Jyoti Agarwal, Pune v. ITO, Wd. 2(2), Pune,

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 952/PN/07 (BLOCK ASSTT. YEAR:1990-91 TO 99-2000 & PART OF AY 2000-01) SMT JYOTI AGARWAL .. APPELLANT C/O STERLITE INDUSTRIES (I) LTD 4 TH FLOOR GODEJ MILLINIUM KOREGAON PARK PUNE PAN ACNPA0718H VS. INCOME-TAX OFFICER RESPONDENT WARD 2(2) PUNE APPELLANT BY : SMT SOUMITRA CHOUDHURY RESPONDENT BY : SHRI HEMANTKUMAR C LEUVA ORDER PER G.S. PANNU A.M: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) II PUNE DATE D 17.05.2007 WHICH IN TURN HAS ARISEN FROM ORDER OF THE ASSESSING OFFICE R DATED 31.3.2004 PASSED UNDER SECTION 158BC(C)/158BD OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT) PERTAINING TO THE BLOCK PERIOD: 01.04.1989 T O 08.12.1999 (ASSESSMENT YEAR 1990-91 TO 1999-2000 & PART OF 2000-01). 2. THE FIRST ISSUE RAISED IN THIS APPEAL BY THE ASS ESSEE RELATES TO THE ADDITION OF RS 8 50 181/- MADE ON ACCOUNT OF PEAK I NVESTMENT IN SHARES ON THE BASIS OF THE ENTRIES AS RECORDED IN THE DIARY. THE RELEVANT FACTS IN BRIEF ARE THAT DURING THE COURSE OF A SEARCH CONDUCTED IN THE CASE OF STERLITE GROUP AND CONSEQUENTIAL SEARCH OPERATION AT THE PREMISES OF SHRI PRAVIN AGARWAL ON 8.12.1999 INVENTORY OF VARIOUS BOOKS OF ACCOUNT AN D OTHER DOCUMENTS WERE PREPARED. AS PER ANNEXURE A-1 CONTAINING 13 PAGES A ND DIARY AS ANNEXURE A- 2 SEIZED IT WAS OBSERVED THAT SEVERAL SHARE TRANSA CTIONS WERE NOTED THEREIN. ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 2 THE ASSESSEE BY AN AFFIDAVIT DATED 26.12.2001 AFFIR MED THE OWNERSHIP OF THE DIARY BESIDES AFFIRMING THAT WRITING OF THE DIARY WAS HER HOBBY AND PASTIME AND THEY WERE SCRIBBLINGS AND WERE NOT IN THE NATUR E OF ANY MONETARY TRANSACTION AND ALSO NOT CORROBORATED BY ANY SECOND ARY EVIDENCE. IN THE AFFIDAVIT THE ASSESSEE ALSO ACKNOWLEDGED THE OWNER SHIP OF THE LOOSE SHEETS CONTAINING 13 PAGES AND AFFIRMED THAT EXCEPT PAGE-5 OF THE LOOSE SHEET WHICH WAS A COMPUTERIZED ACCOUNT STATEMENT IN RESPECT OF LOAN ACCOUNT WITH M/S RAMANAND RAMPAROSAD THE OTHER PAPERS WERE NOT IN T HE NATURE OF ANY MONETARY TRANSACTION AS THEY WERE SCRIBBLING AND T HEREFORE THEY COULD NOT BE CORROBORATED BY ANY SECONDARY EVIDENCE. IN FURTHER AFFIDAVIT SWORN IN ON 23.1.2002 THE ASSESSEE ACKNOWLEDGED THE LOOSE PAPE RS AS HER OWN HANDWRITING AND FURNISHED EXPLANATION. THE ASSESSEE WAS ALSO ASKED TO OFFER HER EXPLANATION REGARDING ENTRIES IN THE SEIZED DOC UMENTS AS ANNEXURES A-1 AND A-2. THE ASSESSEE SUBMITTED THAT THE NOTINGS MA DE IN THE ABOVE SEIZED DOCUMENTS WERE SCRIBBLINGS AND IT WAS HER ACCOUNTIN G PRACTICE. SHE HOWEVER DID NOT OFFER PAGE-WISE EXPLANATION WITH ANY CORROB ORATE EVIDENCE ON THE PLEA THAT ALL THE ENTRIES WERE SCRIBBLINGS. THE ASSESSIN G OFFICER ON PERUSAL OF THE DIARY FOUND THAT ON DIFFERENT PAGES FULL DETAILS OF SHARE TRANSACTIONS TOGETHER WITH THEIR PURCHASE PRICE SALE PRICE AND IN SOME C ASES DATES OF SENDING THEM FOR TRANSFER HAD BEEN WRITTEN. ACCORDING TO THE ASS ESSING OFFICER