Shri Jatin N. Patel, Baroda v. The ACIT., Circle-2,, Baroda

ITSSA 81/AHD/2006 | misc
Pronouncement Date: 18-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 8120516 RSA 2006
Assessee PAN AOEPP0505K
Bench Ahmedabad
Appeal Number ITSSA 81/AHD/2006
Duration Of Justice 3 year(s) 9 month(s) 23 day(s)
Appellant Shri Jatin N. Patel, Baroda
Respondent The ACIT., Circle-2,, Baroda
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 18-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 18-02-2010
Date Of Final Hearing 16-02-2010
Next Hearing Date 16-02-2010
Assessment Year misc
Appeal Filed On 25-04-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH JM & SHRI A.N. PAHUJA AM I.T.(SS)A. NO.81/AHD/2006 (BLOCK PERIOD 1986-87 TO 15-12-1995) SHRI JATIN N PATEL VS ACIT CIRCLE-2 6 BHAGIRATH SOCIETY AAYAKAR BHAWAN BARODA CHHANI JAKAT NAKA BARODA [PAN : AOEPP0505K] (APPELLANT) (RESPONDENT) ASSESSEE BY : SMT. URVASHI SHODHAN AR REVENUE BY : SHRI CK MISHRA DR O R D E R A.N. PAHUJA : THIS APPEAL BY THE ASSESSEE DIRECTED AGAINST AN O RDER DATED 28- 3-2006 OF THE ASSESSING OFFICER[AO IN SHORT] RAIS ES THE FOLLOWING GROUNDS: (1) THE LEARNED ASST.COMMISSIONER OF INCOME TAX HAS ERR ED IN LAW AND ON FACTS OF THE APPELLANTS CASE IN ASSESSI NG UNDISCLOSED INCOME OF BLOCK PERIOD AT RS.3 49 983 /- AS AGAINST RS.NIL. THE APPELLANT MOST HUMBLY SUBMITS THAT NO UNDISCLOS ED INCOME WITHIN THE MEANING OF SECTION 158BC(C) OF TH E ACT HAS BEEN EARNED BY THE APPELLANT HENCE ALL THE ADD ITIONS MADE BY THE LEARNED ASST.COMMISSIONER OF INCOME TAX AS UNDISCLOSED INCOME ARE ERRONEOUS ON FACTS OF THE CASE AS WELL AS IN LAW. IN VIEW THEREOF THE APPELLANT MOST HUMBLY SUBMITS THAT ALL THE ADDITIONS MADE BY THE LEARNED ASST.COMMISSIONER REQUIRES TO BE DELETED AND PRAYS THAT HONBLE TRIBU NAL BE PLEASED TO HOLD SO NOW AND DELETE THE IMPUGNED ADDI TION. (2) THE LEARNED ASST.COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AND FACTS OF THE APPELLANTS CASE IN ESTIMATING INCOME OF THE APPELLANT AT RS.54 000/- & RS.80 000/- FOR A.Y. 1994-95 & 1995-96 RESPECTIVELY AND TAXING THE SAME AS UNDIS CLOSED INCOME. THE APPELLANT MOST HUMBLY SUBMITS THAT NO INCOME AS ALLEGED HAS BEEN EARNED BY THE APPELLANT FOR THE AB OVE- MENTIONED ASST.YEARS AS WELL AS INCOME EARNED DURIN G SAID ASST.YEARS IS UNDISCLOSED INCOME AND PRAYS THAT THE HONBLE TRIBUNAL BE PLEASED TO HOLD SO NOW AND DELETE THE I MPUGNED ADDITION. IT(SS)A NO.81/AHD/2006 2 (3) THE LEARNED ASST.COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AND ON FACTS OF THE APPELLANTS CASE IN MAKING ADDITION OF RS.1 00 000/- AS UNDISCLOSED INCOME EARNED FROM ALL EGED SHARES TRADING. THE APPELLANT MOST HUMBLY SUBMITS THAT HE HAS NEITH ER CARRIED OUT SUCH SHARES TRANSACTION NOR HAS EARNED SUCH INCOME AND PRAYS THAT THE HONBLE TRIBUNAL BE PLEAS ED TO HOLD SO NOW AND DELETE THE IMPUGNED ADDITION. (4) THE LEARNED ASST.COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AND ON FACTS OF THE APPELLANTS