Income Tax Appellate Tribunal - Ahmedabad
Bhagwandas P.Punjabi, Ahmedabad vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL,
AHMEDABAD "A" BENCH,
BEFORE SHRI BHAVNESH SAINI, J.M.
AND SHRI N. S. SAINI, A.M.
IT (SS) A No.93/AHD/2007
Block Period: 01-04-1990 to 07-03-2001
Late Bhagwandas Punjabi Vs The A. C. I. T., Circle-6,
(Assessee)- Through Ahmedabad
L/H Ms. Varsha
Bhagwandas Punjabi
(daughter),
702, Ganesh Complex,
Opp. Navrang School,
Naranpura, Ahmedabad
PAN No. AEHPP 2016C
(Appellant) (Respondent)
For Assessee: Shri Asheem L. Thakkar, AR
For Department: Shri Rajeev Agarwal, DR
ORDER
PER SHRI BHAVNESH SAINI, J.M. This appeal by assessee is directed
against the order of learned CIT(Appeals)-XII, Ahmedabad dated 12-02- 2007 for the above block period on the following ground:
"1. The learned Commissioner of Income Tax (A) has erred in confirming an addition of Rs.15,20,000/- made by the Assessing Officer for the alleged undisclosed investment in the property on estimate basis."
2. We have heard learned Representatives of both the parties, perused the findings of authorities below and considered the material available on record.
23. The leaned Counsel for the assessee intimated that assessee has expired leaving behind his daughter Ms. Varsha Bhagawandas Punjabi as legal heir. Her affidavit is also filed. There is no objection to the substitution of the legal heir by opposite side. The assessee is, therefore, substituted through above legal heir.
4. The facts in brief are that a search operation u/s 132 of the IT Act was carried out in the case of Shri Devendra Gajendranath Chaturvedi. The key of t he property tenement No.4A, Navendu Co-operative Housing Society, Memnagar, Ahmedabad was seized by the police authorities and the same was handed over to the Income Tax Department u/s 132A of the IT Act. Shri Chaturvedi stated before the police that the above premises were purchased for Rs. 12 lacs from Shri Bhagwandas Parmanand Punjabi i.e. the assessee. However, during the course of block assessment of Shri Devendra Gajendranath Chaturvedi, he denied the above statement as having been taken under coercion by the police and the property belonged to the assessee only. The assessee was therefore, summoned and his statement was recorded u/s 131 on 04-10-2004, wherein the assessee has accepted the ownership of the property. However, t he assessee could not explain the source of investment before the ACIT, Central Circle 2(2), Ahmedabad. As the assessee could not substantiate the investment, proceedings u/s 158BD were initiated. It has been stated by the Assessing Officer that the above said property is not found reflected in the balance sheer enclosed to the return of income filed prior to the search. Hence, notice u/s 158BD read with section 158BC of the IT Act dated 17-11-2004 was issued to the assessee asking to file the prescribed return in form No.2B within 30 days of receipt of the above notice. The assessee furnished his return of income for block assessment on 31-03-2005 declaring undisclosed income at Rs. Nil. Further, a notice 3 u/s 143(2) (ii) of the IT Act was issued to the assessee on 10-05-2005. Incompliance, the assessee attended and submitted statement recorded by ACIT, Central Circle 2(2),Ahmedabad wherein he stated that he has not constructed any floor in the aforesaid tenement and his brother and mother stayed at the house and constructed the two floors. Further, he stated that he has not invested any money in additional construction, which was clearly stated in answer Nos. 6, 7 and 8 in his statement recorded on 04-10-2004. The Assessing Officer issued a detailed letter along with notices u/s 143(2) and 142(1) of the IT Act to the assessee. Subsequently, letters dated 19-10-2005 and 09-11-2005 were issued to the following parties by the Assessing Officer:
1) The Chief Officer, Memnagar Nagarpalika/Panchayat.
2) The Secretary/Vahivatdar, Navendu Co-op. Housing Society.