HAD THESE BEEN SCRIBBLINGS AS CLAIMED BY THE ASSESSEE THEN S UCH DETAILS WOULD NOT HAVE BEEN POSSIBLE. ON THESE FACTS AMONGST OTHERS THE ASSESSING OFFICER HELD THE ENTRIES IN THE DIARY AS ACTUAL SHARE TRANS ACTIONS AND NOT SCRIBBLINGS AS CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER ALSO HELD THAT SINCE THE ASSESSEE HAD CLAIMED OWNERSHIP OF THE LOOSE SHEETS AND ALSO ACCEPTED THE HANDWRITING IN THE DIARY AS HER OWN THE SUBMISSION OF THE ASSESSEE THAT THEY WERE SCRIBBLING CANNOT BE ACCEPTED AS THE ASSESSEE HAD MADE NOTINGS ON THE ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 3 SEIZED DOCUMENTS A-1 AND A-2 OF HER UNACCOUNTED SHA RE TRANSACTIONS AS WELL AS HOUSE-HOLD EXPENSES. 3. ON THE ABOVE FACTS THE ASSESSING OFFICER FINALI ZED THE BLOCK ASSESSMENT UNDER SECTION 158BC/158BD OF THE ACT BY MAKING VARIOUS ADDITIONS WHICH RESULTED IN ASSESSMENT OF A TOTAL UNDISCLOSED INCOME OF RS 33 22 590/- AS AGAINST RETURNED TOTAL UNDISCLOSED I NCOME OF RS 2 14 340/-. THE ASSESSEE TOOK UP THE MATTER IN APPEAL WITH THE COMM ISSIONER OF INCOME-TAX (APPEALS). BEFORE THE COMMISSIONER OF INCOME-TAX (A PPEALS) THE ASSESSEE AT THE FIRST INSTANCE CHALLENGED THE VARIOUS ADDITIONS BY MAKING WRITTEN SUBMISSIONS. THE COMMISSIONER OF INCOME-TAX (APPEAL S) FORWARDED THE WRITTEN SUBMISSIONS OF THE ASSESSEE TO THE ASSESSIN G OFFICER WITH DIRECTIONS TO SEND A REMAND REPORT. THE ASSESSING OFFICER ACCORD INGLY SUBMITTED HIS COMMENTS ON THE WRITTEN SUBMISSIONS OF THE ASSESSEE . IN THE MEANWHILE THE ASSESSEE FILED FOLLOWING TWO ADDITIONAL GROUNDS BEF ORE THE COMMISSIONER OF INCOME-TAX (APPEALS): 1) WITHOUT PREJUDICE THE AO HAS ERRED ON FACTS AN D IN LAW IN CONSIDERING THE ENTIRE AMOUNT OF INVESTMENTS IN SHARES AS RECORDED IN THE DIARY AS AGAINST THE PEAK INVESTMENT AND THEREBY IGNORED THE FACT THAT T HE SAME FUNDS COULD HAVE BEEN ROTATED FOR MAKING INVESTMENT IN SHARES AS REC ORDED IN THE DIARY. 2) WITHOUT PREJUDICE FOR THAT ON THE FACTS AND CIR CUMSTANCES OF THE CASE THE PEAK INVESTMENT BE CONSIDERED WHILE CONSIDERING THE ENTRIES AS RECORDED IN THE DIARY. IN VIEW OF THE ABOVE ADDITIONAL GROUNDS THE COMMIS SIONER OF INCOME-TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO VERIFY THE PEAK INVESTMENT AND SUBMIT A REPORT. ACCORDINGLY THE ASSESSING OFFICER VERIFIED THE PEAK INVESTMENT IN SHARES AS PER PAGES 5 6 & 7 OF THE D IARY CONTAINING PAGES 1 TO 13 SEIZED DURING THE COURSE OF SEARCH AND WORKED OU T THE SAME AT RS 8 13 024.90 FOR THE PERIOD 7.4.1992 TO 1.4.1994. SI NCE THE ASSESSING OFFICER OMITTED TO CONSIDER CERTAIN ENTRIES WHILE WORKING O UT THE PEAK THE COMMISSIONER OF INCOME-TAX (APPEALS) AGAIN ASKED TH E ASSESSING OFFICER TO SUBMIT HIS REPORT. THE ASSESSING OFFICER AFTER CO NSIDERING THE INVESTMENTS MADE IN SHARES OF ADARSH CHEMICALS OF RS 37 157/- JINDAL IRON OF RS 61 521/- ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 4 RELIANCE INDUSTRIES OF RS 39 011/- INDIAN RAYON & INDUSTRIES OF RS 43 031/- ADARSH CHEMICALS OF