R.K. Gupta, J.M. - (1.) THIS is an appeal by assessee against the assessment order under Section 158BC of the IT Act relating to block period from 1st April, 1986, to 20th June, 1996, relevant to asst. yrs. 1987-88 to 1997-98.
(2.) In first ground the assessee has objected the addition of Rs. 86 lakhs on account of cash seized. In ground No. 2 the assessee has objected the following additions : JUDGEMENT_3172_TLIT0_20020.htm These additions were made on account of alleged commission on billing on job contract work in block period. In the third ground the assessee has objected the following additions made on account of billing commission on trading activities in the block period : JUDGEMENT_3172_TLIT0_20021.htm In ground No. 4 the assessee has objected the addition of Rs. 1,36,41,971 made as unexplained cash credits. In ground No. 5 the assessee objected the following additions on account of jewellery as unexplained : JUDGEMENT_3172_TLIT0_20022.htm In the sixth ground , the assessee has objected the addition of Rs. 1,15,000 on account various valuables as undisclosed, In last, the assessee has appealed for telescoping of the income earned in a particular year and the same should be telescoped in regard to another year's income. Brief facts of the case are that a search and seizure operation was conducted on 20th June, 1996, at the residential and business premises of Shri Sunil Agarwal and his associated persons/concerns which continued till 30th July, 1996, when the last warrant of authorisation of search was executed. Notice under Section 158BC was issued on 30th Sept., 1996, requiring the assessee to prepare a true and correct return of his total income including the undisclosed income for the block period . No return was submitted within the time allowed, i.e., 16 days of the service of notice. However, the. assessee filed a return on Form No. 2B on 9th June, 1997. From the assessment order it is revealed that assessee had filed its regular IT return only for asst. yrs. 1993-94 and 1994-95. These returns were filed with ITO, Ward 3(11) , Jaipur; declaring an income of Rs. 31,590 and Rs. 33,655, respectively, only. As per the assessment order wherein it is mentioned that assessee has admitted to have earned undisclosed income to the tune of Rs. 2,27 crores for tax purposes. However, no such income was disclosed in the return filed by the assessee on 9th June, 1997. As per the order of the AO, the assessee's attitude was not co-operative with the Department because no reply in response to various notices was filed. The assessee started co-operating from 14th July, 1997, only, a date very close to the last date for completion of assessment, i.e., 31st July, 1997. It was found that assessee is interested in M/s. Polychem Traders (proprietorship concern of assessee); M/s. Petrochem Overseas (India), proprietorship concern of assessee; M/s. Petro Impex India (P) Ltd., a company where assessee is director and in M/s. Par Petrochem Ltd., wherein the assessee is one of the directors. As per the assessment order the assessee has filed the trading and P&L a/c as well as balance sheets of his proprietary concern from asst. yrs. 1990-91 to 1996-97.
(3.) DURING the course of search a cash amounting to Rs. 86 lakhs was seized from the premises of Canara Bank, Arya Samaj Road, Karol Bagh. This cash was seized from a person named Shri Gopal Singh, who was a trusted man of assessee--Shri Sunil Agarwal. The statement of Shri Sunil Agarwal was recorded on 20th June, 1996, where in reply to question No. 11, the assessee admitted that this sum of Rs. 86 lakhs was undisclosed income out of trading activity of Plastic Dana. It was also stated that in earlier years also the assessee and his associates were involved in trading activity which was not recorded in the books of accounts and the amount was earned which was not disclosed by the assessee or its concerns. It was also stated by the assessee that his total undisclosed income is about Rs. 2,70,00,000, on which he is ready to pay tax under Chapter XIV-B. DURING the course of assessment proceedings the assessee retracted from his earlier 'stand that this cash amount of Rs. 86 lakhs was not out of his undisclosed income, as the same is from disclosed sources of trading activities. It was explained through letter that assessee and his associates are dealing in trading activity of Plastic Dana and 70 per cent of this sale are to M/s. Polymer Ltd. (M/s PPL for short) and remaining sales were made in cash in the market. But the purchasers who were not interested to take the bills, therefore, certain bank accounts were opened in the names of various other persons and the cash received out of cash sales were deposited in these accounts and then cheques/drafts were issued to the various parties from whom the material was purchased or to the customs authorities, on account of payment of customs duty which was made for the release of imported material as assessee also imports raw material from overseas. It was duly explained that all the purchases are vouched, parties from whom material was purchased are identifiable. Therefore, genuineness of the purchases cannot be doubted and the receipts out of cash sales are routed through these various bank accounts. It was explained that Rs. 86 lakhs also was to be deposited in Canara Bank, Arya Samaj Road, Karol Bagh, New Delhi and for the same purpose the amount 'was handed over to Shri Gopal Singh, a trusted man of assessee. The amount could not be deposited because Shri Gopal Singh was intercepted by the IT persons in the premises of Canara Bank, Arya Samaj Road, Karol Bagh and the amount was seized. The explanation given by the assessee was not found satisfactory to the AO because of the assessee himself surrendered this amount during the course of search proceedings, wherein a statement on oath was recorded. Therefore, it was treated that the statement recorded at the time of search proceedings was a valid evidence as per provisions of law. Accordingly, an addition of Rs. 86 lakhs was made as unexplained cash under Section 68 of the Act.;