRIBUNAL IN ASSESSEE'S OWN CASE, THE ASSESSING AUTH ORITY REPEATED THE SAME FIGURES AS IN THE ORIGINAL ASSESSMENT. 9. LD.D.R SUPPORTED THE ORDERS OF LOWER AUTHORITI ES. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. IN THIS CASE IT IS AN ADMITTED FACT THAT TH E PROPERTY WAS UNDER ATTACHMENT BY THE DVAC DURING THE ASSESSMENT YEAR 2 000-01 & 2001- MRS.J.ILLAVARASSI :- 39 - : 02. ACCORDINGLY, THE PLEA OF ASSESSEE IS THAT THE ASSESSEE WAS NOT ABLE TO RENT THE PROPERTY AT A RENT ESTIMATED BY TH E AO. THE PLEA OF THE ASSESSEE IS THAT IN VIEW OF THE JUDGEMENT OF T HE JURIDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M. IN 228 ITR 626, T HE ANNUAL VALUE IS TO BE DETERMINED ON THE BASIS OF ACTUAL RENT RECEIV ED BY THE ASSESSEE. THE TRIBUNAL ON THE EARLIER OCCASION WHILE DISPOSIN G THE APPEAL FOR THESE ASSESSMENT YEARS VIDE ORDER DATED 11.11.2005 DIRECTED THE AO TO TAKE INTO CONSIDERATION THE ACTUAL AMOUNT OF REN T RECEIVED FOR THE YEAS UNDER CONSIDERATION AND NOT THE RENT RECEIVED IN THE PRECEDING YEAR AND DIRECTED THE AO TO CONSIDER THE EVIDENCE PRODUCED BY THE ASSESSEE REGARDING THE ACTUAL RECEIPT OF RENT. CONT RARY TO THIS ABOVE FINDINGS OF THE TRIBUNAL, THE AO AS WELL AS THE LD. CIT(A) ONCE AGAIN MADE AN ATTEMPT TO ESTIMATE THE INCOME OF ASSESSEE ON THE BASIS OF SUBSEQUENT YEARS OF RECEIPT OF RENT. THIS KIND OF A PPROACH OF THE DEPARTMENT CANNOT BE APPRECIATED. ACCORDINGLY, WE ARE OF THE OPINION THAT LOWER AUTHORITIES BOUND BY THE DECISION OF THE HIGHER FORUM I.E. TRIBUNAL AND THEY HAVE TO STRICTLY FOLLOW THE DIRE CTION OF TRIBUNAL. IN VIEW OF THIS, WE DIRECT THE AO TO CONSIDER ONLY THE ACTUAL RENT RECEIVED BY THE ASSESSEE AS PER THE AGREEMENT ENTERED BY THE ASSESSEE WITH THE CONCERNED PARTIES FOR LETTING OUT THE SAID PROP ERTY. ACCORDINGLY, THIS GROUND OF ASSESSEE IS ALLOWED FOR BOTH THE ASS ESSMENT YEARS. MRS.J.ILLAVARASSI :- 40 - : ITA NO. 316/MDS./2011 11. THE FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED A RETURN OF INCOME FOR THE A.Y. 2004-05 ON 22 -03-2005 DISCLOSING A TOTAL INCOME OF ` 18,74,750/- AND AGRICULTURAL INCOME OF ` 2,96,450. ORDER U/S. 143(3) OF THE I.T. ACT, 1961 WAS PASSED ON 04-12-2006 ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT ` 21,71,200/-. THE ASSESSING OFFICER TREATED AGRICULTURAL INCOME RETUR NED OF ` 2,96,450/- AS INCOME FROM OTHER SOURCES, AS NO EVIDENCE REGARDING CROPS CULTIVATED, EXTENT OF LAND HOLDING, DETAILS OF EXPENSES INCURRE D WAS FURNISHED. AGGRIEVED BY THE TREATMENT OF AGRICULTURAL INCOME A S INCOME FROM OTHER SOURCES, THE ASSESSEE CARRIED THIS APPEAL BE FORE THE LD.CIT(A). 11.1 DURING THE APPELLATE PROCEEDINGS IT IS SUBMITTED BY THE LEARNED AR THAT AS IN THE EARLIER YEARS, THE ASSESSEE WAS T HE OWNER OF THE AGRICULTURAL LANDS AT RISHIYUR VILLAGE, BESIDES 1/7 TH SHARE IN THE FAMILY LANDS A PERUGAVAZHNDAN VILLAGE. HE SUBMITTED THAT P ADDY, BLACK GRAM AND GREEN GRAM ARE THE MAIN CROPS IN THE LANDS AT R ISHIYUR VILLAGE AND PADDY, COCONUT, PLANTAIN AND BLACK GRAM, IN THE LAN DS AT PERUGAVAZHNDAN VILLAGE. HE SUBMITTED THAT THE EXIST ENCE OF LANDS AND INCOME THERE FROM HAVE BEEN ACCEPTED FOR OVER A NUM BER OF YEARS. MRS.J.ILLAVARASSI :- 41 - : 11.2 ON APPEAL, THE LD.CIT(A) OBSERVED THAT THE LEARNED A.R. DID NOT PRODUCE ANY EVIDENCE OF AGRICULTURAL INCOME BEFORE THE AO OR DURING