RS 36 088/- TOTALING TO RS 2 16 808/- WORKED OUT THE PEAK INVESTMENTS AT RS 10 29 832/-. WHEN THE ABOVE REPORTS WERE CONFRONTED TO THE ASSESSEE IT WAS STATED THAT THE FIGURE OF P EAK INVESTMENT GIVEN BY THE ASSESSING OFFICER EARLIER AT RS 8 13 024/- WAS CORR ECT AND THE REVISED FIGURE SHOULD NOT BE TAKEN. THE COMMISSIONER OF INCOME-TAX (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE SUSTAI NED AN ADDITION OF RS 8 50 181/- OUT OF TOTAL ADDITION OF RS 22 39 760/- BY HOLDING AS FOLLOWS: I HAVE GONE THROUGH THE ORDERS OF THE A.O SUBMISS IONS OF THE APPELLANT AS ALSO THE REMAND REPORTS OF THE A.O. THE APPELLANT APPEARS TO HAVE ONLY ONE PANACEA FOR ALL THE TRANSACTIONS TO STATE THAT VARIOUS PAGE NUMBERS OF THE DIARY WERE NOT REAL TRANSACTIONS AND HAD NOT RELATIONSHIP WITH ANY INVE STMENT MADE. AS NO PHYSICAL SHARE CERTIFICATE/BROKER NOTES IN SUPPORT OF THE SHARES S AID TO HAVE BEEN PURCHASED WERE FOND AT THE TIME OF SEARCH NO ADDITION COULD HAVE BEEN MADE ON THE BASIS OF MERE SCRIBBLING WITHOUT ANY CORROBORATIVE EVIDENCE. THE APPELLANT RELIES UPON A FEW CASE LAWS RENDERED ON ENTIRELY DIFFERENT CIRCUMSTANCES. IT IS UNDISPUTED THAT THE WORDS BOUGHT JAMA ADVANCE PAID CLEAR REMAINI NG NO. OF SHARES HELD ON CASTROL SOLD CASH SALE COLGATE SOLD SHARE INDO GUL F SOLD SHARE SENT FOR TRANSFER AND THE DATE OF PURCHASES OF VARIOUS SHARES WERE FOUND WRITTEN ALL OVER THE DIARY. ON THE BASIS OF THE ENTRIES IN THE DIARY IT IS BEYOND ANY DOUBT THAT THE APPELLANT HAS INDULGED IN PURCHASE AND SALE OF SHARES OUTSIDE THE BOOKS OF ACCOUNT FOR WHICH ENTRIES WERE MADE IN THE DIARY SEIZED. AS PER THE PROVISIONS OF SECTION 132 (4A) OF THE INCOME-TAX ACT 1961 A PRESUMPTION IS AVAILABLE AGAINST THE AP PELLANT THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOUND IN THE P OSSESSION OR CONTROL OF THE APPELLANT ARE TRUE. THE APPELLANT HAS NOT BEEN ABLE TO REBUT THE PRESUMPTION BY JUST STATING THAT AS NO PHYSICAL SHARE CERTIFICATES/BROK ER NOTES WERE FOUND DURING SEARCH THEREFORE THOSE WERE NOT REAL TRANSACTION. HOWEVER I AGREE WITH THE CONTENTION OF THE APPELLANT THAT IN ANY CASE A PEAK OF THE INVESTMENT WOULD HAVE TO BE FOUND OUT FOR THE PERIOD 7.4.92 TO 1.4.94 WHICH WAS CALCULATED ON 8 1 3 024/-. EVEN THOUGH THE ASSESSING OFFICER WAS ASKED TO CONSIDER A FEW ENTRI ES APPEARING ON PAGE NO. 6 & 7 OF THE SEIZED MATERIAL I AGREE WITH THE APPELLANT TO SOME EXTENT THAT DIFFERENCE IN THE PEAK FIGURE WAS ON ACCOUNT OF ENTRIES IN RESPECT OF SOME SHARES IN THE DIARY WHICH ARE IDENTICAL IN NAME AND NUMBER. IT IS FOUND THAT IN R ESPECT OF ADARSH CHEMICALS SHARES THE DATES OF PURCHASE TALLIED BUT NUMBERS DO NOT TA LLY AND THEREFORE THE PEAK INVESTMENT FOUND BY THE A.O AT RS 8 13 024/- HAS TO BE INCREASED BY 37 157/-. ON THE BASIS OF THE ABOVE THE ADDITION TO THE EXTENT OF R S 8 50 181/- IS SUSTAINED OUT OF ADDITION OF RS 22 38 760/-. THE GROUND NO. 6 TO 52 ARE DISPOSED OF ACCORDINGLY. AGAINST THE AFORESAID ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS