ORDERS
Shri B.L. Chhibber, A.M.
I ORDERS
The assessee is a firm duly registered under the Partnership Act. Shri Kisanrao M. Khopade is one of the partners. Search and seizure action under section 132(1) of the Income tax Act, 1961 was taken in the Khopade Group of cases including the present assessee. Accordingly, assessment in the case of the assessee was completed under section 158BC, read with section 143(3) of the Act for the block period 1-4-1986 to 29-11-1996.
2.Three grounds have been raised. The same are discussed and disposed of as follows :
3. Ground No. 1 : This ground challenges the validity of the assessment was not given inter alia, on the ground that adequate opportunity was given. At the time of hearing, this ground was not pressed. The same is accordingly dismissed.
4. Ground No. 2 : In this ground an addition of Rs. 2,32,204 from plot business for different assessment years has been challenged. The impugned addition has been made on assumption of profit on average rate basis on sale of plots. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Ground No. 2 in the case of Khopade Kisanrao Manikrao (IT (SS) Appeal No. 281 (Pune) of (1997) (2000) 18 DTC 540 (Pune-Trib) (TM) : (2000) 74 ITD 25 (Pune-Trib)(TM). As such, the decision given by us in our aforesaid order will apply mutatis mutandis to the facts of the present case. For the detailed reasons given in our order in the case of Khopade Kisanrao Manikrao (supra) we allow this ground in part. The assessing officer is directed to restrict the additions in this regard to the extent of “Excess money” actually found to have been charged on the basis of seized material.
5. Ground No. 3 : This ground reads as under:
“The appellant craves leave to add, alter or amend the grounds of appeal”
Obviously, this ground is general in nature and calls for no comments.
6. In the result, the appeal is allowed in part.
7. Singhal (Judicial Member)-After going through the proposed order of my learned brother very carefully, I have not been able to persuade to agree with the conclusion reached by him in respect of Ground No. 4 which relate to the addition of Rs. 2,32,204 on account of excess, money charged by the assessee on the sale of plots in the block period for the reasons given by me hereafter.
8. The conclusion arrived at by my learned brother is that there is no scope of estimation of undisclosed income under the provisions of Chapter XIV-B and on the facts of the case. The conclusion is based on the following reasons:-
(a) The Legislature has not made the provisions of section 145 applicable to search cases assessable under Chapter XIV-B. Though section 143 and 144 are made applicable by section 158BC specifically, there is no reference to section 145. Hence, section 145 cannot be invoked even by implication.
(b) In the absence of application of section 145 there is no scope of estimation of undisclosed income under section 143.
(c) The seized materials consisting of Bharna Register, Diaries and Loose Papers are the complete record of unaccounted transactions and therefore, the undisclosed income has to be restricted to the amounts mentioned in the seized material regarding excess money charged by the assessee on the sale of plots. According to him, this is the record which was maintained by him for his personal knowledge and information and therefore, according to the human probabilities, it is to be considered as true and correct of his undisclosed income.
(d) No defect has been found in the cash flow statement prepared by the assessee on the basis of the entries in the Bharna Register, Diaries and Loose-papers except the minor discrepancy.
9. The controversies which have arisen before us are the following
(1) Whether there is any scope of estimation of undisclosed income under the provisions of Chapter XIV-B.
(2) If yes, is there any justification for making estimate of the undisclosed income on the facts of the case ?
(3) if , yes, then what should be the quantum of estimate of the undisclosed income ?
10. This controversy has arisen in the case of Khopade Kisanrao Manikrao (supra) who is a family member of the present assessee. Since facts are identical, my reasonings of dissent as given in the order of the aforesaid assessee dated 9-2-1999, would apply in the present case. Consequently, I set aside the order of the assessing officer on this issue and restore the matter for fresh adjudication in accordance with the guidance given in the aforesaid order.
11. Except as stated above, I agree with the proposed order.
ORDER UNDER SECTION 255(4) OF THE INCOME TAX ACT, 1961
As, there is a difference of opinion between the Accountant Member and the Judicial Member, the matter is being referred to the President of the Income Tax Appellate Tribunal with a request that the following questions may be referred to a Third Member or to pass such orders as the President may desire :
“(1) Whether on the facts and circumstances of the case, the provisions of section 145 can be applied while assessing the undisclosed income on sale of plots under Chapter XIV-B of the Income Tax Act, 1961 ?
(2) If the answer to question No. 1 is in the negative, whether there is any scope of estimation of undisclosed income, under Chapter XIV-B by applying the provisions of section 143 of the Income Tax Act, 1961″
II ORDER
The assessee before us is Khopade Family Trust of which Mr. Kisanrao M. Khopade is the trustee. The trust carries on trading of plots. The assessee is maintaining regular books of account and also entering actual transacted amount in separate registers in Bharna Registers viz. Bharna Register Nos. 89,90,91 etc. A search and seizure action under section 132(1) of the Act was carried out from 26-11-1996 to 29-11-1996 in the Khopade group of cases including the present assessee. Accordingly, assessment in the case of the assessee was completed under section 158BC, read with section 143(3) of the Act for the block period 1-4-1986 to 29-11-1996 which is challenged in the appeal before us,
2. Five grounds have been raised in this appeal. The same are discussed and disposed of accordingly.
3. Ground No. 1. This ground challenges the validity of the assessment order, inter alia, on the ground that adequate opportunity was not given. At the time of hearing this ground was not pressed. The same is accordingly dismissed.
4. Ground Nos. 2, 3 and 4: These grounds are interconnected with each other. In Ground No. 2 an addition of Rs. 5,26,258 i.e. cash balance as on 29-11-1996 as determined by the assessee as per cash flow statement has been challenged. In Ground No. 3 an addition of Rs. 39,48,873 on account of estimation of profit on average basis of sale of plot has been challenged. In Ground No. 4, an addition of Rs. 1,06,244 on account of opening cash balance (para 14 Sr. page No. 17) has been challenged. As regards the addition of Rs. 39,48,873 on account of estimation of profit on average rate basis on sale of plots, the facts, reasoning and the arguments of both sides are identical to those discussed by us in Ground No. 2 in the case of Kisanrao M. Khopade (supra). As such, the decision given by us in our aforesaid order will apply mutatis mutandis to the facts of the present case. For the detailed reasons given in our order in the case of Kisanrao M. Khopade (supra) we all agree on this ground in part. The assessing officer is directed to restrict the addition in this regard to the extent of “excess money” actually found to have been charged on the basis of seized material.
5. As regards the cash balance of Rs. 5,26,258 (Gr. No. 2) and Rs. 1,06,244 (Gr. No. 4), it is seen that in fact cash of Rs. 5,26,258 is the result of profit earned in respect of plots and hence both profit of plots as well as cash cannot be added. Accordingly, these two additions are deleted for the detailed reasons given in the case of Kisanrao M Khopade cited supra. These grounds accordingly succeed.