CASE IN MAKING AN ADDITION OF RS.50 983/- AS UNDISCLOSED INCOME BEING AMOUNT DEPOSITED IN THE BANK A/C. THE APPELLANT MOST HUMBLY SUBMITS THAT ON THE FACTS AND CIRCUMSTANCE OF HIS CASE AND IN LAW NO PART OF THE ALLEGED DEPOSITS IN THE BANK IS UNEXPLAINED AND PRAYS THAT THE HONBLE TRIBUNAL BE PLEASED TO HOLD SO NOW AND DELE TE THE IMPUGNED ADDITION. (5) THE LEARNED ASST.COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AND ON FACTS OF YOUR APPELLANTS CASE IN MAKING AN ADDITION OF RS.65 000/- AS UNDISCLOSED INVESTMENT. THE APPELLANT MOST HUMBLY SUBMITS THAT ON THE FACTS AND CIRCUMSTANCES OF HIS CASE AND IN LAW NO PART OF THE ALLEGED INVESTMENT IS UNEXPLAINED AND PRAYS THAT THE HONBL E TRIBUNAL BE PLEASED TO HOLD SO NOW AND DELETE THE I MPUGNED ADDITION. (6) THE LEARNED ASST.COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AND ON FACTS OF YOUR APPELLANTS CASE IN CHARGI NG SURCHARGE OF RS.20 998/- ON THE TAX PAYABLE WITHOUT GIVING ANY REASON. THE APPELLANT MOST HUMBLY SUBMITS THAT ON THE FACTS AND CIRCUMSTANCE OF HIS CASE AND IN LAW NO SURCHARGE IS PAYABLE ON THE TAX PAYABLE AND PRAYS THAT THE HONBLE TRIBU NAL BE PLEASED TO HOLD SO NOW AND DELETE THE SAME. (7) THE APPELLANT CRAVES LEAVE TO ADD TO ALTER AND/OR AMEND THE GROUNDS HEREINABOVE TAKEN . 2. FACTS IN BRIEF AS PER RELEVANT ORDER ARE THAT A SEARCH U/S 132 OF THE INCOME-TAX ACT 1961[HEREINAFTER REFERRED TO AS THE ACT] WAS CONDUCTED ON 15- 12-1995 IN THE PREMISES OF SHRI PN PATEL BROTHER OF THE ASSESSEE AND A SHARE BROKER REGISTERED WITH VADODARA STOCK EXCHANGE. D URING THE SEARCH IT WAS FOUND THAT THE ASSESSEE WAS DEALING IN SHARE TRANSA CTIONS IN THE NAME OF HIS IT(SS)A NO.81/AHD/2006 3 PROPRIETORY CONCERN M/S DIVYA INVESTMENTS FROM DE CEMBER 1994. THE ASSESSEE WAS FOUND TO BE RESIDING WITH HIS BROTHER AT THAT TIME AT BHAGIRATH SOCIETY BARODA. IN CONSEQUENCE OF THE SEARCH IN R ESPONSE TO A NOTICE U/S 158BC OF THE ACT THE ASSESSEE FILED RETURN FOR T HE BLOCK PERIOD ON 5.8.1996 DECLARING NIL UNDISCLOSED INCOME. SINCE THE ASSESS EE DID NOT COOPERATE DURING THE BLOCK ASSESSMENT PROCEEDINGS ACCORDINGLY ON T HE BASIS OF STATEMENT OF THE ASSESSEE RECORDED DURING THE SEARCH ON 15.12.1995 A ND SUBSEQUENT STATEMENTS RECORDED U/S 131 OF THE ACT ON 23.12.1995 & 27.12.1 995 AS ALSO ON THE BASIS OF SEIZED MATERIAL FOUND DURING THE SEARCH BLOCK AS SESSMENT WAS COMPLETED U/S 158BC R.W.S. 144 OF THE ACT ON 23-12-1996 DETERMIN ING UNDISCLOSED INCOME AS UNDER: (I) UNDISCLOSED INCOME FOR AY 1994-95 RS. 54 0 00/- (II) UNDISCLOSED INCOME FOR A.Y. 1995-96 RS. 8 0 000/- (III) UNDISCLOSED INCOME OUT OF TRADING OF SHARES RS. 5 83 229/- (IV) UNDISCLOSED INCOME ON ACCOUNT OF UNACCOUNTED CASH CREDITS RS. 83 700/- (V) UNEXPLAINED INVESTMENTS RS. 65 000/- ------------------- RS. 8 65 929/- ------------------- ON APPEAL THE TRIBUNAL VIDE THEIR ORDER DATED 22 ND FEBRUARY 2005 IN IT(SS)A NO. 20/AHD/1997 SET ASIDE THE AFORESAID ORDER OF TH E AO WITH THE DIRECTIONS TO