(1.)These appeals are directed against the judgment and order dated 9.7.2001 passed by the High Court of Karnataka at Bangalore in ITRC Nos. 38, 39 & 40 of 1996 vide which the High Court has allowed the reference cases 39 and 40 of 1996 thereby answering the questions in favour of the Revenue and against the assessee. ITRC No. 38 of 1996 filed by the assessee has been dismissed by the High Court. Since these appeals arise from the common order passed by the High Court, we also propose to dispose them of by a common order.
(2.)The facts relevant for disposing of these references in short are.
P.R. Metrani and Y.R. Metrani were two brothers and are the members of the Joint Hindu Family. P.R. Metrani (HUF) assessee was a partner in a firm called M/s. R.N. Metrani and Sons. Y.R. Metrani was also a partner in this firm. P.R. Metrani as well as Y.R. Metrani have died during the pendency of these cases.
A search of the residential premises Ranganatha Nilaya was conducted by the Income Tax, Central Excise and Customs Departments on 30.06.1982 and 01.07.1982 and as well as the business premises where the business of the firm was being conducted. The residential premises of J.J. Bakale, nephew of P.R. Metrani were also searched. The search brought to surface unaccounted money, gold biscuits, gold jewellery, silver etc. besides some important documents. For the purpose of assessment for the assessment years 1981-82 and 1982-83 three documents were found to be relevant by the Assessing Officer and they were marked as PRM-1, PRM-7 and PRM-13 at the time of search and seizure, which were seized from the residential premises namely, 'Ranganatha Nilaya'. Statement of J.J. Bakale was recorded at the time of search. P.R. Metrani was away to Rajasthan on a business tour. He was examined after his return to Hubli on 13.7.1982. He denied the possession of PRM-1, PRM-13 and PRM-14. He also denied that these papers contain any writing made by him. The Assessing Authority made a summary adjudication order under Section 132(5) of the Income Tax Act, 1961 (for short "The Act"). He made certain additions and retained the assets seized.
Notice under Section 139(2) dated 17.9.1982 for the assessment year 1982-83 was served on the assessee on 21.9.1982. The appellant declared a total income of Rs.46, 200/- and a net agricultural income of Rs.6, 000/-. Notices under Section 143(2) and 142(1) were issued on several dates. Appellant appeared before the authorities on several dates and assessment came to be completed. The following additions were made in respect of the assessment year 1982-83:-
i. Income from undisclosed sources as discussed in para 3.2 as per PRM-1 and PRM-7 Rs. 28, 67, 920
ii. Income from undisclosed sources as discussed in para 3.3 i.e., PRM-13 Rs. 6, 66, 690
iii Investent in Durgadabail building at Hubli as per para 5 being 50% of Rs. 5, 24, 200/- Rs. 2, 62, 100
iv Unexplained expenditure U/s. 69C Rs. 8, 33, 525
The assessment for the years 1981-82 was completed after making an addition of Rs.19, 93, 117/-.
(3.)Assessing Authority made an assessment for the construction of a commercial complex in Durgadabailu, the investment for which was declared at Rs. 5, 55, 000/- for the entire building. Half of the building belonged to P.R. Metrani and other half to Y.R. Metrani. The department had sent the Valuation Officer for enquiry regarding the cost of building and it was fixed by the Department Valuation Officer at Rs. 5, 83, 000/-. The assessing authority however did not accept the valuation made by the Valuation Officer and held that the total investment on the building was Rs. 6, 45, 809/-. A source to the extent of Rs. 1, 21, 627/- was accepted. The balance was rounded off to Rs. 5, 24, 200/-. Half of this was added to the assessment of P.R. Metrani (HUF) and other half were added in the assessment of Y.R. Metrani.