6. Ground No. 5: This ground reads as follows:
“Applicant craves to add, alter or amend, substitute to the above grounds of appeal.”
Obviously, this ground is general in nature and calls for no comments.
7. In the result, the appeal is allowed in part.
8. Singhal, J.M.-After going through the proposed order of my learned brother very carefully, I have not been able to persuade myself to agree with the conclusion reached by him in respect of Ground No. 3 which relate to the addition of Rs. 39,48,873 on account of excess money charged by the assessee on the sale of plots in the block period for the reasons given by me hereafter.
9. The conclusion arrived at by my learned brother is that there is no scope of estimation of undisclosed income under the provisions of Chapter XIV-B and on the facts of the case. This conclusion is based on the following reasons :-
(a) The Legislature has not made the provisions of section 145 applicable to search cases assessable under Chapter XIV-B. Though sections 143 and 144 are made applicable by section 158BC specifically, there is no reference to section 145. Hence, section 145 cannot be invoked even by implication.
(b) In the absence of application of section 145 there is no scope of estimation of undisclosed income under section 143.
(c) The seized materials consisting of Bharna Register, Diaries and Loose Papers are the complete record of unaccounted transactions and therefore, the undisclosed income has to be restricted to the amounts mentioned in the seized material regarding excess money charged by the assessee on the sale of plots. According to him, this is the record which was maintained by him for his personal knowledge and information and therefore, according to the human probabilities, it is to be considered as true and correct of his undisclosed income.
(d) No defect has been found in the cash flow statement prepared by the assessee on the basis of the entries in the Bharna Register, Diaries and Loose Papers except the minor discrepancy.
10. The controversies which have arisen before us are the following :-
(1) Whether there is any scope of estimation of undisclosed income under the provisions of Chapter XIV-B.
(2) If yes, is there any justification for making estimate of the undisclosed income on the facts of the case ?
(3) If yes, then what should be the quantum of estimate of tile undisclosed income ?
11. This controversy has arisen in the case of Khopade Kisanrao Manikrao (supra) who is a family member of the present assessee. Since facts are identical, my reasonings of dissent as given in the order of the aforesaid assessee dated 9-2-1999, would apply on the present case. Consequently, I set aside the order of the assessing officer on this issue and restore the matter for fresh adjudication in accordance with the guidance given in the aforesaid order.
12. Except as stated above, I agree with the proposed order.
ORDER UNDER SECTION 255(4) OF THE INCOME TAX ACT, 1961
As there is a difference of opinion between the Accountant Member and the Judicial Member, the matter is being referred to the President of the Income Tax Appellate Tribunal with a request that the following questions may be referred to a Third Member or to pass such orders as the President may desire :
“(1) Whether on the facts and circumstances of the case, the provisions of section 145 can be applied while assessing the undisclosed income on sale of plots under Chapter XIV-B of the Income Tax Act, 1961?
(2) If the answer to question No. 1 is in the negative, whether there is any scope of estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143 of the Income Tax Act, 1961 ?”
III ORDER
The assessee is the son of Mr. Kisanrao M. Khopade. There was an action under section 132 in the case of Khopade Group of cases to which the assessee belongs. As a result of search assessment was completed under section 158BC for the block period 1-4-1986 to 29-11-1996. This assessment has been challenged before us. As many as seven grounds have been raised in this appeal. The same are discussed and disposed of as follows :
2. Ground No. 1 – This ground challenges the validity of the assessment order, inter alia, on the ground that adequate opportunity was not given. At the time of hearing, this ground was not pressed. The same is accordingly dismissed.
3. Ground No. 2 – This ground reads as follows :
“There is no order passed under section 158BC r.w.s. 143 but it is a draft order and hence draft order is not an order contemplated under section 158BC. Hence demand notice issued on the basis of draft order is bad in law and illegal.”
At the time of hearing this ground was not pressed. The same is accordingly dismissed.
4. Ground No. 3 – In this ground an addition of Rs. 23,141 on protective basis on account of cash has been challenged. The assessee had prepared date-wise cash flow statement of unaccounted transaction for the whole block period. As per the said cash flow statement the cash in hand as on 29-11-1996 is Rs. 23,141. The assessing officer has added the same on protective basis on the ground that all the cash found at the time of search belonged to his father Mr. Kisanrao M. Khopade. She made a substantive addition in the case of Mr. Kisanrao M. Khopade (supra) but in the case of Mr. Khopade Kishanrao Manikrao (supra) we have deleted all such additions. Accordingly, we hold that the cash of Rs. 23,141 belongs to the assessee which has accounted for in the cash flow statement. Accordingly, no addition on this account is called for. The same is accordingly deleted.
5. Ground No. 4 – In this ground an addition of Rs. 4,72,864 on account of estimation of profit on average basis on sale of plot has been challenged. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Ground No. 2 in the case of Khopade Kishanrao Manikrao (supra). As such the decision given by us in our aforesaid order will apply mutatis mutandis to the facts of the present case. For the detailed reasons given in our order in the case of Khopade Kishanrao Manikrao (supra), we allow this ground in part. The assessing officer is directed to restrict the addition in this regard to the extent of “excess money” actually found to have been charged on the basis of seized material.
6. Ground No. 5- In this ground, an addition of Rs. 30,000 on account of cash payments made in contravention of section 40A(3) has been challenged. The facts are identical to those discussed by us in Ground No. 30 in the case of Kisanrao M. Khopade (supra). For the detailed reasons given in our order in the case of Kisanrao M. Khopade (supra) we hold that there is no justification for the impugned addition of Rs. 30,000. The same is accordingly deleted. This ground accordingly succeeds.
7. Ground No. 6- In this ground an addition of Rs. 4,00,000 on account of agricultural income has been challenged. The facts are identical to those discussed by us in Ground No. 31 in the case of Kisanrao M. Khopade. As in the case of Kisanrao M. Khopade (supra) in this case also, what has been added is the amount of expenditure incurred for earning the agricultural income. This addition has been made on wrong appreciation of’ facts. For the detailed reasons given in the case of Kisanrao M. Khopade (supra) we delete the impugned addition. This ground accordingly succeeds.
8. Ground No. 7- This ground reads as follows:
“The appellant craves leave to add to, alter, amend any grounds of appeal.”
Obviously this ground is general in nature and calls for no comments.
9. In the result, the appeal is allowed in part.
10. Singhal, Judicial Member-After going through the proposed order of my learned brother very carefully, I have not been able to pursuade myself to agree with the conclusion reached by him in respect of Ground No. 4 which relate to the addition of Rs. 4,72,864 on account of excess money charged by the assessee on the sale of plots in the block period for the reasons given by me hereafter.