READJUDICATE THE CASE ALONG WITH THE CASE OF SHRI N IZAR ALI S SATANI IN ACCORDANCE WITH LAW AFTER AFFORDING SUFFICIENT OPP ORTUNITY TO THE ASSESSEE SUBSTANTIVE ADDITIONS HAVING BEEN MADE IN THE CASE OF SHRI NIZAR ALI S SATANI. HERE IT MAY BE POINTED OUT THAT THERE IS NOTHING T O SUGGEST EITHER IN THE ORDER DATED 23.12.1996 OR IN THE IMPUGNED ORDER PASSED IN CONSEQUENCE OF DIRECTIONS OF THE ITAT THAT THE ADDITIONS WERE MADE ON PROTECT IVE BASIS IN THE CASE OF THE ASSESSEE AND ON SUBSTANTIVE BASIS IN THE CASE OF S HRI NIZAR ALI S SATANI NOR ANY IT(SS)A NO.81/AHD/2006 4 SUBMISSIONS HAVE BEEN MADE BEFORE US ON THAT BASIS. . IN THE IMPUGNED ORDER THE AO ADDED AN AMOUNT OF 3 49 983/- AS UNDER : (I0 UNDISCLOSED INCOME FOR AY 1994 -95 RS. 54 000/- (II) UNDISCLOSED INCOME FOR A.Y. 1995-96 RS. 8 0 000/- (III) UNDISCLOSED INCOME OUT OF TRADING OF SHARES OF NMHL RS. 1 00 000 /- (IV) UNDISCLOSED INCOME ON ACCOUNT OF UNACCOUNTED CASH CREDITS RS. 50 983/- (V) UNEXPLAINED INVESTMENTS RS. 65 000/- THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID ADDITIONS IN HIS VARIOUS GROUNDS OF APPEAL . 3. GROUND NO. 1 IN THE APPEAL BEING GENERAL IN NATURE DOES NOT REQUIRE ANY SEPARATE ADJUDICATION AND IS THEREFORE DISMISSED. 4. GROUND NO.2 RELATES TO ESTIMATION OF INCOME FOR THE AYS 1994-95 AND 1995-96 AT RS.54 000/- AND RS.80 000/- RESPECTIVELY . THESE ADDITIONS WERE INITIALLY MADE BY THE AO IN THE ORDER DATED 23.12.1 996 FOR THE REASON THAT THE ASSESSEE IN HIS STATEMENT U/S 131(1A) OF THE ACT RE CORDED ON 23-12-1995 ADMITTED THAT HE HAD INCOME OF RS.80 000/- FOR THE ASSESSMENT YEAR 1995-96. THE ASSESSEE HOWEVER DID NOT FILE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1995-96 ON THE GROUND THAT HE HAD MENTIONED ONLY GR OSS ESTIMATE OF INCOME IN HIS STATEMENT AND AFTER CONSIDERING EXPENSES AND BA D DEBT THE INCOME REDUCED TO NIL AND THEREFORE NO RETURN OF INCOME WAS FILED . HOWEVER SINCE THE ASSESSEE DID NOT SUBSTANTIATE HIS CLAIM OF EXPENSES AND BAD DEBTS THE AO ADDED THESE TWO AMOUNTS . IN THE IMPUGNED ORDER THESE ADDITI ONS WERE RETAINED THE ASSESSEE HAVING NOT SUBSTANTIATED HIS CLAIM FOR EXP ENSES AND BAD DEBTS. 4.1 LIKEWISE GROUND NO.3 PERTAINS TO ADDITION OF RS.1 LAKH AS UNDISCLOSED INCOME EARNED FROM THE SHARE TRADING. THE AO NOTI CED THAT THE ASSESSEE IN HIS STATEMENT U/S 131(1A) OF THE ACT RECORDED ON 27-12- 1995 ADMITTED THAT HE HAD IT(SS)A NO.81/AHD/2006 5 EARNED A PROFIT OF RS.5 LAKHS TO RS.6 LAKHS ON TRAD ING IN SHARES OF NMHL IN THE NAME OF HIS BROTHER-IN-LAW SHRI SC PATEL AND HE WAS THE BENEFICIARY OF THE TRANSACTION. SHRI SC PATEL ALSO CONFIRMED THE SAME . THE ASSESSEE ALSO MADE A COMMITMENT IN HIS REPLY TO QUESTION NO.12 TO PAY TH E ADVANCE-TAX ON SUCH PROFIT. HOWEVER THE ASSESSEE DID NOT DECLARED ANY SUCH INC OME IN HIS RETURN ON THE GROUND THAT THE AMOUNT OF RS.5 83 229/- ACCRUED O N ACCOUNT OF SHARE TRANSACTIONS OF NMHL WAS TREATED AS BAD DEBT EVEN W HEN IN HIS REPLY TO QUESTION NO.10 (STATEMENT DATED 27-12-1995) THE ASSESSEE ADM ITTED THAT ONLY A SUM OF RS.1 LAKH WAS RECEIVED BY HIM AND THE SAME WAS CRED ITED IN THE BOOKS OF ACCOUNT OF SHRI PN PATEL HIS BROTHER TO THE ACCOU NT OF THE ASSESSEE. THIS CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO WHO MADE THE ORIGINAL BLOCK ASSESSMENT AND AN ADDITION OF RS.5 83 229 W AS MADE. IN THE DE NOVO ASSESSMENT PROCEEDINGS THE AO NOTICED FROM THE DOC UMENT ANNEXURE A/1 TO PANCHANAMA DATED 22-12-1995 SEIZED FROM THE PREMI SES OF SATANI & CO AND SHRI PN PATEL THAT IN THE NAME OF DIVYA INVESTMENTS THE PROPRIETORY CONCERN OF THE ASSESSEE A SUM OF RS.6 89 930/- WAS CREDITED IN THE BOOKS OF M/S PN PATEL STOCK BROKER VSE IN RESPECT OF THE TRANSACTIONS OF SALE AND PURCHASE OF NMHL (NILKANTH MOTELS & HOTELS LTD) SHARES. AFTER MAKIN G ENQUIRES FROM THE VADODRA STOCK EXCHANGE THE AO ADDED ONLY AN AMOUNT OF RS. 1 LAC IN VIEW OF THE ADMISSION OF THE ASSESSEE THAT HE HAD RECEIVED A SU M OF RS.1 LAKH FROM SHRI PN PATEL AT THE RELEVANT TIME . 4.2. GROUND NO. 4 PERTAINS TO ADDITION OF RS.50 983 AS UNDISCLOSED INCOME BEING AMOUNT DEPOSITED IN THE BANK ACCOUNT. THE A O NOTICED THAT THE ASSESSEE IN HIS STATEMENT RECORDED ON 15-12-1995 ADMITTED T O RUN A BUSINESS OF NEW ISSUES THROUGH BANK ACCOUNT NO.98 OF UMA CO-OPERATI VE BANK. THE AO IN THE ORIGINAL BLOCK ASSESSMENT PROCEEDINGS FOUND THAT TH ERE WAS DEPOSIT OF RS.83 790 IN THIS BANK ACCOUNT. SINCE THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF THE SAID DEPOSIT THE ENTIRE AMOUNT WAS ADDED . HOWEVER I N THE DE NOVO ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED AS UNDER: IT(SS)A NO.81/AHD/2006 6 REGARDING DEPOSIT OF RS.83 790/- MADE IN THE BANK ACCOUNT WITH UMA CO-OPERATIVE BANK I HAVE TO MOST HUMBLY SUBMIT THAT NO PART OF THE DEPOSIT MADE IN THE SAID BANK ACCOUNT IS UND ISCLOSED INVESTMENT. I HAVE TO MOST HUMBLY SUBMIT THAT THE MAJORITY CREDIT IN THE SAID BANK ACCOUNT IS REFUND OF SHARE APPLICATIO N MONEY MADE EARLIER. SINCE THE AMOUNT DEPOSITED IS NOTHING BUT THE WITHDRAWAL MADE EARLIER AND INITIAL INVESTMENT BEING FULLY EXP LAINED NO ADDITION CAN BE MADE. I AM ENCLOSING HEREWITH THE STATEMENT GIVING DETAILS OF AMOUNT CREDITED IN BANK. FROM THE SAID ANALYSIS YOU WILL OBSERVE THAT NO AMOUNT CREDITED INTO THE SAID BANK ACCOUNT IS UNDISCLOSED INVESTMENT. THE AO DID NOT ACCEPT THE AFORESAID SUBMISSIONS OF THE ASSESSEE AND ADDED AN AMOUNT OF RS.50 500/- AND ADDITIONAL AMOUNT OF DIVI DEND INCOME OF RS.483/- NOT AGGREGATING TO RS.50 983/- TO BE IN THE NATURE OF U NDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. 4.3. GROUND NO.5 PERTAINS TO ADDITION OF RS.65 000/ - AS UNDISCLOSED INVESTMENT. THIS AMOUNT WAS STATED TO BE INVESTMEN T IN THE SHARE OF ARAVALLI FINLEASE LTD. THE ASSESSEE IN THE COURSE OF DE NO VO ASSESSMENT PROCEEDINGS STATED THAT THE INVESTMENT IN ARAVALLI FINLEASE LTD WAS MADE OUT OF MONEY RECEIVED FROM SHERI PANKAJ PATEL (RS.1 00 000/- REC EIPT FROM HIM) AND THEREFORE THE SAME IS NOT UNDISCLOSED INVESTMENT. HOWEVER T HE AO ADDED THE AMOUNT IN THE ABSENCE OF ANY EVIDENCE IN SUPPORT OF THIS CLAI M . 5. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAI NST THE AFORESAID ADDITIONS. THE LD. AR APPEARING BEFORE US SUBMITTED THAT ALL T HE AFORESAID ADDITIONS WERE MADE ON ESTIMATE BASIS WITHOUT REFERENCE TO ANY SEI ZED DOCUMENT AND THEREFORE ARE REQUIRED TO BE DELETED .ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF MATERIAL F OUND DURING THE COURSE OF SEARCH AND THE ADMISSION OF THE ASSESSEE IN HIS ST ATEMENTS. 6. WE HAVE HEARD BOTH THE PARTIES AND G ONE THROUGH THE FACTS OF THE CASE. AFTER HEARING BOTH THE PARTIES WE ARE OF TH E OPINION THAT WHAT FALLS WITHIN THE SCOPE OF CHAPTER XIV-B CANNOT BE MADE SUBJECT-M ATTER OF REGULAR IT(SS)A NO.81/AHD/2006 7 ASSESSMENT AND VICE VERSA. ASSESSMENT PROCEEDINGS U NDERTAKEN UNDER CHAPTER XIV-B ARE ONLY IN RESPECT OF UNDISCLOSED INCOME THA T IS THAT INCOME WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED AND WHIC H HAS BEEN UNEARTHED AS A RESULT OF THE SEARCH OR REQUISITION. ASSESSMENT PRO CEEDINGS UNDER CHAPTER XIV-B ARE NOT CONCERNED WITH THAT INCOME WHICH HAS ALREAD Y BEEN DISCLOSED AND IN RESPECT OF WHICH REGULAR ASSESSMENT PROCEEDINGS STA ND CONCLUDED OR ARE STILL PENDING OR IN RESPECT OF WHICH TIME FOR FILING OF RETURN HAS NOT EXPIRED ON THE DATE OF SEARCH/REQUISITION AND WHICH STAND RECORDED IN T HE BOOKS OF ACCOUNT ON THE DATE OF SEARCH. IN THIS CONNECTION HONBLE GUJARA T HIGH COURT IN THE CASE OF N.R. PAPER & BOARD LTD. & ORS. VS. DY. CIT (1998) 1 46 CTR (GUJ) 612 : (1998) 234 ITR 733 (GUJ) HELD THAT THE ESSENCE OF THE SPECIAL PROCED URE OF CHAPTER XIV-B IS TO PROVIDE FOR AN ASSESSMENT OF THE UNDISC LOSED INCOME DETECTED AS A RESULT OF THE SEARCH WITHOUT AFFECTING THE REGULAR ASSESSMENTS MADE OR TO BE MADE. THE SPECIAL PROVISIONS ARE DEVISED TO OPERATE IN THE SEPARATE FIELD OF UNDISCLOSED INCOME AND ARE CLEARLY IN ADDITION TO T HE REGULAR ASSESSMENTS COVERING THE PREVIOUS YEARS FALLING IN THE BLOCK PE RIOD. . IN CIT VS. RAVI KANT JAIN (2001) 167 CTR (DEL) 566 : (2001) 250 ITR 141 (DEL) HONBLE HIGH COURT WHILE DISCUSSING THE PROVISIONS OF S. 158B OF THE ACT HEL D THAT: 'THE SPECIAL PROCEDURE OF CHAPTER XIV-B IS INTENDED TO PROVIDE A MODE OF ASSESSMENT OF UNDISCLOSED INCOME WHICH HAS BEEN DE TECTED AS A RESULT OF SEARCH. AS THE STATUTORY PROVISIONS GO TO SHOW IT IS NOT INTENDED TO BE A SUBSTITUTE FOR REGULAR ASSESSMENT. ITS SCOPE AND AM BIT IS LIMITED IN THAT SENSE TO MATERIALS UNEARTHED DURING SEARCH. IT IS IN ADDITIO N TO THE REGULAR ASSESSMENT ALREADY DONE OR TO BE DONE. THE ASSESSMENT FOR THE BLOCK PERIOD CAN ONLY BE DONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE AO. EVIDENCE FOUND AS A RESULT OF SEARCH I S CLEARLY RELATABLE TO SS. 132 AND 132A.' 6.1. HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. CHANDRA CHEMOUX PVT. LTD. 298 ITR 98(RAJ) HELD THAT ADDITION IN TH E BLOCK ASSESSMENT