Income Tax Appellate Tribunal - Jaipur
Mustaq Ahmed & Ors. vs Assistant Commissioner Of Income-Tax on 23 December, 1998
ORDER
R.K. Gupta, J.M.
1. These are 15 appeals by different assessees belonging to Mustaq Ahmed group of cases, Makrana. These appeals are filed against orders passed under s. 158BC consequent to the search operation under IT Act, 1961. The search was conducted on 18th Dec., 1996, onwards at the residential and business premises of Mustaq group of cases. Since the issues involved and grounds in these appeals are of similar nature and inter-related, therefore, these appeals are being disposed off by this common order.
2. During the course of hearing also the learned counsel of the appellants as well as the learned Departmental Representative put-forth common arguments for all these appeals. The paper books for all these cases are also common. Out of 15 appellants 12 are engaged in trading and manufacturing activity of marble at Makrana. The main case of the group is appeal No. 19/Jp/1998 pertaining to Shri Mustaq Ahmed, the senior most family member of the group. The assessment order in this case is much exhausted and was made the basis of arguments by both the parties. We shall deal with all the cases together because the issues are similar and related and it would be appropriate for the sake of convenience. During the course of search, cash, jewellery, huge stock of marble blocks and slabs and loose documents indicating under billing of sales, suppression of sales and job work income were found. The assessee group has filed return under s. 158BC declaring undisclosed income of Rs. 1,54,08,341 for all the assessees of the group. The AO completed the assessment in all the cases at Rs. 14,98,52,154. Now we will take the appeals together of all the assessees, groundwise.
3. In relation to first ground pertaining to the opportunity, the facts were stated by the learned counsel but he opted for arguing the individual ground on merits. Since we are also discussing all the additions and grounds on merits, no specific finding are required in relation to this ground and it shall be discussed if required along with the ground concerned.
4. In ground No. 2(i) in all the 12 appeals where marble business is there, the appellant has disputed the determination of income by estimating the under billing for the whole block period. According to the appellant the undisclosed income for the block period should have determined on the basis of undisclosed assets and the undisclosed expenditure which are more apparent and evident than a wild guess work of income by estimating the under billing for the whole block period for all the persons of the group.
5. The learned counsel put-forth the facts of the case and allegations of the AO as contained in the block assessment order. The statement of Shri Mustaq was recorded on 21st Dec., 1996 wherein he stated the extent of under billing at 30% to 50% for the block period. Further, the statement of Nawab Ali was recorded on 19th Dec., 1996 who agreed to pay tax on under billing amount on the basis of papers found during the course of search. In search, certain papers were found reflecting a few transactions of sales pertaining to asst. yrs. 1996-97 and 1997-98. According to assessee, there were only 26 transactions aggregating to Rs. 67,02,663 against which the turnover recorded in books was Rs. 58,44,250 as per p. 34 of the paper book. In these transactions some transactions were exactly tallying with the books suggesting no under billing whereas in some other transactions there were under billing. The AO picked up only those transactions out of these few transactions where under billing was there and ignored the transactions where there were no under billing. On that basis and on the basis of statement of Mustaq Ahmed, he determined the extent of under billing at 60% of the recorded sales for all the persons of the group engaged in marble business and applied the same to the whole block period. Apart from this, the addition on account of gross profit on alleged suppressed sales and alleged unrecorded income from job work was also made. Further, since no books for the current period were found, the income for this period i.e. 1st April, 1996, to 18th Dec., 1996, was also estimated by the AO.
6. In case of Anwar Ahmed, where marble business was not there, the undisclosed income for the block period was determined on the basis of undisclosed assets and expenses. Thus, in aggregate total undisclosed income was determined at Rs. 14,98,52,154 by the AO. The learned authorised representative further stated that the AO also made an exercise in all the cases to determine the extent of undisclosed assets and undisclosed expenses for the block period though no addition was made on that basis except in case of Shri Anwar Ahmed because the undisclosed income determined by way of estimating the under billing, profit and suppressed sales, unrecorded job work and estimated profit for the current year was much more than the estimate of undisclosed assets and expenditure for all the period of group in respect of the block period. The details of determination of income, estimation of assets and expenditure are shown in Appendix 'A' enclosed with the synopsis of arguments filed before the date of hearing.
7. The learned authorised representative further argued that the difference of two items i.e. total undisclosed income determined and total undisclosed assets and unrecorded expenses determined by the AO comes to Rs. 9,62,08,324. It was further stated that this addition is not backed by assets or expenditure as determined by the AO himself. Therefore, to this extent the additions made in the cases under appeal is notional and apparently excessive.
7.1. The learned counsel referred to the concept of income and the accounting equation on the basis of publication of Institute of Chartered Accountant of India. He also referred to the Grewal's book on Accountancy to explain the approaches for measurement of income. It was explained that the transaction approach is that which makes the transaction enter into with the external parts as the basis for determination of income. The activity approach is an approach where on the basis of activities undertaken by the organisations, the income is determined by making valuation of such activities. The balance sheet approach which is also known as capital maintenance approach is the method where income is determined by evaluating the increase in assets. When the complete details of the transactions are available, the income should be determined by making arithmatic calculation therefrom. When such details are not available but the details of all the activities undertaken by a person are available then the activity approach should be preferred. However, when neither the details of complete transactions nor the details of complete activities are available then the resort should be taken to the balance sheet approach.
7.2. He, therefore, argued that so far as the fact of under billing and other undisclosed income is concerned, it is not disputed but insofar as the extent of undisclosed income is concerned, since the details of all the transactions or activities are not available, it should be determined on the basis of undisclosed assets/expenditure. He further referred to a book of Statistics to support his argument that the sample of a very few transactions relating to two years and pertaining to only a few persons of the group cannot be considered to be a representative sample for determining the average and applying the same to all the transactions of whole group for the whole block period. He stated that neither the sample size adopted by AO resulting in determination of 60% under billing nor the sample size of all 26 transactions found in seized papers as per the assessee, resulting in the average of 12.79% can be said to be representative in the present case. Therefore, instead of making the estimate from this small size of sample, would be only a wild guess work, the estimation of undisclosed income should be based on assets/expenditure. To support further this argument, the learned counsel relied upon the theory of best judgment assessment as explained in various case laws.
7.3. In respect of the confessional statement recorded during the course of search, the learned authorised representative drew our attention to the quality of those statements and the fact that they were subsequently rebutted. It was argued that the statements cannot be made as the basis of assessment unless the admission made therein are free from all doubts and ambiguity. A person ought to have known the implication of confession made by him in clear and conclusive terms, which is absent in the present case. The decision reported in 1971 AIR 1542 was relied upon. The reliance was further placed on 60 Company cases p. 603 to explain the environment during the course of search and temptation prevailing during the search. According to the assessee, the temptation of Departmental officers, in searches to achieve the target is very high which play a significant role in confession. Therefore, the confession cannot be blindly applied without vetting the quality thereof in the light of surrounding environment. Some other cases were also relied upon to contain that the statements cannot be foundation of the assessment. It was also explained that even these statements were not completely relied upon by the AO as the extent of under billing stated by Mustaq Ahmed is 30% to 50% whereas AO has adopted 60%.