3) The Dy. Town Planner, AUDA, Ahmedabad The Assessing Officer stated in his order that the Secretary/Vahivatdar Navendu Co-operative Housing Society vide its letter dated 11-11-2005 stated that they have taken over charge of Navendu Co-operative Housing Society, Memnagar Ahmedabad from the Secretary on 17-11-2004 and they have not received the counterfoils of the share certificates. But they have issued duplicate share certificates wherein the tenement located at 4A Navendu Park Society, Memnagar,Ahmedabad originally belonged to Shri Bhailal Chandubhai Patel and t hereafter it has been registered in the name of Shri Bhikhabhai Maijbhai Desai and thereafter it has been registered in the name of Shri Bhagawandas P. Punjabi. In the light of the explanation offered by the Secretary, the Assessing Officer issued summons to Amarben Desai, wife of Late Shri Bhikhabhai M. Desai and her statement was recorded on oath. Smt. Amarben stated in her 4 statement that the above property was purchased already consisting of three floors and the same was sold to Shri Bhagawandas Punjabi with all the three floors. It was further stated by the Secretary/Vahivatdar that t hey have not obtained "No Objection Certificate" from the Co-operative Society under Co-operative Society Act, 1961 for any renovation/changes/ construction of other two floors. The Assessing Officer further stated that the property was referred to the Valuation Cell. The Valuation Officer has visited the site and based upon actual measurement the fair cost of investment of the entire property i.e. investment on land and building determined at Rs.15,20,000/- as on date of purchase i.e. 04-07-1998.
Further, the assessee filed its submission on 25-11-2005 before the Assessing Officer. It has been stated by the assessee that the said property was purchased at Rs.4 lacs out of inherited cash amount of Rs.4,11,000/- under Will from Smt. Shardaben R. Shah who expired on 16-02-1998. It has been further stated that the deceased had no children and she was aunt of the assessee's wife. Further, it has been stated that the assessee failed to reflect this property in the returns of income out of ignorance. The Assessing Officer stated that now, the assessee has filed revised balance sheets incorporating the above property. After considering the submissions made by the assessee, the Assessing Officer stated that the fact of receiving inherited amount of Rs.4,11,000/- on 16-02-1998 by way of Will from Smt. Shardaben R. Shah is nothing but afterthought story to hood-wink the revenue. The alleged date of gift is also dated 16-02-1998 with a view to make the proceeding time barred in the case of Smt. Shardaben R. Shah. The Assessing Officer contended that if the assessee had received any money by inheritance on the above date he could have definitely mentioned the same at the time of statement recorded u/s 131 of the IT Act or at the time of filing block return, which he has not done. After rebutting the argument of the assessee, the Assessing 5 Officer treated the value of the property at Rs.15,20,000/- and added the same to the total income f the assessee as undisclosed income.
5. It was submitted before the learned Commissioner of Income Tax (Appeals) that the assessee was first summoned by ACIT, Central Circle 2(2), Ahmedabad in connection with the block assessment proceedings in the case of Shri Devendra Gajendranath Chaturvedi before whom the assessee admitted that the property belongs to him and that he has purchased the same for Rs.4,00,000/- on 04-07-1998. It was further stated that the assessee had furnished complete information as to the purchase of the property in question. It has been stated that the property was purchased on 04-07-1998 as per the sale deed dated 04-07-1998 for a total consideration of Rs.4,00,000/-. The property in question was purchased by the assessee from Bhikhabhai M. Desai. It was further contended that as regards the source of fund for purchase of the said property the assessee has filed written submission before the Assessing Officer on 24-11-2005 explaining that the assessee had inherited Rs.4,11,000/- by Will from Smt. Shardaben M. Shah. The assessee further contended that in the absence of any material/evidence on record to show that the appellant had incurred any expenditure on construction/renovation or other investment in the said property, the estimate made by the Assessing Officer determining the total investment in the said land and building of Rs.15,20,000/- is totally unjustified. The assessee, therefore, contended that the addition made by the Assessing Officer may be deleted and income for the block period may be taken as per the return filed.