11. The conclusion arrived at by my learned brother is that there is no scope of estimation of undisclosed income under the provisions of Chapter XIV-B and on the facts of the case. This conclusion is based on the following reasons.-
(a) The Legislature has not made the provisions of section 145 applicable to search cases assessable under’ Chapter XIV-B. Though sections 143 and 144 are made applicable by section 158BC specifically, there is no reference to section 145. Hence, section 145 cannot be invoked even by implication.
(b) In the absence of application of section 145 there is no scope of estimation of undisclosed income under section 143.
(c) The seized materials consisting of Bharna Register, Diaries and Loose Papers are the complete record of unaccounted transactions and therefore, the undisclosed income has to be restricted to the amounts mentioned in the seized material regarding excess money charged by the assessee on the sale of plots. According to him, this is the record which was maintained by him for his personal knowledge and information and therefore, according to the human probabilities, it is to be considered as true and correct of his undisclosed income.
(d) No defect has been found in the cash flow statement prepared by the assessee on the basis of the entries in the Bharna Register, Diaries and Loose Papers except the minor discrepancy,.
12. The controversies which have arisen before us are the follows:
(1) Whether there is any scope of estimation of undisclosed income under the provisions of Chapter XIV-B.
(2) If yes, is there any justification for making estimate of the undisclosed income on the facts of the case ?
(3) If yes, then what should be the quantum of estimate of the undisclosed income ?
13. This controversy has arisen in the case of Khopade Kishanrao Manikrao (supra) who is a family member of the present assessee. Since facts are identical, my reasonings of dissent as given in the order of the aforesaid assessee dated 9-2-1999, would apply in the present case. Consequently, 1 set aside the order of the assessing officer on this issue and restore the matter for fresh adjudication in accordance with the guidance given in the aforesaid order.
14. Except as stated above, I agree with the proposed order.
ORDER UNDER SECTION 255(4) OF THE INCOME TAX ACT, 1961
As there is a difference of opinion between the Accountant Member and the Judicial Member, the matter is been referred to the President of the Income Tax Appellate Tribunal with a request that the following questions may be referred to a Third Member or to pass such orders as the President may desire :
“(1) Whether on the facts and circumstances of the case, the provisions of section 145 can be applied while assessing the undisclosed income on sale of plots under Chapter XIV-B of the Income Tax Act, 1961 ?
(2) If the answer to question No. 1 is in the negative, whether there is any scope of estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143 of the Income Tax Act, 1961.”
IV ORDER
The assessee is a daughter of Mr. Kisanrao M. Khopade. There was an action under section 132 in the case of Khopade Group of cases to which the assessee belongs. As a result of search, assessment was completed under section 158BC for the block period 1-4-1986 to 29-11-1996. This assessment has been challenged before us. As many as 12 grounds have been raised in this appeal. The same are discussed and disposed of accordingly,.
2. Ground No. 1-This ground challenges the validity of the assessment order, inter alia, on the ground that adequate opportunity was not given. At the time of hearing, this ground was not pressed. The same is accordingly dismissed.
3. Ground No. 2-In this ground an addition of Rs. 50,000 on account of cash paid to Shri Bhatu Rajuguru being in contravention of section 40A(3) has been challenged. The facts, reasons and arguments of both the sides are identical to those discussed by us in Ground No. 30 in the case of Kisanrao M. Khopade (supra). For the detailed reasons given therein, we hold that there is no justification for the impugned addition of Rs. 50,000 on account of cash payments made in contravention of section 40A(3) of the Act. The same is accordingly deleted. This ground accordingly succeeds.
4. Ground No. 3 – In this ground an addition of Rs. 1,32,966 on account of estimation of profit on average rate basis on sale of plot has been challenged. The facts, reasoning- and the arguments of both sides are identical to those discussed by us in ground No. 2 in the case of Kishanrao Manikrao Khopade (supra). As such, the decision given by us in, aforesaid order will apply mutatis mutandis to the facts of the present case. For the detailed reasons given in the said order, we allow this ground in part. The assessing officer is directed to restrict the addition in this regard to the extent of “excess money” actually found to have been charged on the basis of seized material.
5. Grounds No. 4, 5 & 7- In these grounds, additions of Rs. 1,26,533, Rs. 1,80,045 and Rs. 1,01,677 have been challenged on account of sale of plots by applying average rate of profit. These grounds are incidental to ground No. 3 discussed above. For the reasons mentioned in the preceding paragraphs, these grounds are allowed in part.
6. Ground No. 6 – In this ground, an addition of Rs. 35,919 on account of cash arrived at as per cash flow statement has been challenged. This ground is corollary to Ground No. 2 discussed above. Since the cash flow statement has been prepared after taking into consideration the unaccounted receipts and payments, for the reasons discussed in ground No. 2 supra, we hold that there is no justification for the impugned addition. The same is accordingly deleted. This ground accordingly succeeds.
7. Ground No. 8 -In this ,round an addition of Rs. 53,261 on account of jewellery has been challenged. The facts leading to this addition have been discussed in para 15 on pages 19 and 20 of the assessment order. Out of the total jewellery, the jewellery weighing 102.425 grams belong to the assessee. Though in the case of Mr. Kisanrao Manikrau Khopade (supra), the assessing officer stated she was adding the value of jewellery on a substantive basis in the hands of Mr. Kisanrao Manikrao Khopade, but as discussed in the said case, the jewellery found in possession of different members of the family was discussed and no substantive addition has been made. So far as the present assessee is concerned, she possessed nominal jewellery weighing 102.425 grams. According to her statement the gold ornaments were received by her from her maternal grand father and grand mother which was corroborated by her statement taken on oath at the time of search action vide answer to question No. 20 on page 7. The jewellery found is as per the CBDT circular bearing Instruction No. 1916, dated 11-5-1994 which gives guidelines in respect of seizure of .jewellery. The assessee is unmarried lady and owns 102.425 grams of gold jewellery which is far less than as prescribed in the instructions (250 grams for unmarried lady) and the sources of these items is explained in her statement recorded under section 132 of the Act. Accordingly, we hold that there is no justification for making the impugned addition of Rs. 53,261 on protective basis. The jewellery possessed by her stands duly explained. The addition of Rs. 53,261 is accordingly deleted- This ground is accordingly allowed.
8. Gronnd No. 9- In this ground an addition of Rs. 5,000 on account of commission has been challenged. The assessee had paid commission to Shri Chandrakant Guruji for procuring sale of plots in Gate No. 106/2B. The details of commission paid are as follows:
Rs. 1,000
22-2-1993
Page No. 38 of diary No. 32
Rs. 4,000
14-9-1993
Page No. 38 of diary No. 32
Rs. 5,000
As this payment was not recorded in regular books of account it was considered in cash flow statement prepared in respect of unaccounted transactions. This commission being paid for the purposes of sale of plots is allowable deduction. The addition of Rs. 5,000 is accordingly deleted.
9. Ground No. 10-In this ground an addition of Rs. 1,30,125 on account of cash payments made in contravention of section 40A(3) has been challenged. For the reasons mentioned in respect of Ground No. 2 above, we hold that there is no justification for the impugned addition of Rs. 1,30,125 on account of cash payments. The same is accordingly deleted. This ground accordingly succeeds.