7.4. The learned authorised representative further invited our attention to the estimation of job receipts by the AO on an incorrect basis. It was stated that he estimated the job receipts for all the years during the block period at the same amount which is not only illogical but is incontradiction with the trend of corresponding expenses as per record. Moreover, the rates of Sawing receipts varied on year to year basis. This apart, all the units were not in business from the starting point of the block period whereas this material point has also been ignored while making the estimate. The total papers found in search reflected job receipts of around Rs. 36 lacs, whereas in the regular books it is much more, though co-relation between the two is not possible for the obvious reasons that the bills are prepared on clearance of goods through excise gate-pass whereas the actual sawing receipts are on the basis of job work done.
7.5. In respect of suppression of sales, the learned authorised representative referred to certain paper books pages to show that there was no suppression of sales and on the basis of certain papers, the learned authorised representative blindly applied the ratio to 10% to ascertain the suppressed sales for the whole block period for all the persons and thereafter applying the gross profit rate of 60% thereon. In respect of one of the figures taken as suppressed sales by the AO being the amount of Rs. 6 lacs, it was submitted that it pertains to the period after 31st March, 1996 for which no regular books were available, therefore, how it could be said that it is a suppressed sale or otherwise. In respect of other instances, it was argued that though they were only presumption of the AO but even if they are taken to be correct, the addition cannot be generalised and has to be restricted to the specific amount only.
7.6. The learned authorised representative pin pointed that order of the AO suffers from several contradictions in as much as he estimates 40% of gross profit rate from the current period at one place in his order, while determining the value of stocks the profit rate taken by him is 17% whereas while determining the profit rate on suppressed sales 60% has been adopted and as against all this, his action of making addition by estimating the under billing has resulted in a gross profit to the extent of 71% on sales. It was further pointed out that the DVO's report in respect of valuation of properties taken into account a profit rate of 10% as a manufacturer and 10% as a trader. Therefore, the order of the AO suffers from several contradictions.
7.7. Summarising his argument on this point, the learned authorised representative contended that in the facts of the present case where the unrecorded expenditure for the whole block period have been separately determined and unrecorded assets on the date of search have been identified and evaluated. The better approach to determine the undisclosed income is the basis of assets and expenditure as against mere estimation, presumption and a wild guess work for determining the undisclosed income by way of a positive working in absence of requisite date and details.
8. On the other hand, the learned Departmental Representative opened his argument by referring to the statements of Mustaq Ahmed and Nawab Ali to support the AO's allegation of under billing. He also stated that in marble business the under billing is a well known feature and the extent thereof depends upon the quality of goods. Better the quality more the under billing since the objective of the trading is to save sales-tax thereon. He also stated that once the under billing is accepted for some period on the basis of some seized papers, there is no reason not to accept the under billing for the preceding years. The learned Departmental Representative further stated that no separate addition was made in respect of assets and expenditure since they were covered by the income determined by the AO. Accordingly the estimate of undisclosed income by the AO was rational and was based on statements as well as seized papers. He thus support the approach adopted by the AO to determine the undisclosed income.
9. We have considered the rival submissions and have gone through the facts of the present case. We have also perused the case laws relied upon by the learned authorised representative. We find that the fact of undisclosed income remains undisputed. The question is only of determination of quantum of undisclosed income. Although the assessment of exact quantum of undisclosed income in such cases where complete records of unaccounted transactions are not found, is difficult but one has to resort to best judgment assessment in such cases. There may be many methods of determination of undisclosed income by estimation but one has to find out the best method which would be more nearer to the real state of affairs. In case of searches where all belonging to assessee are being caught by the Department, it is more rational and appropriate to determine the income on the basis of assets/expenditure theory which duly approved in accountancy. The estimation of undisclosed income by way of a positive working on the basis of statements of two persons and a very few transactions appearing in seized papers for the whole block period for all the persons is not less than a wild guess. The best judgment assessment is not a punitive assessment and one has to try to make a fair estimate nearer to the true affairs. An estimation based on assets and expenditure is obviously better than making a wild guess without backing of assets/expenditure particularly when Department has no case that any asset remained undetermined. The estimate made by the AO is self-contradictory in the sense that it results in a unrealistic gross profit rate which is not even as per his own estimate at other places in the order. Concessions made in the present case carries no significance for the purpose of determination of income inasmuch as they are not absolute, they have been rebutted, not being completely relied by the AO also. The statements are very general in nature without bearing the reference of quality of goods, the specification of period and such other minute particulars which are utmost necessary for positive computation of income. The statement is very brief and not detailed. We are, therefore, of the view that the basis adopted by the AO for determining the undisclosed income is incorrect. When AO himself has identified and ascertained all the undisclosed assets as also all kinds of undisclosed expenditure including the household expenses, expenditure on marriages and Haj Yatra, acquisition of household items, jewellery and vehicles and extent of undisclosed stocks then there was no justification in presuming that there is much more undisclosed income. We fail to understand as to where a substantial amount of Rs. 9.62 crores has gone when the Department has caught every asset and expenditure pertaining to the assessee by taking recourse to the provisions of s. 132. We thus allow ground No. 2(i) of the assessee by holding that the undisclosed income be determined on the basis of assets and expenditure only instead of making any addition on account of under billing, job work and suppression of sales. Therefore, there is no need to discuss grounds 2(ii), 2(iii), 2(iv) and 2(v) because they pertain to determination of income on the basis of positive working which we have dis-approved. In these grounds the additions made out by making a positive working have been challenged which are to be replaced by the additions on the basis of assets/expenditure, for which presently there is no separate addition in assessment. Accordingly and in other words as far as these grounds are concerned, we allow the relief of Rs. 9,62,08,324 in various appeals of the group being the amount not backed by any assets or expenditure. The case-wise relief would be as follows, disposing off ground No. 2(i) in all various appeals except in case of Anwar Ahmed where additions have been made on the basis of assets/expenses.
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Appeal Name of assessee Undisclosed Total Amount of No.
income assets/expendi- relief
determined ture estimated
by AO by AO
1. 2. 3. 4. 5.
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Rs. Rs. Rs.
19/Jp/98 Mustaq Ahmed 2,66,04,671 1,05,93,743 1,60,10,924
25/Jp/98 S. Nawab Ali 2,75,26,093 99,59,706 1,75,66,387
33/Jp/98 Gayoor Ahmed 2,25,80,261 93,34,908 1,32,45,353
23/Jp/98 Salimuddin 2,00,56,200 72,96,924 1,27,59,276
26/Jp/98 Riyazur Rehman 1,29,51,164 71,57,804 57,93,360
21/Jp/98 Ahmed Hassan 88,50,017 36,84,727 51,65,290
20/Jp/98 Mukhtyar Ahmed 81,14,942 15,13,672 66,01,270
29/Jp/98 Kherunisha 53,90,343 11,14,477 42,75,866
30/Jp/98 Mehrunisha 39,20,182 4,34,371 34,85,811
27/Jp/98 Mem 55,02,340 6,67,556 48,34,784
32/Jp/98 Sabra Banu 46,48,523 6,22,256 40,26,267
22/Jp/98 Salauddin 31,12,288 6,68,556 24,43,732
24/Jp/98 Anwar Ahmed 5,95,130 5,95,130 Nil
------------ ----------- -----------
Total 14,98,52,154 5,36,43,830 9,62,08,324
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9.1. Though the assessee has challenged the value of assets and expenditure determined by the AO but since there are separate grounds for the same, they will be discussed separately with the appropriate ground where they are agitated.