6. On consideration of the submissions of the assessee and the facts on record, the learned Commissioner of Income Tax (Appeals) confirmed the addition by holding as under:
6"3.3 I have carefully considered the facts of the case, observations of the A O as well as the arguments put forth by the learned Counsel for the appellant. From the facts of the case it is very clear that the property situated at 4A Navendu Co-operative Housing Society, Memnagar, Ahmedabad belongs to the appellant and the same was purchased from Shri Bhikhabhai Maijbhai Desai on 04.07.1998. As discussed above, it is clear in this case that the appellant did not show the property in his balance sheet. As per statement of Smt. Amarben Desai, W/o. of Late Shri Bhikhabhai M. Desai recorded on 22.11.2005, it was clearly stated by her that the property was purchased by her husband, which already consisted of three floors and the same was sold to Bhagawandas Punjabi with all three floors. The appellant neither during the course of assessment proceedings nor appellate proceedings proved any investment made in the property after it was purchased. It is conclusive evidence that when t he property was purchased it was a three storied building. So far as investment in purchase of property is stated by the appellant through the Will is concerned, the appellant could not clarify as and on what date the execution of will was made and how the money was received by the appellant is not clear. The Assistant Valuation Officer, who is a technical person determined the cost of land and building at Rs.15,20,000/- after inspecting the property and making the actual measurement. The Assistant Valuation Officer while submitting his report, determining the fair cost of investment in the property mentioned as under"
"The fair cost of investment on land and building as worked out by this office comes to Rs.15,20,000/- as on date of purchase i.e. 4.7.98. As the assessee has not submitted any details regarding the construction made after the date of purchase i.e. after 4.7.199, and it is also not identifiable at the time of inspection of the property. The undersigned has considered the total area of the building as existed at the time of purchase and the same fact has been received from the copy of form No.1 available with the assessee. The detailed report regarding the cost of investment of the property is follow. The above cost does not include the following:7
1. Addition/expenditure done by the occupant at first floor
2. Cost of movable furniture like sofa, Bed, Chair etc."
Accordingly, the value of Rs.15,20,000/- determined by the Assistant Valuation Officer as on 04.07.1998 is well considered and justified. It is also worth to be considered that he Secretary/Vajhivatdar has stated that they have not obtained "No Objection Certificate" from Co-operative Society under Co-operative Society Act, 1961 for any renovation/change/construction of other two floors (page 5 of assessment order). It means the investment made in the property as determined by the technical person, Assistant Valuation Officer at Rs.15,20,000/- was not disclosed to the department by the appellant, as it was made out of undisclosed source. In view of the above discussion and detailed order passed by the A. O., the addition made by the A. O. for unexplained investment in the property of Rs.15,20,000/- is hereby confirmed. This ground of appeal is, therefore, rejected.
4. In the result, the appeal is dismissed."
7. The assessee raised the following additional ground of appeal and requested that the same may be admitted for the purpose of hearing:
"1. The Appellant challenges the validity of the assessment made by the A. O. u/s. 158BC rws 158BD of the I. T. Act as the same is illegal & bad in law. Hence the assessment so made require to be annulled."
7.1 Learned Counsel for the assessee submitted that above additional ground is legal in nature and may be admitted. He has relied upon the decision of the Hon'ble Supreme Court in the case of National Thermal Power Corporation 229 ITR 383 (SC). He has referred to the findings of the Assessing Officer u/s 158 BC of the IT Act in the block assessment in respect of property in question in the case of Shri Devendran 8 Gajendranath Chaturvedi, the person in whose case search was conducted by police and action was taken by the Income Tax Department u/s 132A of the IT Act and submitted that the Assessing Officer did not believe his statement and directed to consider investment in the hands of the assessee. He has submitted that key of the property in question and statement of Devendra Gajendranath Chaturvedi was on record but there is no evidence that same were handed over by Assessing Officer in that case to the Assessing Officer of the assessee. He has submitted that post search enquiry was conducted against the assessee. He has submitted that key of the property has no value. Therefore, it is not a valuable property. He has submitted that onus is upon Revenue Department if any addition is to be made u/s 69 of the IT Act. He has submitted that notice issued by the Assessing Officer u/s 158BD/158BC dated 17-11-2004 is illegal because no status is mentioned in the notice. He has submitted that Assessing Officer in the case of the person searched has not recorded satisfaction as required u/s 158 BD of the IT Act. He has relied upon the following decisions:
(1) Manish Maheshwari Vs ACIT 289 ITR 341(SC)
(2) Vishwanath Prasad 86 ITD 516 (All)
(3) CIT Vs P. K. Ganeshwar 308 ITR 124 (Mad)
(4) Mangeram Mittal Vs ACIT 103 ITD 389 (SB) (Delhi)
(5) Morarjee Gokuldas Spg. & Wvg. Co. Ltd. Vs DCIT 95 ITD 1
(Mum) (TM)
(6) CIT Vs M. K. Gabriel Babu & Others 188 ITR 464 (Ker)
(7) Bhagawandas Narayandas Vs CIT 98 ITD 194 (Guj)
(8) Ambeshwar Gruh Nirman Sahkari Samity Ltd. Vs DCIT 84 ITD
139 (JP) (TM)
(9) CIT Vs Dawn View Funds Pvt. Ltd. 224 CTR 504 (Delhi)
(10) Radheshyam Tanwai 77 TTJ 505
(11) Srinivas Resorts Ltd. Vs CIT 86 TTJ 797 (Hyd.) (12) Chabaria Manufacturing Ltd. Vs CIT 81 ITD 314 The learned Counsel for the assessee accordingly submitted that the above additional ground may be admitted for hearing. He has however, 9 fairly conceded that the assessee never challenged the defect in the notice and initiation of proceedings u/s 158 BD of the IT Act before the Assessing Officer as well as before Learned Commissioner of Income Tax (Appeals).