CAN NOT BE MADE ON THE BASIS OF INFERENCES. HONBLE HIGH COURT HELD IN FOLLOWING TERMS: WE HAVE GONE THROUGH THE PROVISIO NS OF SECTION 158BB OF THE INCOME-TAX ACT AND FIND THAT EVEN IN ACCORDANCE WIT H THE PROVISION ADDITION CAN BE MADE ONLY WHEN EVIDENCE IS AVAILABLE AS A RESULT OF SEARCH OR A REQUISITION OF IT(SS)A NO.81/AHD/2006 8 BOOKS OF ACCOUNT DOCUMENTS AND OTHER MATERIAL HOW EVER ADDITION CANNOT BE MADE ON THE BASIS OF INFERENCES. VARIOUS BENCHES OF THE TRIBUNAL ARE FOLLOWING THE PRINCIPLE THAT ADDITIONS CAN BE MADE ONLY ON TH E BASIS OF INCRIMINATING DOCUMENTS/MATERIAL COLLECTED DURING THE COURSE OF S EARCH. HOWEVER IN THE PRESENT MATTER NO SUCH FACTS ARE AVAILABLE RATHER IT SAYS THAT ADDITIONS WERE MADE BY THE ASSESSING OFFICER BASED ON INFERENCES W HICH DOES NOT FALL WITHIN THE SCOPE OF SECTION 158BB OF THE INCOME-TAX ACT. 6.2. HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. G.K. SENNIAPPAN REPORTED IN [2006] 284 ITR 220 CONSIDERED THE SCOPE OF SECTION 158BB OF THE ACT AND HELD AS FOLLOWS: 'SECTION 158BB OCCURS IN CHAPTER XIV-B WHICH PROVI DES FOR SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES. THE COMPUTATION OF UNDISCLOSED INCOME OF THE BLOCK PERIOD IS CONTEMPLATED UNDER SECTION 158BB. A S PER THE SECTION THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHOULD BE TH E AGGREGATE OF THE TOTAL INCOME OF THE PREVIOUS YEARS FALLING WITHIN THE BLO CK PERIOD COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT ON THE BASIS OF THE EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOU NT OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WIT H THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE AS REDUCED BY THE AGGRE GATE OF THE TOTAL INCOME OR AS THE CASE MAY BE AS INCREASED BY THE AGGREGATE O F THE LOSSES OF SUCH PREVIOUS YEARS. A MERE READING OF THE ABOVE PROVISION CLEARLY INDIC ATES THAT THE SENTENCE 'SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WIT H THE ASSESSING OFFICER' CANNOT BE BISECTED OR TAKEN IN ISOLATION FOR THE PURPOSE O F COMPUTATION. SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER SHOULD AS PER THE SECTION RELATABLE TO SUCH EVIDENCE. THE WOR D 'SUCH' USED AS A PREFIX TO THE WORD 'EVIDENCE' ASSUMES MUCH SIGNIFICANCE IN T HIS PROVISION AS IT INDICATES ONLY THE EVIDENCE FOUND AS A RESULT OF SEARCH OR R EQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AT THE TIME OF SEARCH. ANY OTHE R MATERIAL CANNOT FORM BASIS FOR COMPUTATION OF UNDISCLOSED INCOME OF THE BLOCK PERIOD. HENCE WE ARE OF THE VIEW THAT THE COMMISSIONER AS WELL AS THE TRIBUNAL HAVE THE ISSUE IN ACCORDANCE WITH THE STATUTORY PROVISIONS AND REQUIRES NO INTE RFERENCE. THE APPEAL IS ACCORDINGLY DISMISSED.' APPLYING THE ABOVE RATIO WE FIND THERE IS NO ERROR OR LEGAL INFIRMITY IN THE ORDER OF THE TRIBUNAL AND THE REASONS GIVEN BY THE TRIBUNAL ARE BASED ON RELEVANT MATERIALS AND EVIDENCE. 