PRIMARILY REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES. ACCORDING TO THE APPELLANT NO ADDITION WAS JUSTIFIED MERELY ON THE BASIS OF ENTRIES RECORDED IN THE SEIZED DIARY INASMUCH AS NO SHARES OR BROKER N OTES ETC. WERE FOUND WHICH WOULD INDICATE ACTUAL SHARE DEALINGS BY THE A SSESSEE. ACCORDING TO THE ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 5 LEARNED COUNSEL THE DIARY SEIZED WAS A DUMB DOCUME NT AND THEREFORE NOTINGS MADE THEREIN CANNOT BE CONSTRUED AS AN INCO ME WITHIN THE MEANING OF SECTION 158BC OF THE ACT. IN THE ALTERNATIVE IT IS ALSO SUBMITTED THAT ONLY PEAK OF THE INVESTMENT MADE IN THE TRANSACTIONS NOTED IN THE DIARY BE ADDED AS UNDISCLOSED INCOME. 5. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS DEFENDED THE ORDERS OF THE AUTHORITIES BELOW BY POINTING OUT THAT THE ASSESSEE HAS NOT DENIED TH E OWNERSHIP OF THE DIARY AND HAS ALSO ADMITTED THAT THE SAME WAS IN THE HAND WRITING OF THE ASSESSEE. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIV E THE BURDEN WAS ON THE ASSESSEE TO ESTABLISH THAT THE TRANSACTIONS NOTED I N THE DIARY WERE IMAGINARY OR WERE MERE SCRIBBLINGS WHICH HAS NOT BEEN DONE. IN NUTSHELL THE ADDITION SUSTAINED BY THE COMMISSIONER OF INCOME-TAX (APPEAL S) HAS BEEN DEFENDED BY THE DEPARTMENTAL REPRESENTATIVE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. IN THIS CASE THE CRUX OF THE CONTROVERSY REVOLVES AROUND THE TRANSAC TIONS FOUND NOTED BY THE ASSESSEE IN HER OWN HAND-WRITING IN A DIARY SEIZED DURING THE COURSE OF SEARCH. THE CLAIM OF THE ASSESSEE WAS THAT THE TRAN SACTIONS NOTED IN THE DIARY WERE NOT REAL TRANSACTIONS AND WERE MERE SCRIBBLING S. THE CLAIM OF THE ASSESSEE WAS THAT NO SHARES CERTIFICATES OR BROKER NOTES CORRESPONDING TO THE TRANSACTIONS NOTED IN THE DIARY WERE FOUND AND THE REFORE THE ENTRIES IN THE DIARY DID NOT REFLECT REAL TRANSACTIONS. IN OUR CON SIDERED OPINION THE AFORESAID CONTENTIONS OF THE ASSESSEE HAVE BEEN DULY APPRECIA TED BY THE LOWER AUTHORITIES. IN PARAGRAPH 6.2 OF THE ORDER OF THE C OMMISSIONER OF INCOME-TAX (APPEALS) WHICH WE HAVE EXTRACTED IN THE EARLIER P ART OF THIS ORDER IT IS CLEARLY BROUGHT OUT THAT THE TERMINOLOGIES USED TO DENOTE T HE TRANSACTIONS IN THE DIARY DO NOT REFLECT THAT THEY WERE IMAGINARY ENTRIES. MO REOVER THE DISCUSSION IN THE ASSESSMENT ORDER CLEARLY BRINGS OUT THAT THE ASSESS EE HAS REFLECTED SHARE ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 6 TRANSACTIONS IN THE REGULAR BALANCE SHEETS FILED FO R THE ASSESSMENT YEARS UNDER CONSIDERATION THUS IT SHOWS THAT THE ACTIVIT Y OF SHARE DEALINGS IS NOT ALIEN TO ASSESSEE. UNDER THESE CIRCUMSTANCES WE FI ND THAT THE MATERIAL ON RECORD HAS BEEN APPROPRIATELY APPRECIATED BY THE LO WER AUTHORITIES TO JUSTIFY THE ADDITION. MOREOVER ONCE THE ASSESSEE DOES NOT DENY OWNERSHIP AND HAND-WRITING OF THE TRANSACTIONS NOTED IN THE DIARY THE BURDEN SHIFTS ON THE ASSESSEE TO PROVE THAT THE ENTRIES NOTED THERE DO N OT REFLECT REAL TRANSACTION. THE SAID