7.2 On the other hand, Learned Departmental Representative submitted that no facts are available on record that Assessing Officer did not record any satisfaction as required u/s 158 BD of the IT Act or that the key and the statement of Devendra Gajendranath Chaturvedi was not handed over to the Assessing Officer of the assessee. Learned Departmental Representative submitted that the block assessment order in the case of Devendra Gajendranath Chaturvedi clearly discerned the satisfaction recorded by the Assessing Officer of the person searched and the seized material handed over to the Assessing Officer of the assessee. The Learned Departmental Representative submitted that the key of the property in question represents immovable property in question which was found to be correct and connected with the assessee. 158 BD proceedings have therefore, being correctly initiated against the assessee being the income of other person. Undisclosed income came to the knowledge of the department as per the material found during the search as well as from the statement of Devendra Gajendranath Chaturvedi and post search enquiry conducted from the assessee which was related to the material seized during the course of search. The assessee in the post search enquiry admitted undisclosed investment in the property which was not shown to the Revenue Department prior to the search. Assessing Officer was therefore, satisfied that assessee has undisclosed income within the block period. The Learned Departmental Representative submitted that since the assessee has not challenged the above issue before the authorities below and assessee has failed to adduce sufficient material to support the additional ground therefore, same cannot be admitted for the purpose of 10 hearing because otherwise it would amount to probing of the new facts not on record.
7.3 We have considered the rival submissions and the material available on record. Section 158 B of the IT Act provides definition of block period and undisclosed income. It reads as under:
"158B. In this Chapter, unless the context otherwise requires,--
[(a) "block period" means the period comprising previous years relevant to six assessment years preceding the previous year in which the search was conducted under section 132 or any requisition was made under section 132A and also includes the period up to the date of the commencement of such search or date of such requisition in the previous year in which the said search was conducted or requisition was made :
Provided that where the search is initiated or the requisition is made before the 1st day of June, 2001, the provisions of this clause shall have effect as if for the words "six assessment years", the words "ten assessment years" had been substituted;]
(b) "undisclosed income" includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act [, or any expense, deduction or allowance claimed under this Act which is found to be false]".
Section 158 BB provides computation of undisclosed income of the block period and reads as under:
"158BB. (1) The undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed, 1[in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence], as reduced by the aggregate of the 11 total income, or as the case may be, as increased by the aggregate of the losses of such previous years, determined,--
(a) where assessments under section 143 or section 144 or section 147 have been concluded [prior to the date of commencement of the search or the date of requisition], on the basis of such assessments;
(b) where returns of income have been filed under section 139 [or in response to a notice issued under sub-section (1) of section 142 or section 148] but assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such returns;
[(c) where the due date for filing a return of income has expired, but no return of income has been filed,--
(A) on the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such entries result in computation of loss for any previous year falling in the block period; or (B) on the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such income does not exceed the maximum amount not chargeable to tax for any previous year falling in the block period; (ca) where the due date for filing a return of income has expired, but no return of income has been filed, as nil, in cases not falling under clause (c);]
(d) where the previous year has not ended or the date of filing the return of income under sub-section (1) of section 139 has not expired, on the basis of entries relating to such income or transactions as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition relating to such previous years;
(e) where any order of settlement has been made under sub-section (4) of section 245D, on the basis of such order;
(f) where an assessment of undisclosed income had been made earlier under clause (c) of section 158BC, on the basis of such assessment.