9.2. In respect of ground No. 2(v), the learned authorised representative has submitted that the income for the period from 1st April, 1996 to 18th Dec., 1996 cannot be charged to tax as undisclosed income because, though the regular books were not there but the sale invoices were available. However, we are not convinced with these arguments as there were no regular books. Further in respect of sale invoices and other documents also, since under billing has been admitted, it is not possible to bifurcate disclosed income and undisclosed income. The income earned during the period 1st April, 1996 to 18th Dec., 1996 is also, therefore, liable to be assessed as undisclosed income and cannot form part of the regular return from asst. yr. 1997-98. However, in view of our findings of determination of income on the basis of assets and expenditure, all the assets acquired upto 18th Dec., 1996, and expenditure incurred upto that date would be considered for ascertaining the undisclosed income, therefore, there is no need for any positive calculation of income for the current period. It stands automatically taxed as a part of assets and expenditure. In the result, though the ground is technically rejected but as held above, the income shall be taxed on the basis of assets and expenditure. Resultant relief is already comprised in the amount of Rs. 9,62,08,324.
10. Ground No. 3 in 12 appeals relates to estimation of various undisclosed assets/expenditures on the basis of which no addition was made considering them to be covered by the additions made which were covered in ground No. 2. However, since that basis of addition is disapproved and while dealing with ground No. 2, the additions to the extent to which they are covered by ground No. 3 were sustained. It is necessary to deal with these grounds to consider the amounts of estimation on merit since they have been challenged by the assessee in ground No. 3. This ground has been divided in several parts which shall be discussed individually.
11. Ground Nos. 3 to 7 in case of Anwar Ahmed also relate to addition in respect of various assets/expenditures where the basis of addition is expenditure and assets only. Since the various cases of the group are inter-related, the fact relating to group as a whole, in respect of each issue shall be discussed together. The details of additions in the hands of different persons are contained in Appendix 'F' to the synopsis of arguments filed before the date of hearing by the learned authorised representative.
12. The first issue relating to addition in respect of alleged unexplained cash. The total unexplained cash in the group is determined at Rs. 3,62,810. Cash found during the course of search from various persons of the group was Rs. 3,84,055 out of which Rs. 21,245 found at Shalimar Hotel was considered as explained and remaining cash was considered as unexplained. Before us, three things have been mainly argued. One is that wherever the cash balance is upto 10,000 it should be considered as explained because all the persons are regularly withdrawing, the amounts.
13. Secondly, the cash as per the books of Shalimar Hotel and Shalimar Restaurant, should be considered as explained, and thirdly, the cash amount kept by the assessee in trustee capacity called as 'Betul Mal' should not be taken as assessee's cash. Further the amount of Rs. 15,000 was stated by Afsana Bano as being out of her savings. From the paper books the cash balance as per the books of Shalimar Restaurant is appearing at Rs. 1,70,650. Further the cash balance of Rs. 30,578 was as per the books of Hotel Shalimar. So far as the amount pertaining to charitable fund called as 'Betul Mal' is concerned, the learned authorised representative referred to the statements recorded during the course of search where the amount was stated at Rs. 1 lac to Rs. 1.5 lacs.
14. On the other hand, the learned Departmental Representative placed reliance on the assessment order.
15. After hearing the parties, we are of the view that the assessee's claim of considering the recorded cash as explained is in order. Further the claim of considering the amount found upto Rs. 10,000 with one person is also reasonable considering the regular withdrawals of family members and the fact that the aggregate of such amount was only Rs. 28,360 (Rs. 7075 + Rs. 7,100 + Rs. 10,000 + Rs. 7,685 + 6,500). Further in the statement of Afsana Bano she has stated that Rs. 15,000 were out of her own savings which we considered as explained. However, we do not find any merit in the claim of cash pertaining to so-called charitable fund. If the assessee claims some cash found with him belonging to some other person then the onus is on him to bring satisfactory evidence. Merely because in the statements recorded at the time of search, this fact was stated and subsequently no evidence was given, this addition, therefore, cannot be deleted. Thus the unexplained cash works out to Rs. 1,08,222 (Rs. 3,62,810 - 1,70,650 - 30,578 - 38,360 - 15,000). This addition would remain in the hands of Nawab Ali who has claimed this amount. The addition in respect of all other persons is hereby deleted. In the result, the following reliefs are being allowed and by this following grounds in various appeals stand disposed of.
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Appeal No. Name of the Ground Unexplained Addition Amount
assessee No. cash confirmed or relief
determined
by AO
Rs. Rs. Rs.
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19/Jp/98 Mustaq Ahmed 3(i) 7,100 - 7,100
25/Jp/98 S. Nawab Ali 3(i) 2,78,700 1,08,222 1,70,478
33/Jp/98 Gayoor Ahmed 3(i) 7,075 - 7,075
23/Jp/98 Salimuddin 3(i) 10,000 - 10,000
26/Jp/98 Riyazur Rehman 3(i) 7,685 - 7,685
21/Jp/98 Ahmed Hassan 3(i) 6,500 - 6,500
24/Jp/98 Anwar Ahmed 3 45,750 - 45,750
----------- --------- ----------
Total 3, 62,810 1,08,222 2,54,588
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16. Next issue is in respect of gold jewellery. Total undisclosed investment has been determined at Rs. 9,35,508 in respect of all the persons. Out of which Rs. 1,62,540 has been estimated for the assessee Mustaq Ahmed. It was argued by the learned counsel that AO considered 25% of the jewellery claimed as explained and remaining as unexplained which has no logic. It was argued that apart from specific amounts offered as undisclosed income, the balance jewellery is very reasonable considering the number of married ladies and family members. Share of per member comes to only around 231 gms. It was further stated that the jewellery to the extent of 221 gms belonged to Noorjahan which is not disputed by the AO.
17. On the other hand, the learned Departmental Representative had relied upon the assessment order.
18. After considering the facts of the case we are of the view that the amount offered as unexplained income to the extent of 86 gms by S. Nawab Ali and 320.7 gms by Mustaq Ahmed are liable to be considered as undisclosed income. The value of undisclosed income in the hands of these two persons after multiplying the quantity with the rate adopted by the AO at Rs. 516 per gms the addition in case of S. Nawab Ali is being sustained to the extent of Rs. 44,376 whereas full addition of Rs. 1,62,540 is being sustained in the hands of Shri Mustaq Ahmed. The rest of the addition in respect of other persons and in the hands of S. Nawab Ali is hereby deleted since in a family of 8 married couples the extent of holdings i.e. about 20 tola is justified with reference to the sources like the occasion of marriages and other gifts, etc. Accordingly the relief allowed in various appeals is tabulated as under :
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Appeal No. Name of the Ground Unexplained Addition Amount
assessee No jewellery confirmed of relief
determined by AO
Rs. Rs. Rs.