6.3. RECENTLY HONBLE JURISDICTIONAL HIGH COURT VIDE THEIR ORDER DATED 1.9.2008 IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI VS. CIT IN ITR NO. 111 OF 1997 HELD THAT MERELY ON THE BASIS OF ADMISSION THE ASSESSEE COULD NOT BE SUBJECTED TO IT(SS)A NO.81/AHD/2006 9 ADDITION UNLESS AND UNTIL SOME CORROBORATIVE EVIDEN CE IS FOUND IN SUPPORT OF SUCH ADMISSION. 6.4 IF WE ANALYSE THE FACTS OF THE CASE IN THE LIGHT OF AFORESAID DECISIONS OF HONBLE GUJRAT HIGH COURT HONBLE MADRAS DELHI AND RAJASTHAN HIGH COURT WE FIND THAT ADDITIONS OF RS. 54 000/- AND RS. 80 0 00/- MADE BY THE AO WERE PURELY ON ESTIMATE WITHOUT REFERENCE TO ANY SEIZED DOCUMENT. THE LD. DR APPEARING BEFORE US DID NOT REFER US TO ANY SEIZE D MATERIAL IN THIS CONNECTION. THESE ADDITIONS WERE MADE ONLY ON THE BASIS OF STAT EMENTS OF THE ASSESSEE. LIKEWISE ADDITIONS OF RS. 50 983/- AND RS. 65 000/- ON ACCOUNT OF CASH CREDITS AND INVESTMENT IN ARAVALI FINLEASE LTD. WERE MADE W ITHOUT ANY REFERENCE TO SEIZED MATERIAL DETECTED DURING THE COURSE OF SEARC H AND SOLELY ON THE BASIS OF STATEMENT OF THE ASSESSEEE RECORDED ON 15.12.1995 . IN THE BANK ACCOUNT OF THE ASSESSEE SUMMARY OF WHICH IS PLACED ON PAGE 12 OF THE PAPER BOOK NO CASH IS DEPOSITED AND ALL THE AMOUNTS CREDITED ARE THROUGH TRANSFER/CLEARING . AS CONCLUDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THEIR ORDER DATED 1.9.2008 IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI(SUPRA) MER ELY ON THE BASIS OF ADMISSION THE ASSESSEE COULD NOT BE SUBJECTED TO A DDITION UNLESS AND UNTIL SOME CORROBORATIVE EVIDENCE IS FOUND IN SUPPORT OF SUCH ADMISSION. SINCE THE REVENUE HAVE NOT REFERRED US TO ANY SEIZED MATERIAL FORMING BASIS FOR THE AFORESAID ADDITIONS WE ARE NOT INCLINED TO SUSTAIN THESE ADDITIONS. THUS GROUND NOS. 2 4 & 5 IN THE APPEAL ARE ALLOWED. 6.5 AS REGARDS ADDITION OF RS. 1 00 000/- THE SAID ADDITION HAS BEEN MADE ON THE BASIS OF A SEIZED DOCUMENT AS PER ANNEXURE A/1 TO PANCHANAMA DATED 22- 12-1995 AND AS A RESULT OF SUBSEQUENT ENQUIRES FR OM THE VADODRA STOCK EXCHANGE APART FROM ADMISSION OF THE ASSESSEE THAT HE HAD RECEIVED A SUM OF RS.1 LAKH FROM SHRI PN PATEL AT THE RELEVANT TIME FOR TRADING IN SHARES OF NMHL IN THE NAME OF HIS BROTHER-IN-LAW SHRI SC PATEL. SH RI S C PATEL ALSO SUPPORTED THE STATEMENT OF THE ASSESSEE. IN THE LIGHT OF RELEVAN T PROVISIONS OF SEC. 158BB(1) OF THE ACT AND VIEW TAKEN IN THE AFORESAID DECISIONS ESPECIALLY WHEN THE LD. AR DID IT(SS)A NO.81/AHD/2006 10 NOT DISPUTE THE FINDINGS OF THE AO THE SAID ADDITI ON OF RS. 1 LAC IS SUSTAINED. THEREFORE GROUND NO. 3 IN THE APPEAL IS DISMISSED. 