10. Ground No. 11- In this ground an addition of Rs. 1,02,000 on account of debtors has been challenged. The facts are identical to those discussed by us in Ground No. 15 in the case of K.M. Khopade. For the detailed reasons given in our order in the case of Kisanrao Manikrao Khopade (supra) we hold that there is no justification for the impugned addition of Rs. 1,02,000 on account of debtors. The same is accordingly deleted. This ground accordingly succeeds.
11. Ground No. 12 -This ground reads as follows:
“Applicant craves leave to add to, alter, amend any grounds of appeal.”
Obviously this ground is general in nature and calls for no comments.
12. In the result, the appeal is allowed in part.
13. Singhal, Judicial Member-After going through the proposed order of my learned brother very carefully, I have not been able to pursuade myself to agree with the conclusion reached by him in respect of Ground Nos. 3,4, 5 & 7 which relate to the total addition of Rs. 5,41,221 on account of excess money charged by the assessee on the sale of plots in the block period for the reasons given by me hereafter.
14. The conclusion arrived at by my, learned brother is that there is no scope of estimation of undisclosed income under the provisions of Chapter XIV-B and on the facts of the case.. This conclusion is based on the following reasons :-
(a) The Legislature has not made the provisions of section 145 applicable to search cases assessable under Chapter XIV-B. Though sections 143 and 144 are made applicable by section 158BC specifically, there is no reference to section 145. Hence, section 145 cannot be invoked even by implication.
(b) In the absence of application of section 145 there is no scope of estimation of undisclosed income under section 143.
(c) The seized materials consisting of Bharna Register, Diaries and Loose Papers are the complete record of unaccounted transactions and therefore, the undisclosed income has to be restricted to the amounts mentioned in the seized material regarding excess money charged by the assessee on the sale of plots. According to him, this is the record which was maintained by him for his personal knowledge and information and therefore, according to the human probabilities, it is to be considered as true and correct of his undisclosed income.
(d) No defect has been found in the cash flow statement prepared by the assessee on the basis of the entries in the Bharna Register, Diaries and Loose Papers except the minor discrepancy.
15. The controversies which have arisen before us are the following :-
(1) Whether there is any scope of estimation of undisclosed income under the provisions of Chapter XIV-B.
(2) If yes, is there any justification for making estimate of the undisclosed income on the facts of the case ?
(3) If yes, then what should be the quantum of estimate of the undisclosed income ?
16. This controversy has arisen in the case of Khopade Kishanrao Manikrao (supra) who is a family member of the present assessee. Since facts are identical, my reasonings of dissent as given in the order of the aforesaid assessee dated 9-2-1999, would apply in the present case. Consequently, I set aside the order of the assessing officer on this issue and restore the matter for fresh adjudication in accordance with the guidance given in the aforesaid order.
17. Except as stated above, 1 agree with the proposed order.
ORDER UNDER SECTION 255(4) OF THE INCOME TAX ACT, 1961
As there is a difference of opinion between the Accountant Member and the Judicial Member, the matter is being referred to the President of the Income Tax Appellate Tribunal with a request that the following questions may be referred to a Third Member or to pass such orders as the President may desire :
“(1) Whether on the facts and circumstances of the case, the provisions of section 145 can be applied while assessing the undisclosed income on sale of plots under Chapter XIV-B of the Income Tax Act, 1961 ?
(2) If the answer to question No. 1 is in the negative, whether there is any scope of estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143 of the Income Tax Act, 1961 ?”
V ORDER
The assessee is a daughter of Mr. Kishanrao M. Khopade. There was an action under section 132 in the case of Khopade Group of cases to which the assessee belongs. As a result of search, assessment was completed under section 158BC for the block period 1-4-1986 to 29-11-1996. This assessment has been challenged before us. As many as 12 grounds have been raised in this appeal. The same are discussed and disposed of as follows:
2. Ground No. 1: This ground challenges the validity of the assessment order, inter alia, on the ground that adequate opportunity was not given. At the time of hearing, this ground was not pressed. The same is accordingly dismissed.
3. Grounds Nos. 2 & 3: Thus are incidental to each other. These relate to the additions of Rs. 1,00,000 and Rs. 1,51,078. Since the cash flow statement has been prepared after taking into consideration the unaccounted receipts and payments, we hold that there is no justification for the impugned additions. The same are accordingly deleted. These grounds accordingly succeed.
4. Ground No. 4 : In this ground an addition of Rs. 6,55,476 on account of profit on sale of plots in various Gat Nos. on average basis has been challenged. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Ground No. 2 in the case of Kisanrao M. Khopade (supra). As such, the decision given by us in our aforesaid order will apply mutatis mutandis to the facts of the present case. For the detailed reasons given in our order in the case of Kisanrao M. Khopade (supra) we allow this ground in part. The assessing officer is directed to restrict the addition in this regard to the extent of “excess money” actually found to have been charged on the basis of seized material.
5. Ground No. 5 : In this ground an addition of Rs. 1,5 1,078 on account of cash in hand as per cash flow statement, has been challenged. At the time of hearing, this ground has not been pressed as the same has already been taken in Ground No. 3 above. Accordingly, this ground is dismissed.
6. Ground No. 6: In this ground an addition of Rs. 65,056 on account of jewellery has been challenged. The facts leading to this addition have been discussed in para 14 on pages 16 and 17 of the assessment order. Out of the total jewellery seized from the residence of Mr. Kisanrao M. Khopade, jewellery weighing 125.148 grams (net) was valued at Rs. 65,056 belonging to the assessee. Though in the case of Mr. Khopade Kisanrao M. (supra), the assessing officer has stated that she was adding the value of jewellery on substantive basis in the case of Khopade Kishanrao Manikrao (supra) but as discussed in the said order the jewellery found in possession of different members of the family was discussed, but no substantial addition had been made. So far as the present assessee is concerned, the assessee possessed a nominal jewellery weighing 125.148 gms. The statement of the assessee was recorded under section 132 in which she had explained the acquisition of gold jewellery. In answer to question No. 25 item No. 6 on page 3, she had stated as follows :
“Gold ornaments in my possession were received by me from my grand mother and grand father. Those were received when I was of about 12 to 15 years old.”
The jewellery found is as per CBDT Instruction No. 1916 which gives guidelines in respect of possession of jewellery. The assessee is unmarried lady and owns only 125.148 grams which is far less than as prescribed under the instructions (250 grams for unmarried lady) and the source of this, jewellery is explained in her statement recorded under section 132. Accordingly we hold that there is no justification for the impugned addition of Rs. 65,056 on protective basis. The jewellery possessed by her stands duly explained. The addition of- Rs. 65,056 is accordingly deleted. This ground accordingly succeeds,
7. Ground No. 7 : In this ground an addition of Rs. 5,000 on account of commission has been challenged. The facts and arguments of both sides arc identical to those discussed by us in Ground No. 9 in the case of Anila K. Khopde (I.T. (SS) Appeal No. 275 (Pune) of 1997). For the detailed reasons given therein, we hold that there is no Justification for the impugned addition. The same is accordingly deleted. This ground, therefore, Succeeds.