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19/Jp/98 Mustaq Ahmed 3(ii) 1,62,540 1,62,540 -
25/Jp/98 S. Nawab Ali 3(ii) 3,63,780 44,376 3,19,404
23/Jp/98 Salimuddin 3(ii) 23,220 - 23,220
26/Jp/98 Riyazur
Rehman 3(ii) 1,87,308 - 1,87,308
21/Jp/98 Ahmed Hussan 3(ii) 44,376 - 44,376
20/Jp/98 Mukhtayar 3(i) 9,804 - 9,804
Ahmed
---------- ----------
24/Jp/98 Anwar Ali 4 1,44,480 - 1,44,480
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19. Next issue relates to addition on account of silver jewellery aggregating to Rs. 1,80,272 where the facts, allegations and arguments remain the same. Total net weight of silver found during the course of search is only 3,270 gms. The AO has taken the rate of Rs. 73.46 per gram instead of 7.346 per gram which has resulted in 10 times of the amount which ought to have been added as per the AOs own findings. Considering the family size and number of married ladies, the whole silver jewellery is considered as explained and the relief is allowed to the extent of Rs. 1,80,272 as follows :
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Appeal No. Name of the Ground Unexplained Addition Amount
assessee No. jewellery confirmed of relief
determined
by AO
Rs. Rs. Rs.
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19/Jp/98 Mustaq Ahmed 3(iii) 1,65,285 - 1,65,285
23/Jp/98 Salimuddin 3(iii) 5,509 - 5,509
26/Jp/98 Riyazur Rehman 3(iii) 2,792 - 2,792
21/Jp/98 Ahmed Hassan 3(ii) 1,690 - 1,690
20/Jp/98 Mukhtayar Ahmed 3(i) 2,792 - 2,792
24/Jp/98 Anwar Ali 4 2,204 - 2,204
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1,80,272 1,80,272
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20. Next issue relates to addition on account of vehicles aggregating to Rs. 15,24,946 as per the details given in Appendix-F to the synopsis of argument filed before the date of hearing. The additions have been made in respect of 14 vehicles considering them to be unexplained. Before us it was argued that the dispute is only in respect of four vehicles. Other 10 vehicles were admitted to be unexplained, but the benefit of depreciation was claimed by the appellant. So far as disputed vehicles are concerned, it was argued that the amount of Rs. 4,11,886 pertain to a vehicle being truck belonging to Shri Gopal Lal. Not only the registration papers were in the name of said owner but even that owner had purchased the vehicle through bank finance. The reasons of the paper lying with the assessee were also explained, as the vehicle was engaged for assessee's business. Another dispute was of amount of Rs. 30,000 considered in respect of a motor cycle, whereas the seized papers do not reflect the motor cycle or the amount or anything. It is simply a transfer form. The third disputed item was Rs. 35,000 which is in respect of Mahindra Ford booking amount. It was submitted that the amount was subsequently refunded within the block period and, therefore, the effect was neutralised. The fourth dispute is in respect of the amount of Rs. 2,25,000 on account of car No. RJ 20C 3952, since it is a double addition for the same vehicle which is in fact a Maruti Esteem car and an addition of Rs. 4,45,000 has been separately made.
21. On the other hand, the learned Departmental Representative relied upon the orders of the AO.
22. We have gone through the rival submissions and the facts. We find force in the argument regarding incorrect inclusion of the four amounts as narrated. In s. 69, the burden is on the Revenue to prove that the investment was made, which is not discharged in respect of all the four amounts. The vehicle belonging to other persons is duly supported by the evidence on record and the same is being financed by bank. The double addition in respect of car No. RJ. 20 3952 is apparent - once by considering the same as Maruti 800 and secondly Maruti Esteem. Further when the deposited amount was refunded in respect of Mahindra Ford, the addition gets neutralised. Moreover, the addition of Rs. 30,000 is merely on the basis of presumption that the assessee purchased some vehicle is not tenable in the eye of law. Therefore, we delete these four additions.
23. So far as the assessee's claim of depreciation in respect of undisclosed vehicles is concerned, we find some force in the arguments that the depreciation on such vehicle is allowable. However, for the purpose of claim of depreciation, it is necessary that the assessee shows evidence for use of the vehicle for the purpose of business. Therefore, in absence of necessary details on record, we reject the claim of depreciation. The assessee is free to claim such depreciation in regular assessment of subsequent years by discharging its onus. In the result, the assessee gets following relief aggregating to Rs. 7,01,886 and the under-noted grounds of various appeals stand disposed of :
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Appeal No. Name of the Ground Unexplained Addition Amount
assessee No. investment confirmed of relief
determined by AO
Rs. Rs. Rs.
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19/Jp/98 Mustaq Ahmed 3(iv) 4,86,886 45,000 4,04,886
25/Jp/98 S. Nawab Ali 3(iii) 2,49,000 2,14,000 35,000
26/Jp/98 Riazyur Rehman 3(viii) 7,55,060 5,30,060 2,25,000
24/Jp/98 Anwar Ali 5 34,000 34,000 -
--------- --------- ---------
Total 15,24,946 8,23,060 7,01,886
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24. Next issue pertains to marriage expenses in respect of which total amount ascertained is Rs. 8,50,000 in the hands of 2 persons, namely, Mustaq Ahmed and S. Nawab Ali. Three marriages were performed during the block period and the assessee disclosed expenditure of Rs. 75,000, Rs. 1 lac and Rs. 1,50,000 in these marriages. The AO made estimation of expenses at double the amounts offered. The learned counsel submitted that expenditure on marriages was nominal on account of reasons like place of marriage, two marriages are of male members and further there were restrictions on expenditure on marriages by the local society.
25. The learned Departmental Representative supported the order of the AO.
26. After hearing the rival submissions and considering the fact of the case, we find that the assessee's amounts as well as AO's amounts are merely estimates. Neither complete evidence is there with the assessee nor with the AO. We are left with the option to estimate only and considering the facts, we estimate the expenses at Rs. 1 lac, 1,50,000 and Rs. 2,25,000 on these three marriages. The rest of the additions are hereby deleted in the following manner, disposing of the under-noted grounds :
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Appeal No. Name of the Ground No. Unexplained Addition Amount
assessee No. investment confirmed of relief
determined by AO
Rs. Rs. Rs.