BURDEN IN OUR VIEW HAS NOT BEEN DISCHARG ED BY THE ASSESSEE ON THE BASIS OF ANY COGENT MATERIAL. HENCE IN PRINCIPLE WE UPHOLD THE STAND OF THE LOWER AUTHORITIES IN THIS REGARD. IN SO FAR AS ALTE RNATIVE PLEA OF THE ASSESSEE OF SUSTAINING THE ADDITION ONLY ON ACCOUNT OF PEAK INV ESTMENT IN SHARES IS CONCERNED WE FIND THAT THE ADDITION HAS BEEN SUSTA INED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ONLY ON THE BASIS OF THE PE AK OF THE INVESTMENT FOR THE PERIOD UNDER CONSIDERATION. THUS THE ALTERNATIVE A RGUMENT OF THE ASSESSEE IS MIS-CONCEIVED. IN THIS VIEW OF THE MATTER ON THE F IRST ISSUE ASSESSEE HAS TO FAIL. 7. THE NEXT ISSUE RELATES TO AN ADDITION OF RS 3 91 000/- SUSTAINED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) OUT OF ADDITIO N OF RS 5 41 000/- MADE BY THE ASSESSING OFFICER ON THE BASIS OF ENTRIES R ECORDED IN PAGE NO.13 OF THE DIARY. ON VERIFICATION OF PAGE 13 OF THE SEIZED D IARY THE ASSESSING OFFICER NOTICED THAT THE SAID PAGE INDICATED EXPENSES AMOUN TING TO RS 5 41 000/- WHICH WERE NOT REFLECTED EITHER IN THE BOOKS OF ACC OUNT OF M/S UNIVERSAL FLORITECH ASSESSEES PROPRIETARY CONCERN OR IN TH E PERSONAL CASH FLOW STATEMENTS OF THE ASSESSEE. NO DATES HAD ALSO BEEN MENTIONED AGAINST THE EXPENDITURE. IN ABSENCE OF ANY CORROBORATIVE EVIDEN CE AND SOURCE OF EXPENDITURE THE ASSESSING OFFICER ADDED THE SUM OF RS 5 41 000/- IN THE ASSESSMENT YEAR 2000-01 AS UNEXPLAINED EXPENDITURE INCURRED FROM UNDISCLOSED INCOME. ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 7 8. IN APPEAL IT WAS SUBMITTED BEFORE THE COMMISSIO NER OF INCOME-TAX (APPEALS) THAT THE ENTRIES ON PAGE 13 OF THE SEIZED DIARY BASED ON WHICH THE ADDITION WAS MADE WERE IN RELATION TO THE PROVISION TO WRITE TELEPHONES NAME AND ADDRESS IN THE DIARY AND THESE NOTINGS HAD NO C ONNECTION WITH THE EXPENSES HAVING BEEN INCURRED AND/OR DATE OF INVEST MENT. BESIDES THERE WERE OVERWRITING AND FIGURES HAD BEEN CUT AND OVERW RITTEN SEVERAL TIMES. THE COMMISSIONER OF INCOME-TAX (APPEALS) CALLED FOR A R EMAND REPORT FROM THE ASSESSING OFFICER. IN REPLY TO THE REMAND REPORT T HE ASSESSEE FURTHER CONTENDED THAT IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE THE ADDITION WAS WRONGLY AND ILLEGALLY MADE. WITHOUT PREJUDICE TO TH E ABOVE CONTENTIONS IT WAS PLEADED THAT THE ASSESSEES PEAK INVESTMENT ALREADY CALCULATED COULD BE CONSIDERED TO BE CASH AVAILABLE OUT OF WHICH THE I NVESTMENT OF RS 5 41 000/- WAS MADE. 9. THE ABOVE SUBMISSIONS DID NOT FIND FAVOUR WITH T HE COMMISSIONER OF INCOME-TAX (APPEALS). HE FOUND NO FORCE IN THE ASSE SSEES CONTENTION THAT THE ADDITION WAS MADE ONLY ON THE BASIS OF PRESUMPTION. THE COMMISSIONER OF INCOME-TAX (APPEALS) PERUSED THE ENTRIES MADE IN PA GE13 OF THE SEIZED DIARY AND FROM THE DETAILS CONTAINED THEREIN HE NOTICED THAT AN AMOUNT OF RS 1 50 000/- WAS RECEIVED BY THE ASSESSEE FROM BABUJ I. AS PER THE COMMISSIONER OF INCOME-TAX (APPEALS) THIS AMOUNT O F RS 1 50 000/- WHICH WAS OBVIOUSLY GIVEN BY BABUJI