8. Ground No. 8 : In this ground an addition of Rs. 1,84,000 on account of payments made in contravention of section 40A(3) of the Act has been challenged. The facts, reasoning and arguments of both the sides are identical to those discussed by using Ground No. 30 in case of Kisanrao M. Khopade (supra). For the detailed reasons given therein, we hold that there is no, justification for the impugned addition. The same is accordingly deleted. This ground therefore, succeeds.
9. Ground No. 9 : In this ground an addition of Rs. 1,00,000 on account of cash has been challenged. This ground is corollary to Ground No. 4 discussed above. Since the cash flow statement has been prepared after taking into consideration the unaccounted receipts and payments, we hold that there is no justification for the impugned addition. The same is accordingly deleted. This ground, therefore, succeeds.
10. Ground No. 10 : In this ground an addition of Rs. 1,71,000 on account of debtors has been challenged. The facts are identical to those discussed by us in Ground No. 16 in the case of Khopade Kishanrao Manikrao (supra). For the detailed reasons given therein, we hold that there is no justification for the impugned addition of Rs. 1,71,000 on account of debtors. The same is accordingly deleted. This ground therefore, succeeds.
11. Ground No. 11 : In this ground an addition of Rs. 2,70,000 on protective basis on account of investment made in Flat No. 103, Oshiwara Scheme No. 3, has been challenged. The assessee had purchased a flat No. 103 in Sahyadri Co-operative. Housing Society, Oshiwara, Bombay. The investments made by the assessee are duly accounted for in the books of account. Hence the question of adding the same on protective basis in the hands of the assessee does not arise. This addition is accordingly deleted.
12. The last ground reads as under:
“The appellant craves leave to add, to alter, or amend grounds of appeal.”
Obviously this ground is general in nature and calls for no comments.
13. In the result the appeal is allowed in part.
14. Singhal, J.M.After going through the proposed order of my learned brother very carefully, I have not been able to persuade myself to agree with the conclusion reached by him in respect of Ground No. 4 which relate to the addition of Rs. 6,55,476 on account of excess money charged by the assessee on the sale of plots in the block period for the reasons given by me hereafter.
15. The conclusion arrived at by my learned brother is that there is no scope of estimation of undisclosed income under the provisions of Chapter XIV-B and on the facts of the case. This conclusion is based on the following reasons :-
(a) The Legislature has not made the provisions of section 145 applicable to search cases assessable under Chapter XIV-B. Though sections 143 and 144 are made applicable by section 158BC specifically, there is no reference to section 145. Hence, section 145 cannot be invoked even by implication.
(b) In the absence of application of section 145 there is no scope of estimation of undisclosed income under section 143.
(c) The seized materials consisting of Bharna Register, Diaries and Loose Papers are the complete record of unaccounted transactions and therefore, the undisclosed income has to be restricted to the amounts mentioned in the seized material regarding excess money charged by the assessee on the sale of plots. According to him, this is the record which was maintained by him for his personal knowledge and information and therefore, according to the human probabilities, it is to be considered as true and correct of his undisclosed income.
(d) No defect has been found in the cash flow statement prepared by the assessee on the basis of the entries in the Bharna Register, Diaries and Loose Papers except the minor discrepancy.
16. The controversies which have arisen before us are the following :-
(1) Whether there is any scope of estimation of undisclosed income under the provisions of Chapter XIV-B.
(2) If yes, is there any justification for making estimate of the undisclosed income on the facts of the case ?
(3) If yes, then what should be the quantum of estimate of the undisclosed income ?
17. This controversy has arisen in the case of Khopade Kishanrao Manikrao (supra) who is a family member of the present assessee. Since facts are identical, my reasonings of dissent as given in the order of the aforesaid assessee dated 9-2-1999, would apply in the present case. Consequently, I set aside the order of the assessing officer on this issue and restore the matter for fresh adjudication in accordance with the guidance given in the aforesaid order.
18. Except as stated above, I agree with the proposed order.
ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961
As there is a difference of opinion between the Accountant Member and the Judicial Member, the matter is being referred to the President of the Income Tax Appellate Tribunal a request that the following questions was, be referred to a Third Member or to pass such orders as the President may desire :
“(1) Whether on the facts and circumstances of the case, the provisions of section 145 can be applied while assessing the undisclosed income on sale of plots under Chapter XIV-B of the Income Tax Act, 1961 ?
(2) If the answer to question No. 1 is in the negative, there is any scope of’ estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143 of the Income Tax Act, 1961 ?”
VI ORDER
The assessee is the wife of Mr. Kisanrao Manikrao Khopade. There was action under section 132 at the residential and residential and business premises of Shri Kisanrao Manikrao Khopade. During the course of search action, besides regular books of account, secret books of account which were kept by Shri K.M. Khopade for his personal purpose were also seized. Such secret books are Bharna Register Nos. 89, 90, 91, 93 and 79. In the said registers, assessee and her husband had maintained actual transactions ie., sale amount received, date-wise and Gat No. wise and plot No. wise except in the case of Gat No. 566 which was given to a single commission agent viz. Mr. Thorat for sale. As Mr. Thorat was depositing amounts with the assessee it was date-wise entered in Bharna Register No. 89, without mentioning specific number of plot against a consideration. Hence, assessee’s co-assessees have applied average rate basis in respect of S. No. 566.
2. As many as nine grounds have been raised in this appeal. The same are discussed and disposed of as follows :
3. Ground No. 1 : This ground challenges the validity of the assessment order, inter alia, on the ground that adequate opportunity was not given. At the time of hearing, this ground was not pressed. The same is accordingly dismissed.
4. Ground No. 2 : In this ground an addition of Rs. 20,61,433 on account of estimation of profit on average rate basis on sale of plots has been challenged. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Gr. No. 2 in the case of Kisanrao Manikrao Khopade (supra). As such, the decision given by us in our aforesaid order will apply mutatis mutandis to the facts of the present case. For the detailed reasons given in our order in the case of Kisanrao Manikrao Khopade (supra), we allow this ground in part. The assessing officer is directed to restrict the addition in this regard to the extent of “excess money” actually found to have been charged on the basis of seized material.
5. Ground No. 3: In this ground an addition of Rs. 11, 19,825 on protective basis for assessment year 1997-98 on account of advances given to land owners has been challenged. The facts leading to this addition have been discussed in para 20 on page 20 to 23 of the assessment order. These facts have also been discussed by us in great detail in the case of Kisanrao Manikrao Khopade (supra). A substantive addition has been made in the hands of the husband of the assessee, viz. Kisanrao M. Khopade while protective addition has been made in the case of the assessee. Since we have held that no addition on this account is called for in the hands of assessee’s husband, we hold that protective addition in the hands of the assessee is also not called for. Accordingly, we delete the impugned addition of Rs. 11,19,825. This ground accordingly succeeds.