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19/Jp/98 Mustaq Ahmed 3(vii) 3,50,000 2,50,000 1,00,000
25/Jp/98 S. Nawab Ali 3(vi) 3,00,000 2,25,000 75,000
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Total 6,50,000 4,75,000 1,75,000
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27. Next issue relates to expenses incurred in Haj Yatra wherefor the assessee estimated Rs. 25,000 per person and the AO estimated it at Rs. 30,000 per person. The addition made on this account is thus Rs. 2,10,000. We feel that the assessee's offer as well as the AO's amount both are based on estimates. Assessee did not place on record any material to support his claim. The addition of Rs. 2 lacs is, therefore, upheld. This disposes of the following grounds :
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Appeal No. Name of the Ground No. Expenditure Addition Amount
assessee estimated by confirmed of relief
AO
Rs. Rs. Rs.
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19/Jp/98 Mustaq Ahmed 3(x) 60,000 60,000 -
25/Jp/98 S. Nawab Ali 3(ix) 1,20,000 1,20,000
26/Jp/98 Riayazur Rehman 3(x) 30,000 30,000
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2,10,000 2,10,000
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28. Next issue is in respect of household expenses. The AO made the estimate by taking Rs. 2,000 per adult per month and Rs. 1,000 per children per month, as the expenses in the last year and thereafter this was scaled down in respect of preceding years. Apart from this Rs. 30,000 per annum were added on account of gifts, medical expenses, electricity, water, repairs, telephone, etc. Further the educational expenses of children were separately estimated on the basis of the standard in which they were studying. The learned counsel argued that the estimation of the AO was on higher side. It was further stated that looking to the standard of living of assessee like village at akrana, clothing, meals, etc. the estimation of AO is very high. Further the children were going to only 'Madarsa' where only nominal expenditure are incurred on education. Moreover, the agricultural production from own farm, milk obtained from pet cattles also requires consideration. Moreover, the expenditure on marriages, Haj Yatra, donations, household items has been separately estimated and the withdrawals for specific purpose, for example tax, LIC, etc. has been separately shown in the regular returns. It was also argued that the AO did not allow the claim in respect of withdrawals made in the regular returns of Tahira and Nafisa. The appeal Nos. of Tahira and Nafisa are 31/Jp/98 and 28/Jp/98. As against the AO's estimation, the assessee estimated Rs. 20,14,000 as the household expenses for the whole block period. It was further stated that the withdrawals shown in regular books for the block period were Rs. 16,81,764. The remaining amount of Rs. 3,39,084 was offered in the block return. It was further argued that the amount offered was reasonable and the addition to that extent can be made.
28.1. On the other hand the learned Departmental Representative supported the estimation of the AO.
28.2. After careful consideration we find some force in the argument of the learned counsel but cannot be accepted the same in entirety. The AO's estimate is certainly on higher side looking to the facts of the case brought on record by the Departmental Representative. The AO was not justified in not giving the credit for withdrawals shown by Tahira and Nafisa in their regular returns.
28.3. So far as appeal Nos. 31/Jp/98 and 28/Jp/98 are concerned, these two appeals as we have already stated belong to Tahira and Nafisa and the only issue in these two appeals are regarding not giving the credit for withdrawals shown by Tahira and Nafisa in their regular returns. We find from the details of account offered by assessee that the expenses for the period from 1st April, 1996 to 18th Dec., 1996 have not been covered in the statement whereas the same is required because the estimation is being made on the basis of assets and expenditure for the whole block period. Total addition made by AO is Rs. 41,72,669 in the hands of 8 male members of the family whereas assessee has offered Rs. 3,39,084 in aggregate. The assessee has already shown a sum of Rs. 16,81,764 as withdrawal in regular books for the block period. Having considered the facts and withdrawals made, it would be reasonable to restrict the addition to the extent of Rs. 10,00,000 in aggregate. Thus in this way the total withdrawal comes to Rs. 26,81,764 for the whole block period which in our considered view are reasonable withdrawals for meeting out the household expenses. Thus the assessee would get a relief of Rs. 31,72,669. The amount of addition would be equally divided between the eight male members for computing the resultant relief. This disposes of the under-noted grounds with the relief mentioned there against :
----------------------------------------------------------------------
Appeal No. Name of the Ground No. Household Addition Amount
assessee expenses confirmed of relief
determined by AO
Rs. Rs. Rs.
----------------------------------------------------------------------
19/Jp/98 Mustaq Ahmed 3(vi) 4,02,360 1,25,000 2,77,360
25/Jp/98 S. Nawab Ali 3(v) 8,43,011 1,25,000 7,18,011
33/Jp/98 Gayur Ahmed 3(iv) 6,97,677 1,25,000 5,72,677
23/Jp/98 Salimuddin 3(v) 7,76,755 1,25,000 6,51,755
26/Jp/98 Riyazur 3(v) 5,23,713 1,25,000 3,98,713
21/Jp/98 Ahmed Hassan 3(iv) 2,55,647 1,25,000 1,30,647
20/Jp/98 Mukhtiyar 3(iii) 3,72,660 1,25,000 2,47,660
24/Jp/98 Anwar Ali 7 3,00,846 1,25,000 1,75,846
----------- --------- ----------
41,72,669 10,00,000 31,72,669
----------------------------------------------------------------------
This also disposes of appeal Nos. 21/Jp/93 and 28/Jp/98 completely.
29. Next issue relates to addition on account of household items aggregating to Rs. 7.09,590. The grievance of the appellant is that the AO has considered all household items for making this addition whether it is a refrigerator, double bed, geysers, night lamp or a fan. He has not accepted the most of these items are out of receipts on the occasion of marriages. The small items like night lamps, fan have to be considered out of household withdrawals. However, it was confessed that there may be some unexplained items acquired by the appellant group.
30. On the other hand, the learned Departmental Representative placed reliance on the order of the AO.
31. After considering the facts, we are of the opinion that it would be fair and reasonable if the addition is restricted to 50% of the amount estimated by the AO. This would take care of the items received on marriages and other occasions. This disposes of under-noted grounds in the following appeals with the relief mentioned herein below :
---------------------------------------------------------------------
Appeal No. Name of the Ground No. Unexplained Addition Amount
assessee investment confirmed of relief
determined by AO
---------------------------------------------------------------------
Rs. Rs. Rs.
---------------------------------------------------------------------
19/Jp/98 Mustaq Ahmed 3(v) 18,300 9,150 9,150
25/Jp/98 S. Nawab Ali 3(iv) 1,91,690 95,845 95,845
23/Jp/98 Salimuddin 3(iv) 26,950 13,475 13,475
26/Jp/98 Riazur Rehman 3(iv) 1,35,600 67,800 67,800
21/Jp/98 Ahmed Hassan 3(iii) 1,92,750 96,375 96,375
20/Jp/98 Mukhtiyar 3(ii) 76,450 38,225 38,225
24/Jp/98 Anwar Ali 6 67,850 33,925 33,925
---------- --------- ---------
7,09,590 3,54,795 3,54,795
---------------------------------------------------------------------
32. Next issue for consideration is donation given by the assessee group which have been estimated at Rs. 25,000 per annum per family and Rs. 18,750 for the period from 1st April, 1996 to 18th Dec., 1996. It was argued on behalf of the assessee that the AO's allegation is not correct. Only 6 instances of donation given by the family were found. Five of them were of less than Rs. 1,000 and one is of Rs. 1,000. Therefore, the presumption of donation of Rs. 25,000 per annum for each family is without any basis.