COULD NOT BE ADDED AS UNEXPLAINED EXPENDITURE. HE ACCORDINGLY SUSTAINED AN ADDITION OF RS 3 91 000/- OUT OF RS 5 41 000/- MADE BY THE ASSESSING OFFICER. STILL AGG RIEVED ASSESSEE IS IN APPEAL BEFORE US. 10. ON THIS ASPECT THE LEARNED COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE ADDITION HAS BEEN MADE ON THE BASIS OF MERE SUSPICI ON AND SURMISES AND THERE WAS NO CORROBORATING EVIDENCE TO SHOW THAT AN Y UNEXPLAINED EXPENDITURE WAS MADE BY THE ASSESSEE. ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 8 11. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE HAS DEFENDED THE ORDERS OF THE AUTHORITIES BELOW IN SUP PORT OF THE CASE OF THE REVENUE. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. THE ADDITION ON THIS ASPECT HAS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF CERTAIN ENTRIES FOUND RECORDED IN THE DIARY SEIZED WHICH A CCORDING TO HIM REFLECTED UNRECORDED EXPENDITURE INCURRED BY THE ASSESSEE. TH E COMMISSIONER OF INCOME-TAX (APPEALS) GAVE A PARTIAL RELIEF OUT OF A SUM OF RS 1 50 000/- BY HOLDING THAT THE SAID SUM REFLECTED AMOUNTS RECEIVE D FROM BABUJI AND THE SAME WOULD NOT CONSTITUTE EXPENDITURE AND ACCORDING LY HE DELETED THE ADDITION TO THAT EXTENT. OUT OF THE TOTAL ADDITION OF RS 5 4 1 000/- ASSESSEE HAS CHALLENGED THE ADDITION OF RS 3 91 000/- BEFORE US WHICH HAS BEEN CLAIMED TO BE SUSTAINED BY THE COMMISSIONER OF INCOME-TAX (APP EALS). BEFORE PROCEEDING FURTHER WE FIND THAT THE COMMISSIONER O F INCOME-TAX (APPEALS) HAS ALLOWED FURTHER RELIEF TO THE ASSESSEE BY NOTIC ING THAT OUT OF THE PEAK INVESTMENT IN SHARE TRADING OF RS 8 50 181/- A SUM OF RS 2 83 100/- WAS AVAILABLE WITH THE ASSESSEE AND TO THAT EXTENT UNE XPLAINED EXPENDITURE HAS BEEN REDUCED. THUS OUT OF THE TOTAL ADDITION OF RS 5 41 000/- ADDITION OF RS 1 08 000/- ALONE HAS BEEN SUSTAINED BY THE COMMISSI ONER OF INCOME-TAX APPEALS). FOR THE AFORESAID REASON WE THEREFORE FIND NO REASONS FOR THE ASSESSEE TO ASSAIL THE ADDITION OF RS 3 91 000/- A S STATED IN THE MEMO OF APPEAL. ON FACTS ALSO WE FIND THAT THE COMMISSION ER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN NOTICING THAT THE ENTRIES FOUND RECORDED IN THE DIARY HAVE NOT BEEN ADEQUATELY EXPLAINED AND THEREFORE SAME CONSTITUTED UNEXPLAINED EXPENDITURE AND THEREFORE TO THE EXTENT OF RS 1 0 8 000/- THE ADDITION SUSTAINED BY THE COMMISSIONER OF INCOME-TAX (APPEAL S) IS HEREBY AFFIRMED. THUS ON THIS GROUND ALSO THE ASSESSEE FAILS. ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 9 13. THE NEXT ISSUE RELATES TO THE ADDITIONS OF RS 3 4 466/- AND RS 27 050/- REPRESENTING EXPENSES AS RECORDED IN THE LOOSE PAPE RS FOUND AT THE TIME OF SEARCH. FROM PAGE 2 OF THE SEIZED DIARY THE ASSESS ING OFFICER NOTED MONTH- WISE PAYMENT TOTALING TO RS 34 466/-. THE ASSESSEE COULD NOT OFFER ANY EXPLANATION ON THIS ASPECT EXCEPT STATING THAT THE NOTINGS WERE JUST SCRIBBLINGS. CONSIDERING THE SIZE OF ASSESSEES FAM ILY AND THEIR STATUS OF LIVING THE ASSESSING OFFICER HELD THAT THE DRAWINGS WERE L OW. HE THEREFORE CONCLUDED THAT THE ABOVE EXPENSES OF RS 34 466/- WE RE FROM UNDISCLOSED SOURCES AND ACCORDINGLY ADDED THIS AMOUNT TO THE UNDISCLOSED INCOME OF THAT ASSESSEE IN ASSESSMENT YEAR 1999-2000. 