6. Ground No. 4 : In this ground an addition of Rs. 30,000 on account of fix deposit receipt kept with Dena Bank dated 26-9-1996 has been challenged. During the course of search, fix deposit receipt the of Rs. 3,00,000 dated 26-9-1996 was found. According to the assessing officer the assessee could not give any satisfactory explanation about the sources of the said fix deposit receipt. She added the entire amount of fix deposit receipt in assessment year 1997-98.
7. Shri K.A. Sathe, the learned counsel for the assessee submitted that these fix deposit receipts are accounted for in the regular books of account and are appearing on L/F 87 and transaction is appearing in cash book on page No. 104. Both cash book and ledger are in possession of the department. If any question on this count would have asked to the assessee, the same would have been explained. The learned Departmental Representative submitted that the matter be referred back to the assessing officer for verification of the contention of the assessee.
8. We have considered the rival submissions. The contention of the assessee is that the fix deposit receipts are duly accounted for in the books of account which are seized and are in possession of the department. Accordingly, we refer this issue to the file of the assessing officer. He is directed to verify the contention of the assessee, and if on verification it is found that the fix deposit appears in the regular books of account, the same should be accepted as explained and no addition should be made.
9. Ground No. 5: In this ground an addition of Rs. 3,86,632 on account of agricultural income has been challenged. The facts are identical to those discussed by us in ground No. 31 in the case of Khopade Kishanrao Manikrao (supra). As in the case of Mr. Kisanrao Manikrao Khopade (supra) in this case also, what has been added is the amount of expenditure incurred for earning the agricultural income. This addition, as also in the case of Kisanrao Manikrao Khopade (supra) has been made on wrong appreciation of facts. For the detailed reasons given, in the case of Kisanrao Manikrao Khopade (supra), we delete the impugned addition. This ground accordingly succeeds.
10. Ground No. 6: In this ground an addition of Rs. 1,83,890 on account of cash in hand as per cash flow statement has been challenged. This ground is corollary, to Ground No. 2 discussed above. Since the cash flow statement has been prepared after taking into consideration the unaccounted receipts and payments, for the reasons discussed in Ground No. 2 supra, we hold that there is no justification for the impugned addition of Rs. 1,83,890. The same is accordingly deleted. This ground accordingly succeeds.
11. Ground No. 7: In this ground an addition of Rs. 10,91,940 on account of cash payments made in contravention of section 40A(3) has been challenged. The facts are identical to those discussed by us in Ground No. 30 in the case of Khopade Kishanrao Manikrao (supra). For the detailed reasons given in our order in the case of Kisanrao Manikrao Khopade (supra) we hold that there is no justification for the impugned addition of Rs. 10,91,940 on account of cash payments made in contravention of section 40A(3) of the Act. The same is accordingly deleted. This ground accordingly succeeds.
12. Ground No. 8: In this ground an addition of Rs. 3,00,000 on account of debtors has been challenged. The facts are identical to those discussed by us in Ground No. 16 (Para 74) in the case of Kisanrao M. Khopade (supra). For the detailed reasons given in our order in the case of Khopade Kishanrao Manikrao (supra) we hold that there is no justification for the impugned addition of Rs. 3,00,000 on account of debtors. The same is accordingly deleted. This ground accordingly succeeds.
13. Ground No. 9: In this ground an addition of Rs. 1,00,000 on account of extra stock of land has been challenged. The facts leading to this addition have been discussed in para 30 on page 27 of the assessment order. The facts are identical to those discussed by us in additional ground taken by the assessee Mr. Kisanrao Manikrao Khopade the husband of the assessee. For the detailed reasons given in our order in the case of Khopade Kishanrao Manikrao (supra) we hold that there is no justification for the impugned addition. The same is accordingly` deleted. This ground therefore, succeeds.
14. Ground No. 10: This ground reads as under:
“The appellant craves leave to add to, alter. amend or substitute the grounds of appeal.”
Obviously, this ground is general in nature and calls for no comments.
15. Vide letter dated Nil, the assessee has moved an additional ground which reads as under:
“Learned A.C.I.T. (Inv.) had erred in making addition of Rs. 1,58,325 by stating that income shown by the assessee for assessment year 1997-98 in the computation filed on page No. 30”.
After hearing both the parties, this ground is admitted and is disposed of as follows : An addition of Rs. 1,58,325 has been made as per the cryptic remarks on page 32 of the assessment order which reads as follows:
Income shown by the assessee for assessment year 1997-98 in the computation filed on page 30
Rs. 1,58,325″.
The learned counsel Shri K.A. Sathe submitted that no such income was shown and accordingly, the assessing officer is not justified in making the impugned addition.
16. After hearing both the parties, we see no justification for the impugned addition. The same is accordingly deleted.
17. In the result, the appeal is allowed in part.
18. Singhal, J.M.-After going through the proposed order of my learned brother very carefully, I have not been able to pursuade myself to agree with the conclusion reached by him in respect of Ground No. 2 which relate to the addition of Rs. 20,61,433 on account of excess money charged by the assessee on the sale of plots in the block period for the reasons given by me hereafter.
19. The conclusion arrived at by my learned brother is that there is no scope of estimation of undisclosed income under the provisions of Chapter XIV-B and on the facts of the case. This conclusion is based on the following reasons :-
(a) The Legislature has not made the provisions of section 145 applicable to search cases assessable under Chapter XIV-B. Though sections 143 and 144 are made applicable by section 158BC specifically, there is no reference to section 145. Hence, section 145 cannot be invoked even by implication.
(b) In the absence of application of section 145 there is no scope of estimation of undisclosed income under section 143.
The seized materials consisting of Bharna Register, Diaries and Loose Papers are the complete record of unaccounted transactions and therefore, the undisclosed income has to be restricted to the amounts mentioned in the seized material regarding excess money charged by the assessee on the sale of plots. According to him, this is the record which was maintained by him for his personal knowledge and information and therefore, according to the human probabilities, it is to be considered as true and correct of his undisclosed income.
(d) No defect has been found in the cash flow statement prepared by the assessee on the basis of the entries in the Bharna Register, Diaries and loose-papers except the minor discrepancy.
20. The controversies which have arisen before us are the following:-
(1) Whether there is any scope of estimation of undisclosed income under the provisions of Chapter XIV-B.
(2) If yes, is there any justification for making estimate of the undisclosed income on the facts of the case ?
(3) If yes, then what should be the quantum of estimate of the undisclosed income ?