THE APPELLATE PROCEEDINGS. LAND HOLDINGS OF EARLIER YEARS CANNOT BE A PROOF FOR GENERATION OF AGRICULTURAL INCOME IN THE CURRENT YEARS AS EACH ASSESSMENT YEAR IS A SEPARATE UNIT FOR ASSESSMENT. FURTHER, LD.CIT(A) OBSERVED THAT THE BURDEN OF PROVING AGRICULTURAL IN COME IS ON THE ASSESSEE. LD.CIT(A) UPHELD THE ORDER OF LD. ASSESSI NG OFFICER AS THE ASSESSEE HAD FAILED TO DISCHARGE THIS BURDEN. AGAI NST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 12. THE ASSESSEE RAISED THE FOLLOWING GROUNDS FOR O UR ADJUDICATION. A) THE CIT(A) ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN SUSTAINING AN ADDITION OF ` 2,96,450/- AS INCOME FROM OTHER SOURCES. B) HE FAILED TO APPRECIATE THAT THE EXISTENCE OF TH E LAND AND INCOME THERE-FROM HAVE BEEN ACCEPTED FOR OVER A NUM BER OF YEARS. C) HE OVERLOOKED TO CONSIDER THE FACT THAT THE AGRI CULTURAL INCOME DERIVED BY THE ASSESSEE WAS ACCEPTED BY THE HONBLE TRIBUNAL IN THE EARLIER YEARS AND THE AO HIMSELF HA D ACCEPTED THE SAME IN THE IMMEDIATELY PRECEDING YEAR . MRS.J.ILLAVARASSI :- 42 - : 13. THE LD.A.R SUBMITTED THAT THE ASSESSEES AGRIC ULTURAL INCOME HAS BEEN ACCEPTED AS BELOW. A.Y INCOME OFFERED BY ASSESSEE ( `) IN COME ACCEPTED BY AO ( `) 1998 - 99 2,48,850 1,64,500 1999 - 00 2,32,650 1,64,500 2000 - 01 2,14,840 1,64,500 2001 - 02 2,18,440 1,58,440 2002 - 03 2,40,300 APPEAL PENDING BEFORE CIT(A) 2003 - 04 2,80,950 2,80,950 2004 - 05 2,96,450 YEAR UNDER APPEAL 14. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDER OF LD.CIT(A). 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSEESSEE HAS DECLARED AGRICULTURAL INC OME OF ` 2,96,450 FOR THIS ASSESSEMENT YEAR. HOWEVER, THE AO TREATED THE ENTIRE ABOVE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AS INC OME FROM OTHER SOURCES. IT IS AN ADMITTED FACT THAT THE AGRICULTUR AL INCOME OF ASSESSEE HAS BEEN ACCEPTED BY THE DEPARTMENT FOR THE EARLIER ASSESSMENT YEARS AS STATED IN PARA 13 OF THIS ORDER. HENCE, IN OUR O PINION, WHEN THE DEPARTMENT HAS ACCEPTED AGRICULTURAL INCOME FROM TH E SAME LAND IN EARLIER YEARS, THERE IS NO REASON FOR DOUBTING THE RAISING OF AGRICULTURAL CROPS IN THE SAID LAND WITHOUT BRINGING ANYTHING ON RECORD TO SHOW THAT THE ASSESSEE HAS NOT CULTIVATED THE SAID LAND. IN I NDIA, THE SMALL MRS.J.ILLAVARASSI :- 43 - : AGRICULTURIST DID NOT MAINTAIN ANY BOOKS OF ACCOUNT S AND IT IS NOT PRACTICABLE TO EXPECT THE SMALL AGRICULTURISTS LIK E PRESENT ASSESSEE TO MAINTAIN BOOKS OF ACCOUNTS FOR ALL AGRICULTURE EXP ENDITURE AS WELL AS GENERATION OF INCOME. CONSIDERING THE ACCEPTANCE OF AGRICULTURAL INCOME BY THE DEPARTMENT FOR EARLIER ASSESSMENT YEA RS 1998-99 TO 2001-02 AND 2003-04 WE ARE NOT INCLINED TO UPHOLD T HE ORDER OF LOWER AUTHORITIES ON THIS ISSUE. ACCORDINGLY, WE ARE DIRE CTING AO TO ACCEPT THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AS AGRICULTURAL INCOME ONLY. 16. ACCORDINGLY, THE APPEAL OF ASSESSEE IS ALLOWED . 17. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN 316/MDS/2011 IS ALLOWED ORDER PRONOUNCED ON 28 TH OCTOBER, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) ! / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' / CHENNAI #$% / DATED: 28 TH OCTOBER, 2016 K S SUNDARAM &$'(( )*(+* / COPY TO: ( 1 . / APPELLANT 3. &(& ,(-. / CIT(A) 5. */0( 1 / DR 2. / RESPONDENT 4. &(& , / CIT 6. 02 (3 / GF