32.1. The learned Departmental Representative has supported to order of AO.
32.2. After considering the facts and submissions, we find that AO's action was based on mere presumption and conjectures. Such wild estimation cannot be permitted particularly when the evidence found is of much less amount. In our view the donations are usually given by the senior family member only. Considering the instances found, we estimate the amount of donation at Rs. 50,000 in case of Mustaq Ahmed, the head of the family and Rs. 50,000 in case of S. Nawab Ali, the eldest son who is living in a separate house. The rest of the additions are hereby deleted. The relief allowed is as per the following table, disposing of under-noted grounds :
---------------------------------------------------------------------
Appeal Name of the Ground Donations Additions Amount No.
assessee No. determined confirmed of relief
by AO
Rs. Rs. Rs.
---------------------------------------------------------------------
19/Jp/98 Mustaq Ahmed 3(xi) 2,68,750 50,000 2,18,750
25/Jp/98 S. Nawab Ali 3(x) 2,68,750 50,000 2,18,750
33/Jp/98 Gayur Ahmed 3(iii) 2,68,750 - 2,68,750
26/Jp/98 Riazur Rehman 3(vi) 2,68,750 - 2,68,750
21/Jp/98 Ahmed Hassan 3(v) 1,43,750 - 1,43,750
20/Jp/98 Mukhtiyar 3(v) 1,43,725 - 1,43,725
----------- --------- ------------
13,62,475 1,00,000 12,62,475
---------------------------------------------------------------------
33. Next issue is in respect of investment in construction of three properties owned by the group. The facts related to the additions are stated in the following table :
-----------------------------------------------------------------------------
Property Amt. Amount Valued by Valued Valued Addition
disclosed surrendered assessee by DVO by AO
Rs. Rs. Rs. Rs. Rs. Rs. -----------------------------------------------------------------------------
Residential 6,03,000 19,13,000 25,16,000 31,16,000 41,70,086 14,82,043 house (Mustaq) (Mustaq (Mustaq) belonging Rs. 20,85,043 to Mustaq & 11,50,000) Riyazur) (Riyazur Rs. 7,63,000) Residential Nil 14,66,000 14,66,000 20,79,000 37,52,390 37,52,390 house belonging to S. Nawab Ali Shalimar 25,93,000 11,03,000 36,96,000 41,42,000 57,43,876 31,50,876 Hotel (belonging to Salimuddin) -----------------------------------------------------------------------------
33.1. The learned counsel submitted that the AO did not accept even the valuation of DVO. It was explained that the AO took the year of construction different than what has been taken by the assessee and DVO which resulted in difference. It was also argued that even the DVO's report suffered from several defects. Various defects were pointed out including that relating to adoption of CPWD rates instead of local PWD rates and allowance for supervision at 12.5% as against 7.5% allowed by the DVO. Insofar as date of commencement and completion of construction is concerned, it was argued that the AO has ignored even the dates when electricity, water and telephone connections were made. It was, therefore, claimed that the amount offered by the assessee was correct and no further addition should have been made. In respect of Shalimar Hotel building, it was submitted that the AO has included certain amounts relating to electric wiring, switches, lamps, geysers, Acs and furniture in the valuation where the assessee has disclosed the amount of Rs. 5,40,394 in respect thereof separately in addition to the cost of buildings.
33.2. On the other hand, the learned Departmental Representative placed reliance on the assessment order.
33.3. We have gone through the facts, documents in the paper book and arguments put-forth. We find that the AO has not accepted even the valuation of the Departmental Valuer by taking a different construction period. The DVO is certainly more expert than the AO insofar as such views are concerned. Therefore, though there was no reason for going beyond the valuation of DVO since the DVO has adopted CPWD rates, we find it appropriate to allow the assessee's claim in respect of local PWD rates by following the consistent view of the bench. This bench has allowed a reduction of 15% to 25% on account of difference of valuation in CPWD rates and PWD rates. Here, we allow 20% deduction from the amount of valuation as per DVO subject to the amount offered by the assessee himself. After considering the amounts separately disclosed in the books in respect of Shalimar Hotel, the addition in respect of Shalimar Hotel is restricted to the amount offered i.e. Rs. 11,03,000. In respect of residential house belonging to Mustaq Ahmed and Riyazur Rehman, the amount to the extent of Rs. 19,13,000 is reasonable after considering the deduction allowed by us. So far as residential house belonging to S. Nawab Ali is concerned, the valuation is determined at Rs. 16,63,200 as against Rs. 14,66,000 offered by the assessee. The balance addition is hereby deleted. The relief as a result of disposing of this issue is tabulated below :
--------------------------------------------------------------------
Appeal No. Name of the Ground No. Undisclosed Additions Amount
assessee investment confirmed of
determined relief
by AO
Rs. Rs. Rs.
--------------------------------------------------------------------
19/Jp/98 Mustaq Ahmed 3(viii) 14,82,043 11,50,000 3,32,043
25/Jp/98 S. Nawab Ali 3(vi) 37,52,300 16,63,200 20,89,190
23/Jp/98 Salimuddin 3(vii) 31,50,876 11,03,000 20,47,876
26/Jp/98 Riyazur Rehman 3(vii) 20,85,043 7,63,000 13,22,043
----------- ---------- ----------
1,04,70,352 46,79,200 57,91,152
--------------------------------------------------------------------
34. Next issue relates to estimation of investment in land at Rs. 10,45,000 in the hands of Riyzur Rehman challenged in ground No. 3(vii) in appeal No. 26/Jp/98. It was argued by the learned counsel that this land was jointly purchased by 5 members of the family group. The AO has wrongly considered the same in the hands of one assessee. The amount disclosed in the regular return for asst. yr. 1996-97 of these five persons in respect of this land is Rs. 1,90,000 + Rs. 1,23,510 and Rs. 15,000 for stamp charges and Rs. 5,000 for expenses (Rs. 66,702 each) aggregating to Rs. 3,33,510. It was explained that the addition was made by making the amount on which stamp duty was paid as the amount of investment without any other evidence of investment. No other material was found during the course of search indicating transfer of money over and above the amount disclosed. Reliance is placed on certain decisions including the decision of this bench.
34.1. On the other hand, the learned Departmental Representative has relied on the findings of the AO.
34.2. After considering the arguments and the amounts disclosed in regular course, we do not see any justification for making this addition. Merely the value adopted by stamping authorities is not an evidence of investment made by the assessee. There is no material indicating the investment as the impugned amount. Similar issues were also came up before the bench wherein we have deleted the additions. We, therefore, delete this addition of Rs. 10,45,000 made in the hands of Riyazur Rehman. This disposes of ground No. 3(vii) of appeal No. 26/JP/98.