21. This controversy has arisen in the case of Khopade Kishanrao Manikrao (supra), who is a family member of the present assessee. Since facts are identical, my reasonings of dissent as given in the order of the aforesaid assessee dated 9-2-1999, would apply in the present case. Consequently, I set aside the order of the assessing officer on this issue and restore the matter for fresh adjudication in accordance with the guidance given in the aforesaid order.
22. Except as stated above, I agree with the proposed order.
ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961
As there is a difference of opinion between the Accountant Member and the Judicial Member, the matter is being referred to the President of the Income Tax Appellate Tribunal with a request that the following questions may be referred to a Third Member or to pass such orders as the President may desire:
“(1) Whether on the facts and circumstances of the case, the provisions of section 145 can be applied while assessing the undisclosed income on sale of plots under Chapter XIV-B of the Income Tax Act, 1961 ?
(2) If the answer to question No. 1 is in the negative, whether there is any scope of estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143 of the Income Tax Act, 1961 ?”
VII ORDER
The assessee is the son of Mr. Kisanrao M. Khopade. There was an action under section 132 in the case of Khopade Group of cases to which the assessee belongs. As a result of search, assessment was completed under section 158BC for the block period 1-4-1986 to 29-11-1996. This assessment has been challenged before us. As many as 12 grounds have been raised in this appeal. The same are discussed and disposed of as follows :
2. Ground No. 1 : This ground challenges the validity of the assessment order, inter alia, on the ground that adequate opportunity was not given. At the time of hearing, this ground was not pressed. The same is accordingly dismissed.
3. Ground No. 2 : In this ground an addition of Rs. 32,26,351 on account of estimation of profit on average rate basis on sale of plots has been challenged. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Gr. No. 2 in the case of Kisan M. Khopade in IT (SS) A. No. 281 /Pune /97 (supra). As such, the decision given by us in our aforesaid order will apply mutatis mutandis to the facts of the present case. For the detailed reasons given in our aforesaid order, we allow this ground in part. The assessing officer is directed to restrict the addition in this regard to the extent of “excess money” actually found to have been charged on the basis of seized material.
4. Ground No. 3 : In this ground an addition of Rs. 3,56,086 on account of investment made in purchase of plots has been challenged. This is incidental to Ground No. 2 supra. For the reasons given above, the impugned addition is deleted.
4.1 Ground No. 4: In this ground, an addition of Rs. 2,00,000 on protective basis in respect of advance made to the agriculturists from whom plots were purchased has been challenged. The facts, reasoning an arguments of both sides are identical to those discussed by us in Gr. No. 16 in the case of Kisanrao Manikrao Khopade (supra). A substantive addition had been made in the case of Mr. Kisanrao Manikrao Khopade (supra) while protective addition has been made in the case of the assessee. Since we have held that no addition on this account is called for in the hands of the assessee’s father, we hold that protective addition in the hands of the assessee is also not called for. Accordingly, we delete the impugned addition of Rs. 2,00,000. This ground accordingly succeeds.
5. Ground No. 5: In this ground, an addition of Rs. 91,066 on protective basis on account of value of gold ornaments has been challenged. The details of jewellery owned by different members of Khopade family have been reproduced and discussed in the order of Mr. Kisanrao Manikrao Khopade. Though in the case of Mr. Kisanrao Manikrao Khopade (supra), the assessing officer stated that she was adding the jewellery belonging to Sanjay Khopade in the case of Khopade Kishanrao Manikrao (supra) on substantive basis and on protective basis in the hands of Sanjay, it was noted that no such addition in case of Mr. Kisanrao M. Khopade (supra) was made on protective basis. So, it is essential to discuss the jewellery owned by Dr. Sanjay Khopade in this case. The total jewellery found in his possession was 198.620 grams (gross weight) and 175.128 grams (net weight). As stated in the case of Mr. Kisanrao M. Khopade (supra), Dr. Sanjay Khopade was married to Shalini daughter of Shri Madhavrao Ramchandra Patil on 3-12-1995. Most of the jewellery belonged to newly wedded bride, the evidence in support of the jewellery got by her from her father Mr. Madhavrao Ramchandra Patil and father-in-law of the assessee, was filed. Keeping in view the status of Dr. Sanjay, the status of his father-in-law, and the status of his father the possession of jewellery being 175.128 grams cannot be said to be excessive. Accordingly, we see no justification for the impugned addition in the hands of the assessee on protective basis. The same is accordingly deleted.
6. Ground No. 6: In this ground an addition of Rs. 2,50,000 on account of fix deposit receipt kept with Dena Bank dated 26-9-1996 has been challenged. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Ground No. 4 in the case of Mrs. Kamalabai K. Khopade (I.T. (SS) Appeal No. 277 Pune of 1997). As such the decision, given by us in our aforesaid order will apply mutatis mutandis to the facts of the present case also. For the detailed reasons given in our order in the case of Mrs. Kamalabai. Khopade (supra) we refer this matter to the file of the assessing officer with a direction to verify the contention of the assessee and if on verification it is found that the cash credit appears in the regular books of account, the same should be accepted as explained and no addition should be made.
7. Ground No. 7: In this ground an addition of Rs. 3,92,138 on account of inflated agricultural income has been challenged. The facts, reasoning and arguments of both sides are identical to those discussed by us in Ground No. 31 in the case of Kisanrao Manikrao Khopade (supra). As such the decision given by us in our aforesaid order will apply mutatis mutandis to the facts of the present case. For the detailed reasons given in our order in the case of Kisanrao Manikrao Khopade we hold that there is no justification for the impugned addition of Rs. 3,92,138 on account of inflated agricultural income. We accordingly delete the impugned addition. This ground accordingly succeeds.
8. Ground No. 8: In this ground an addition of Rs. 1,76,369 on account of cash in hand as per cash flow statement has been challenged. This ground is corollary to ground No. 2 discussed above. Since the cash flow statement has been prepared after taking into consideration the unaccounted receipts and payments on sale of plots, for the reasons discussed in Ground No. 2 supra, we hold that there is no justification for the impugned addition. The same is accordingly deleted. This ground accordingly succeeds.
9. Ground No. 9: In this ground an addition of Rs. 2,00,000 on account of advances to land owners has been challenged. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Ground No. 16 in the case of Kisanrao Manikrao Khopade (supra). For the details reason mentioned therein, we hold that there is no justification for the impugned addition of Rs. 2,00,000 on account of advances to landowners. The same is accordingly deleted. This ground accordingly succeeds.
10. Ground No. 10: In this ground and addition of Rs. 3,83,600 on account of payments made in contravention of section 40A(3) has been challenged. The facts, reasoning and arguments are identical to those discussed by us in Ground No. 30 in the case of Kisanrao Manikrao Khopade (supra). For the detailed reasons given in our order in the case of Kisanrao Manikrao Khopade (supra) we hold that there is no justification for the impugned addition of Rs. 3,83,600 on account of cash payments made in contravention of section 40A(3) of the Act. The same is accordingly deleted. This ground accordingly succeeds.