14. IN APPEAL THE COMMISSIONER OF INCOME-TAX (APPE ALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS THE REMA ND REPORT OF THE ASSESSING OFFICER DECLINED TO ACCEPT THE PLEA OF T HE ASSESSEE THAT THE ENTRIES WERE ONLY SCRIBBLINGS AND NOT THE ACTUAL EXPENDITUR E. HE FURTHER HELD THAT BY MERELY STATING THAT THE ENTRIES MADE ARE MERE SCRIB BLINGS THE PRESUMPTION DRAWN BY THE ASSESSING OFFICER IS NOT REBUTTED IN T HE INSTANT CASE. THE COMMISSIONER OF INCOME-TAX (APPEALS) ALSO REJECTED THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT THE IMPUGNED EXPENDITURE IS CO VERED BY THE PEAK AMOUNT AVAILABLE. FOR ALL THESE REASONS THE COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMED THE ADDITION OF RS 34 466/-. 15. THE FACTS RELATING TO THE ADDITION OF RS 27 050 /- BEING IDENTICAL TO THOSE IN RESPECT TO THE ADDITION OF RS 34 466/- THE COMM ISSIONER OF INCOME-TAX (APPEALS) FOR THE REASONS GIVEN THEREIN CONFIRMED THE ADDITION OF RS 27 050/- AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEF ORE US. 16. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW TO CO NTEND THAT THE ENTRIES IN RESPECT OF THE AFORESAID EXPENSES WERE MERE SCRIBBL INGS AND NOT ACTUAL EXPENDITURE. ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 10 17. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 18. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFUL LY WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INC OME-TAX (APPEALS) ON THIS ASPECT. THE COMMISSIONER OF INCOME-TAX (APPEALS) HA S JUSTIFIABLY REJECTED THE ASSESSEES ALTERNATIVE CONTENTION THAT THE EXPENDIT URE SHOULD BE SET OFF AGAINST THE PEAK AMOUNT OF CASH AVAILABLE WITH HER AS THE PEAK CASH HAS ALREADY BEEN SET OFF AGAINST VARIOUS OTHER ADDITION S. IN THIS VIEW OF THE MATTER WE AFFIRM THE ORDER OF THE COMMISSIONER OF INCOME-T AX (APPEALS) IN RESPECT OF THE IMPUGNED ADDITIONS. THE ASSESSEE FAILS ON THIS ASPECT. 19. THE LAST GROUND RELATES TO AN ADDITION OF RS 75 000/- AND RS 19 100/- MADE ON THE BASIS OF ENTRIES AS RECORDED IN A SMALL PIECE OF PAPER SEIZED DURING THE SEARCH. THE ASSESSING OFFICER NOTED THA T PAGE 8 OF THE SEIZED DIARY CONTAINED DETAILS OF PAYMENTS TO KIRAN BABI RS 25 0 00/- RS 35 000/- TO INDIRABAI AND RS 50 000/- TO SHRUTI KARNANI. SINCE THESE PAYMENTS BORE NO DATES THE TOTAL OF THESE SUMS AMOUNTING TO RS 1 10 000/- WAS ADDED AS UNDISCLOSED INCOME IN THE ASSESSMENT YEAR 2000-01. 