35. Last issue relates to valuation of stock of marble available at the time of search with the assessee group. The brief facts are that the AO valued the stock available at Rs. 3,41,02,408 and after allowing the credit for stocks available as on 31st March, 1996, to the extent of Rs. 21,72,200 the undisclosed investment in stock was determined at Rs. 3,20,20,208. The assessee in its return valued the total stock as on the date of search at Rs. 69.41 lacs but this value was subsequently revised to Rs. 73,22,940 on receiving the copies of all seized annexures. During the course of assessment proceedings, the appellant challenged Departmental valuation from time to time and also submitted the basis of appellants valuation along with the detailed working. Assessee also claimed the credit of disclosed stocks as on 31st March, 1996, only because no books were written thereafter. Both the assessees and the Department have therefore considered that the variation in investment of stocks between 1st April, 1996 and 18th Dec., 1996, on account of earning any business income forms part of the investment in stocks computed as on the date of search. The learned counsel of the assessee vehemently objected to the valuation of stocks by the AO. His objections were in respect of quantity, quality as well as the valuation of the stocks adopted by the AO. In respect of quantity many arithmetical errors were shown to us. It was also pointed out that the quantity of certain stocks have been taken twice. Further in respect of the stocks belonging to other persons lying for job work with the assessee, it was submitted that the AO accepted merely 10% of the quantity claimed by the assessee in spite of evidence in the form of affidavit and identification marks available on record. Further it was also argued that the stocks within the mines was taken by the AO for valuation at the rates equal to the stocks available at the business premises. In respect of quality, it was submitted that there was damaged and wastage material also which were valued as good stocks. Statement of Gsyoor Ahmed were relied upon in respect of quality of stocks but not in damaged and wastage material. The photograph of damaged stocks were also shown in paper book. Regarding valuation of stock, it was submitted that the rates adopted by the AO were arbitrary and very high. Our attention was also drawn to the finding of the AO where he adopted the rates from certain seized papers reflecting the rates of better quality and in respect of thicker size of material which was applied to the whole stocks considering the same to be an average. Further the deduction on account of gross profit was given at 17% on the basis of disclosed gross profit rate, whereas the sales rate adopted are on the basis of seized papers including under billing. Our attention was also drawn to the facts that the valuation adopted by the AO was much higher even in comparison to the valuation done by ADI at the time of release of stocks as per the following details :
---------------------------------------------------------------------
Annexure No. Valued by AO Valued by ADI
---------------------------------------------------------------------
Rs. Rs.
---------------------------------------------------------------------
Party 6 S-1 & S-2 62,12,060 24,05,872
Party 7 S, S-1,
S-3 and S-4 1,07,60,770 69,13,468
Party 9 SS 1,90,830 3,53,724
Party 10 SS-1 65,850 1,36,472
Party 13 Annx. 'A' 19,50,444 14,71,175
Party 14 Annex. 'S' 1,17,500 2,88,000
----------- ------------
1,92,97,454 1,15,68,712
---------------------------------------------------------------------
Thus in respect of this stocks alone the value adopted by the AO was higher by Rs. 77,28,742 in comparison to the value taken by ADI who has seen the stocks physically. Further the AO himself subsequently released balance part of the seized stocks by taking its value at Rs. 50 lacs which has been valued at Rs. 1,11,42,658 in the assessment order as per the following details :
---------------------------------------------------------------------
Annexure No. Valued by AO Valuation at the time of release
---------------------------------------------------------------------
Rs. Rs.
---------------------------------------------------------------------
Party 6. Annx. SB 12,84,500 Party 6. Annx. S. 70,76,828 Party 8. Annex. SS 9,95,200 Party 9. Annx. SS 2,89,430 Party 10. Annx. SSI 3,81,250 Party 12. Annx. S. 8,92,790 Party 14, Annx. S 2,22,560 ------------ ------------------------------ 1,11,42,652 50,00,000
---------------------------------------------------------------------
Thus the difference of Rs. 1,38,71,400 (Rs. 77,28,746 + Rs. 61,42,658) arose merely on account of valuation at one stage by physical verification of the stocks and at the other stage on the basis of papers. The learned counsel argued that the valuation, by looking at the stocks physically, was more correct instead of a theoretical valuation at the time of assessment. Therefore, the valuation done at the time of release of stocks should be preferred. The learned authorised representative, however, contended that even the valuation done at the time of release of stocks was on higher side and invited our attention to the following remarks mentioned by ADI while valuing the stocks :
"Remarks :
1. Value of seized stocks are estimated on the basis of average cost of the goods sold in the financial year 1995-96, on the adjusted cost worked out on the basis of under billing as noticed from the seized bills and documents i.e. 60% of the rates shown in the bills less GP rate 18%.
2. Videography taken in respect of goods put under deemed seizure."
It was stated that whereas the sale rate was inclusive of under bill to the extent of 60% of the bill amount whereas the gross profit deducted is only 17%, which is as per the regular books on the basis of bill amount. It was argued that the cost price of the goods would not change by under billing in respect of change and, therefore, either bill amount and disclosed gross profit should be taken or if sales price is taken inclusive of under billing then higher G.P. should be adopted. On the basis of this argument, the learned authorised representative contended that the assessee's valuation at 73.22 lacs was correct and AO's valuation at Rs. 341.92 lacs was incorrect. So far as the credit of disclosed stocks was concerned, it was argued that appellant has no objection if the credit for stocks disclosed as on 31st March, 1996 is being given and for the period from 1st April, 1996 to 18th Dec., 1996 no income on the basis of any business transaction is charged to tax since the same is comprised in the variation of stocks and other assets uptil the date of search as well as the expenditure incurred during this period upto 18th Dec., 1996, separately considered.
36. On the other hand, the learned Departmental Representative placed full reliance on the findings of the AO.
37. We have carefully considered the facts of this case, relevant papers relating to inventory and arguments advanced. We have also noted that the impugned stock is not available now as being released and sold out. As such no re-verification of valuation of stock is possible. We, therefore, consider it appropriate to disposed of this ground on the basis of material on record. One thing which is very important to note is the significant difference in valuation done by ADI and subsequently done in the assessment order. Similar difference is there is respect of valuation at the time of release of stocks by the AO and that done subsequently in the assessment by the AO. Even such difference aggregate to Rs. 1,38,71,400 as per the details, supra. The addition to that extent cannot be sustained at all. We find that the substantial part of stocks found was in seizure which was subsequently released and is covered by the aforesaid valuation at the time of release. The total stocks valued is thus summarised as under :
---------------------------------------------------------------------
Valuation as per Valuation at the Difference
AO in assessment time of release
order
---------------------------------------------------------------------
Rs. Rs. Rs.