11. Ground No. 11: (wrongly mentioned as Ground No. 10) An this ground an addition of Rs. 3,00,000 on account of advances received from agriculturists has been challenged. The facts are identical to those discussed by us in Ground No. 31 in the case of Kisanrao Manikrao Khopade (supra). As in the case of Mr. Kisanrao Manikrao Khopade (supra) in this case also what has been added is the amount of expenditure incurred for earning the agricultural income. This addition has been made on wrong appreciation of facts as in the case of Kisanrao Manikrao Khopade (supra). For the detailed reasons given in the said order, we delete the impugned addition. This ground accordingly succeeds.
12. Ground No. 12 (wrongly mentioned as Ground No. 12) : An this ground an addition of Rs. 1,70,000 on account of investment made in Flat No. 102, Sahyadri Co-operative. Housing Society, Oshiwara, Mumbai, has been challenged. The facts, reasoning and arguments are identical to those discussed by us in Ground No. 14 in the case of Kisanrao Manikrao Khopade (supra). The assessee had purchased flat No. 102, Sahyadri Co-operative Housing Society, Oshiwara, for Rs. 2,70,000. Out of this amount, an amount of Rs. 1,00,000 was invested by taking loan from Life Insurance Corporation of India and balance amount was invested out of regular income which was duly recorded in the regular books of account. The learned counsel for the assessee Shri K.A. Sathe submitted that there is no justification for the impugned addition. The learned D.R. relied on the observations of the learned assessing officer
13. We have considered the rival submissions and perused the facts on record. The assessee purchased a flat as stated above after making investment from out of his regular books of account as well as by raising loan from the Life Insurance Company of India Ltd. In view of the submissions made, we see no justification for the impugned addition and the same is accordingly, deleted. This ground therefore, succeeds.
14. Ground No. 13 (wrongly mentioned as Ground No. 12) : This ground reads as under:
“Appellant craves leave to add, to alter or substitute, amend the above .grounds of appeal.”
Obviously this ground is general in nature and calls for no comments.
15. In the result, the appeal is allowed in part.
16. Singhal, J.M.-After going through the proposed order of my learned brother very carefully, I have not been able to pursuade myself to agree with the conclusion reached by him in respect of Ground No. 3 which relate to the addition of Rs. 32,26,35.1 on account of excess money charged by the assessee on the sale of plots in the block period for the reasons given by me hereafter.
17. The conclusion arrived at by my learned brother is that there is no scope of estimation of undisclosed income under the provisions of Chapter XIV-B and on the facts of the case. This conclusion is based on the following reasons :-
(a) The Legislature has not made the provisions of section 145 applicable to search cases assessable under Chapter XIV-B. Though sections 143 and 144 are made applicable by section 158BC specifically, there is no reference to section 145. Hence, section 145 cannot be invoked even by implication.
(b) In the absence of application of section 145 there is no scope of estimation of undisclosed income under section 143.
(c) The seized materials consisting of Bharna Register, Diaries and Loose Papers are the complete record of unaccounted transactions and therefore, the undisclosed income has to be restricted to the amounts mentioned in the seized material regarding excess money charged by the assessee, on the sale of plots. According to him, this is the record which was maintained by him for his personal knowledge and information and therefore, according to the human probabilities, it is to be considered as true and correct of his undisclosed income.
(d) No defect has been found in the cash flow statement prepared by the assessee on the basis of the entries in the Bharna Register, Diaries and Loose Papers except the minor discrepancy.
18. The controversies which have arisen before us are the following :-
(1) Whether there is any scope of estimation of undisclosed income under the provisions of Chapter XIV-B.
(2) If yes, is there any justification for making estimate of the undisclosed income on the facts of the case ?
(3) If yes, then what should be the quantum of estimate of the undisclosed income ?
19. This controversy has arisen in the case of Khopade Kishanrao Manikrao (supra) who is a family member of the present assessee. Since facts are identical, my reasonings of dissent as given in the order of the aforesaid assessee dated 9-2-1999, would apply in the present case. Consequently, I set aside the order of the assessing officer on this issue and restore the matter for fresh adjudication in accordance with the guidance given in the aforesaid order.
20. Except as stated above, I agree with the proposed order.
ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT,1961
As there is a difference of opinion between the Accountant Member and the Judicial Member, the matter is being referred to the President of the Income Tax Appellate Tribunal with a request that the following questions may be referred to a Third Member or to pass such orders as the President may desire :
“(1) Whether un the facts and circumstances of the case, the provisions of section 145 can be applied while assessing the undisclosed income on sale of plots under Chapter XIV-B of the Income Tax Act, 1961 ?
(2) If the answer to question No. 1 is in the negative, whether there is any scope of’ estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143 of the Income Tax Act, 1961 ?
VIII ORDER
The learned Judicial Member, Shri M.A. Bakshi, sitting as Third Member by his opinion dated 8-10-1999 has concurred with the views of the Judicial Member and has held as under :
“In the final analysis, I hold that the provisions of section 145 can be applied while assessing the undisclosed income on sale of plots under Chapter XIV-B of the Income Tax Act, 1961. I further hold that there is scope for estimation of undisclosed income under Chapter XIV-B by the provisions of section 143 of the Income Tax Act, 1961.”
In accordance with the majority view, the matter regarding computation of undisclosed income on the sale of land is restored to the file of the assessing officer who shall recompute the same in accordance with the directions given in the order of the Judicial Member in para 138 of his order in the case of Shri K.M. Khopade (IT (SS) A. No. 281 /PN/ 1997). The appeals are allowed in part.
ORDER AS THIRD MEMBER
M.A. Bakshi, J.M.-As a result of difference of opinion between the Accountant Member and the Judicial Member in the appeals of the assessees, following disputed issues have been referred to me for a decision in accordance with section 255(4) :-
“(1.) Whether on the facts and circumstances of the case, the provisions of section 145 can be applied while assessing the undisclosed income on sale of plots under Chapter XIV-B of the Income Tax Act, 1961 ?
(2) If the answer to question No. 1 is in the negative, whether there is any scope of estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143 of the Income Tax Act, 1961 ?”
2. Similar issues were referred to the in the case of Khopade Kisanrao Manikrao (supra), Dhule of the same Group and the same have been decided by me by a detailed order dated 2-9-1999. Since the issues are common, I adopt the reasoning and the conclusion in the case of Khopade Kisanrao Manikrao (supra) for the disposal of these references made to me as Third Member. For the sake of facility, the conclusion applicable to these appeals is reproduced hereunder:-
“In the final analysis I hold that the provisions of section 145 can be applied while assessing the undisclosed income on sale of plots under Chapter XIV-B of the Income Tax Act, 1961. I further hold that there is scope for estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143 of the Income Tax Act, 1961.”
3. By and large I have agreed with the conclusion of the learned Judicial Member. The appeal shall be decided by the majority view.