20. IN APPEAL THE COMMISSIONER OF INCOME-TAX (APPE ALS) THE ASSESSEE CONTENDED THAT SINCE NO STATEMENT OF THE RECIPIENTS WAS RECORDED BY THE ASSESSING OFFICER NO ADDITION WAS LIABLE TO BE MAD E. FURTHER IN THE ALTERNATIVE IT WAS CONTENDED THAT PEAK AMOUNT OF C ASH AVAILABLE WITH THE ASSESSEE SHOULD BE SET OFF AGAINST THE IMPUGNED EXP ENDITURE. THE COMMISSIONER OF INCOME-TAX (APPEALS) AFTER CONSIDE RING THE SUBMISSIONS OF THE ASSESSEE AS ALSO PERUSING THE RECORD CAME TO T HE CONCLUSION THAT AN AMOUNT OF RS 75 000/- COULD ONLY HAVE BEEN ADDED BY THE ASSESSING OFFICER AND NOT RS 1 10 000/- AS WAS DONE BY THE ASSESSING OFFICER. HE ACCORDINGLY CONFIRMED THE ADDITION TO THE EXTENT OF RS 75 000/- . THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 11 21. AS REGARDS THE ADDITION OF RS 19 100/- THE FAC TS ARE THAT THE ASSESSING OFFICER NOTED THAT PAGE 11 OF THE SEIZED DIARY CONT AINED DETAILS OF PAYMENT OF RS 10 000/- TO SHRUTI KAMANI AS ADVANCE AGAINST ORN AMENTS AND THE BALANCE EXPENSES OF RS 9 100/- WERE OF VARIOUS NATURE. THE ASSESSEE WAS NOT ABLE TO PROVIDE NECESSARY DETAILS AS REQUIRED BY THE ASSESS ING OFFICER AND THEREFORE HE ADDED THE AMOUNT OF RS 19 100/- TO THE UNDISCLOS ED INCOME FOR THE ASSESSMENT YEAR 2000-01. 22. IN APPEAL THE COMMISSIONER OF INCOME-TAX (APPE ALS) DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE THAT THE IMPUGNED EXPEND ITURE WAS MERE SCRIBBLINGS AND NOT ACTUAL EXPENDITURE. THE COMMISS IONER OF INCOME-TAX (APPEALS) ALSO DID NOT AGREE WITH THE ASSESSEES AL TERNATIVE SUBMISSION THAT THE PEAK AMOUNT OF CASH AVAILABLE WITH THE ASSESSEE SHOULD BE SET OFF AGAINST THE EXPENDITURE. HE ACCORDINGLY CONFIRMED THE ADDIT ION OF RS 19 100/- MADE BY THE ASSESSING OFFICER. THE ASSESSEE HAS CHALLEN GED BOTH THE ADDITIONS IN APPEAL BEFORE US. 23. THE LEARNED COUNSEL FOR THE APPELLANT HAS ASSAI LED BOTH THE ABOVE ADDITIONS BY MAKING SIMILAR SUBMISSIONS AS WERE MAD E BEFORE THE AUTHORITIES BELOW. 24. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDERS OF THE LOWER AUTHORITIES IN SUPPORT OF T HE CASE OF THE REVENUE. 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. WE FIND THAT AFTER CONSIDERING THE REMAND REPORT OF THE ASSESSING OFFI CER AS WELL AS THE SUBMISSIONS OF THE ASSESSEE THE COMMISSIONER OF IN COME-TAX (APPEALS) HAS GIVEN A PARTIAL RELIEF OF RS 35 000/- OUT OF TOTAL ADDITION OF RS 1 10 000/- THUS SUSTAINING AN ADDITION OF RS 75 000/-. AS REGARDS T HE OTHER ADDITION OF RS 19 100/- THE ADDITION WAS AFFIRMED BY THE COMMISSI ONER OF INCOME-TAX (APPEALS) AS THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY CORROBORATIVE EVIDENCE IN SUPPORT OF THE PAYMENTS. ON BOTH THESE COUNTS WE ARE IN FULL ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 12 AGREEMENT WITH THE FINDINGS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND ACCORDINGLY AFFIRM HIS DECISION. THE ASSESSEE FAI LS ON THE LAST GROUND OF APPEAL. 26. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON THIS 23RD FEBRUARY 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMB ER PUNE DATED:23RD FEBRUARY 2011 COPY TO:- 1) SMT JYOTI AGARWAL PUNE 2) THE ITO WD-2(2) PUNE 3) THE CIT (A)-II PUNE 4) THE CIT-II PUNE 5) THE DEPARTMENTAL REPRESENTATIVE B BENCH I.T.A.T. PUNE. BY ORDER TRUE COPY ASST. REGISTRAR I.T.A.T. PUNE B ITA NO 952/PN/07 SMT JYOTI AGARWAL PUNE 13