---------------------------------------------------------------------
1st release as 1,92,97,454 1,15,68,712 77,28,742
per the details (supra)
Subsequent 1,11,42,658 50,00,000 61,42,658
release
Stock found but 37,52,296 Neither seized N.A.
not seized nor released
Total valuation as per AO
--------------
3,41,92,408
---------------------------------------------------------------------
Since the average rates have been adopted at the time of release as well as by the AO, therefore, the value of stocks found and not seized may also be sealed down in the same proportion as in respect of stocks seized and released for the purpose of equalising the value of whole stocks. Thus :
37,52,296 x 1,65,68,712
-----------------------------
(1,15,68,712 + 50,00,000) 3,04,40,112 (1,92,97,454 + 1,11,42,658) = Rs. 20,42,394 Therefore, the valuation of total stocks as per the basis adopted at the time of release works out to Rs. 1,86,11,106 (Rs. 1,15,68,712 + 50,00,000 + 20,42,394). However, the assessee does not accept even the valuation done at the time of release by contending that the ADI adopted sale price inclusive of under billing whereas gross profit has been doubted as exclusive of under billing. As per the note mentioned by the ADI, he has taken the following basis for calculation :
Sale price as per books (bills) Rs. 100 - cost as per books 82 taking 18% G.P. Under billing 60% of bill amount Rs. 60 Actual sale price Rs. 160 Deduction for GP @ 18% Rs. 29 Cost price adopted for valuation Rs. 131 Thus where the sale price is Rs. 100 as per the rates shown in bills, the valuation has been done at Rs. 131, taking this amount as the cost. While making out such calculation, it has been ignored that the under billing do not have any impact on cost which remains at Rs. 82, in the above example, taking the G.P. at 18% on disclosed sale price. Because of under billing the G.P. works out to 78% (160-82) as against Rs. 29 works out in the above calculation. We find force in the argument that the valuation of stock has to be 82 in the above example which is cost price, whether the basis is actual sales price or the disclosed sale price. Since at the time of release it has been valued at Rs. 131 as per the above example as against 82 such value is required to be proportionately scaled down. Accordingly on this basis the valuation works out as follows :
1,86,11,016 x 82/131 = Rs. 1,16,49,700 Thus as per the correct calculation of value of stocks on the basis of quantity adopted by the Department works out to Rs. 1,16,49,700. Coming to the argument in respect of quantity, damaged stocks and goods pertaining to other persons, we are of the view that since physical stocks is not available now, it is not possible to ascertain the same, though we find some weight in the argument advanced. After going through the detailed submissions relating to these issues, we consider it appropriate to allow 5% deduction in respect of all these contentions from the value determined above. This amount of deduction comes to Rs. 5,82,485 and after deduction of this amount the valuation or stock available with the appellant group as on the date of search works out to Rs. 1,10,67,215 (1,16,49,700 - 5,82,485) as against the amount of Rs. 73.20 lacs computed by assessee and Rs. 341.92 lacs computed by the AO. This valuation comes after our working done on the basis of statistics available in the material placed before us. However, we are of the view that there may be some difference on account of taking of stocks which may be left out at the time of taking of stocks by the search party and the assessee at the time of search. Therefore, we are of the view that to cover all the loopholes and difference in stock taking, we add a sum of Rs. 6 lacs and in this way total stocks come to Rs. 1,16,67,215.
38. The value of stocks disclosed as on 31st March, 1996 is undisputed Rs. 21,72,200, therefore, the value of undisclosed stock is determined at Rs. 94,95,015 which is divided among the various persons of the group on an estimated basis considering the undisclosed income as per their block returns :
---------------------------------------------------------------------
Appeal Name of the Value of Value of stock Estimated
No. assessee stocks as on value
confirmed 31-3-1996 of
undisclosed
stocks
Rs. Rs. Rs.
---------------------------------------------------------------------
19/Jp/98 Mustaq Ahmed 18,17,215 1,98,500 16,18,715
25/Jp/98 S. Nawab Ali 18,50,000 3,50,000 15,00,000
33/Jp/98 Gayur Ahmed 30,50,000 2,58,500 27,91,500
23/Jp/98 Salimuddin 12,50,000 1,46,500 11,03,500
26/Jp/98 Riyazur Rehman 6,50,000 3,45,000 3,05,000
21/Jp/98 Ahmed Hassan 6,50,000 4,10,000 2,40,000
20/Jp/98 Mukhtiyar 4,00,000 76,500 3,23,500
29/Jp/98 Kherunisha 4,00,000 72,000 3,28,000
30'Jp'98 Mehrunisha 4,00,000 58,000 3,42,000
27/Jp/98 Mem 4,00,000 71,000 3,29,000
32/Jp/98 Sabra Banu 4,00,000 1,16,200 2,83,800
22/Jp/98 Salauddin 4,00,000 70,000 3,30,000
------------ ---------------
1,16,67,215 94,95,015
---------------------------------------------------------------------
39. Since the value of disclosed stocks has been taken as on 31st March, 1996, for determination of undisclosed investment upto 18th Dec., 1996, the income earned during the period from 1st April, 1996, to 18th Dec., 1996, is not liable to be taxed separately as the same is comprised in the valuation of stocks. We have no hesitation in accepting that since all the assets uptil 18th Dec., 1996, have been valued separately and all the expenditure upto 18th Dec., 1996, has also been considered under this assessment, no business transactions for the period from 1st April, 1996, to 18th Dec., 1996, have to be separately considered in regular assessments. This disposes of the under-noted grounds of the appellant group of appeals with the resultant relief mentioned there against :
----------------------------------------------------------------------
Appeal No. Name of the Ground Undisclosed Undisclosed Amount of
assessee No. stocks Investment relief
determined in stock
by AO sustained
----------------------------------------------------------------------
1 2 3 4 5 6
Rs. Rs. Rs.
----------------------------------------------------------------------
19/Jp/98 Mustaq Ahmed 3(ix) 71,90,479 16,18,715 55,71,764
25/Jp/98 S. Nawab Ali 3(viii) 35,92,385 15,00,000 20,92,385
33/Jp/98 Gayur Ahmed 3(ii) 83,61,406 27,91,500 55,69,906
23/Jp/98 Salimuddin 3(vi) 33,03,614 11,03,500 22,00,114
26/Jp/98 Hiyazur 3(vi) 21,16,853 3,05,000 18,11,853
21/Jp/98 Ahmed Hassan 3(v) 30,40,014 3,40,000 28,00,014
20/Jp/98 Mukhtiyar 3(iv) 9,08,241 3,23,500 5,84,741
29/Jp/98 Khrunisha 3 11,14,477 3,28,000 7,86,477
30/Jp/98 Mehrunisha 3 4,34,371 3,42,000 92,371
27/Jp/98 Mem 3 6,67,556 3,29,000 3,38,556
32/Jp/98 Sabra Banu 3 6,22,256 2,83,800 3,38,556
22/Jp/98 Salauddin 3 6,68,556 3,30,000 3,38,556
------------- ----------- -----------
3,20,20,208 94,95,015 2,25,25,196
----------------------------------------------------------------------
The income determined including returned income would be Rs. 1,74,52,208 being Rs. 1,08,222 for cash, Rs. 2,06,916 for gold jewellery, Rs. 8,23,060 for vehicles, Rs. 4,75,000 for marriage expenses, Rs. 2,10,000 for Haj Yatra, Rs. 10,00,000 for household expenses, Rs. 3,54,795 for household items, Rs. 1 lac for donation, Rs. 46,79,200 for construction and Rs. 94,95,015 for stocks. The income for all the members will be determined by the AO as mentioned in this order as against determined by him in his order including income returned by him.
40. In the result, all these appeals are partly allowed.