7. GROUND NO.6 RELATES TO LEVY OF SURCHARGE OF RS.20 998/-. THERE IS NO DISCUSSION IN THE IMPUGNED ORDER NOR THE LD. AR ON BEHALF OF THE ASSESSEE MADE ANY SUBMISSIONS ON THIS ASPECT. IN RELATION TO LEVY OF SURCHARGE ON THE TAX DETERMINED IN TERMS OF PROVISIONS OF SEC. 113 OF TH E ACT HONBLE APEX COURT IN THE CASE OF SURESH N. GUPTA [2008] 297 ITR 322 (SC) OBSERVED AS UNDER : WE FIND NO MERIT IN THE ABOVE ARGUMENTS. BOTH THE FINANCE ACTS OF 2000 AND 2001 INDICATED THAT A SUBSTANTIVE CHARGE WAS C REATED IN RESPECT OF THE INCOME-TAX TO BE LEVIED. BOTH THESE ACTS PRESCRIBED THE RATES OF SURCHARGE. THE SAID SURCHARGE DID NOT DEPEND FOR ITS LEVIABILITY O N THE ASSESSEE'S LIABILITY TO PAY INCOME-TAX BUT ON THE ASSESSED TAX. THE ASSESSEE HA S RELIED UPON THE ABOVE ANOMALIES IN SUPPORT OF THEIR CONTENTION THAT SUCH ANOMALIES MADE THE CHARGE INEFFECTIVE. IN OUR VIEW SUCH SUBMISSION AMOUNTS T O BEGGING THE QUESTION. ACCORDING TO THE ASSESSEE PRIOR TO JUNE 1 2002 TH E POSITION WAS AMBIGUOUS AS IT WAS NOT CLEAR EVEN TO THE DEPARTMENT AS TO WHICH YEAR'S FINANCE ACT WOULD BE APPLICABLE. TO CLEAR THIS DOUBT PRECISELY THE PROV ISO HAS BEEN INSERTED IN SECTION 113 BY WHICH IT IS INDICATED THAT THE FINANCE ACT O F THE YEAR IN WHICH THE SEARCH WAS INITIATED WOULD APPLY. THEREFORE IN OUR VIEW THE SAID PROVISO WAS CLARIFICATORY IN NATURE. IN TAXATION LEGISLATION O F THE TYPE INDICATED BY THE PROVISO HAS TO BE READ STRICTLY. THERE IS NO QUESTION OF RE TROSPECTIVE EFFECT. THE PROVISO ONLY CLARIFIES THAT OUT OF THE FOUR DATES PARLIAME NT HAS OPTED FOR THE DATE NAMELY THE YEAR IN WHICH THE SEARCH IS INITIATED WHICH DA TE WOULD BE RELEVANT FOR APPLICABILITY OF A PARTICULAR FINANCE ACT. THEREFOR E WE HAVE TO READ THE PROVISO AS IT STANDS. THERE IS ONE MORE REASON FOR REJECTING THE ABOVE SUBMISSION. PRIOR TO JUNE 1 2002 IN SEVERAL CASES TAX WAS PRESCRIBED SOMETIME S IN THE 1961 ACT AND SOMETIMES IN THE FINANCE ACT AND OFTEN IN BOTH. THI S MADE LIABILITY UNCERTAIN. IN THE PRESENT CASE HOWEVER THE RATE OF TAX IN CASE OF BLOCK ASSESSMENT AT 60 PER CENT. WAS PRESCRIBED BY SECTION 113 BUT THE YEAR OF THE FINANCE ACT IMPOSING SURCHARGE WAS NOT STIPULATED. THIS RESULTED IN THE ABOVE FOUR AMBIGUITIES. THEREFORE CLARIFICATION WAS NEEDED. THE PROVISO WA S CURATIVE IN NATURE. HENCE THE PROVISO INSERTED IN SECTION 113 MERELY CLARIFIE S THAT OUT OF THE ABOVE FOUR DATES THE RELEVANT DATE FOR APPLICABILITY OF THE F INANCE ACT WOULD BE THE YEAR IN WHICH THE SEARCH STOOD INITIATED UNDER SECTION 158B C. 7.1 SUBSEQUENTLY HONBLE APEX COURT IN THE CASE OF CIT VS. RAJIV BHATARA 310 ITR 105(SC) HELD THAT THE PROVISO TO SECTION 113 WAS CLARIFICATORY IT(SS)A NO.81/AHD/2006 11 IN NATURE AND SURCHARGE IS LEVIABLE ON THE TAX DET ERMINED IN PURSUANCE TO BLOCK ASSESSMENT. IN THIS VIEW OF THE MATTER ESPECIALLY WHEN THE LD. AR DID NOT POINT OUT ANY INFIRMITY IN THE LEVY OF SURCHARGE WE HA VE NO ALTERNATIVE BUT TO REJECT THE GROUND RAISED BY THE ASSESSEE. 8. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TER MS OF RESIDUARY GROUND NO.7 ACCORDINGLY THIS GROUND IS DISMISSED. 9. IN THE RESULT APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF FEBRUARY 2010. SD/- SD/- (MAHAVIR SINGH) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED :18 TH FEBRUARY 2010 PK/- COPY TO: 1. THE ASSESSEE 2. ACIT CIRCLE-2 BARODA 3. CIT CONCERNED 4. DR D BENCH BY ORD ER DEPUTY REGISTRAR ITAT AHMEDABAD