Explanation.--For the purposes of determination of undisclosed income,--
(a) the total income or loss of each previous year shall, for the purpose of aggregation, be taken as the total income or loss computed in accordance with the provisions of [this Act] 12 without giving effect to set off of brought forward losses under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32:
[Provided that in computing deductions under Chapter VI-A for the purposes of the said aggregation, effect shall be given to set off of brought forward losses under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32;] [(b) of a firm, returned income and total income assessed for each of the previous years falling within the block period shall be the income determined before allowing deduction of salary, interest, commission, bonus or remuneration by whatever name called [to any partner not being a working partner] :
Provided that undisclosed income of the firm so determined shall not be chargeable to tax in the hands of the partners, whether on allocation or on account of enhancement;]
(c) assessment under section 143 includes determination of income under sub-section (1) or sub-section (1B) of section
143.
(2) In computing the undisclosed income of the block period, the provisions of sections 68, 69, 69A, 69B and 69C shall, so far as may be, apply and references to "financial year" in those sections shall be construed as references to the relevant previous year falling in the block period including the previous year ending with the date of search or of the requisition. (3) The burden of proving to the satisfaction of the Assessing Officer that any undisclosed income had already been disclosed in any return of income filed by the assessee before the commencement of search or of the requisition, as the case may be, shall be on the assessee.
(4) For the purpose of assessment under this Chapter, losses brought forward from the previous year under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32 shall not be set off against the undisclosed income determined in the block assessment under this Chapter, but may be carried forward for being set off in the regular assessments".
7.4 The above provisions would show that in block assessment under Chapter XIV B would apply in case of requisition was made u/s 132A of the IT Act. In the present case, the documents and material found in the search by the police was requisitioned by the Revenue Authorities u/s 132A of the IT Act and was also handed over to the IT Department. The 13 definition of undisclosed income u/s 158B (b) is inclusive of the items referred to in the above provisions. The computation of undisclosed income for the block period could be made in accordance with provisions of this Act on the basis of evidence found as a result of search or requisition of books of accounts or other documents and such other material or information as are available with the Assessing Officer and relatable to such evidence. The Finance Act 2002, has amended section 158 BD of the IT Act with effect from 01-07-1995, to clarify that the block assessment of undisclosed income is to be based on evidence found in the search and material, or information gathered in post search enquiries made on the basis of evidence found in the search. The provisions of section 68, 69, 69A, 69B and 69 C shall also apply for the block period. If any unexplained investment is made by the assessee and assessee offers no explanation about the nature and source of the investment or the explanation offered by assessee is not in the opinion of the Assessing Officer satisfactory, the value of the investment may be deemed to be income of the assessee of such financial year. Hon'ble Punjab & Haryana High Court in the case of Hotel Kumar Palace Vs CIT 283 ITR 110 (P&H) held as under:
"From a bare reading of section 158BB of the Income-tax Act, 1961, it is clear that undisclosed income of the block period has to be computed on t he basis of the evidence found as a result of the search or requisition of books or documents and such other materials as are available with the Assessing Officer. The incident of search is the foundation for applicability of Chapter XIV-B. Held, that as noticed by the Commissioner, income from catering business was estimated by the Assessing Officer, on the basis of the statement of the partner, recorded during the course of search, and diaries seized in these proceedings. The Tribunal had also observed that in his statement, the partner had admitted that income from catering business was not fully recorded in 14 the books of account. This finding was never under challenge. The block assessment was valid."
In the present case, key of the property and the property in question was admittedly belonging to the assessee. Statement of Devendra Gajendranath Chaturvedi was recorded by the police in which he has admitted to have purchased the property in question from the assessee for Rs.12 lacs. During the block assessment proceedings in his case, he has denied to have purchased the property and claimed that the property belong to the assessee. The assessee in his statement admitted ownership of the property in question but could not explain the source of investment. The investment in the property was also not shown to the Revenue Department prior to the search. The above facts would show that there was sufficient material available with the Assessing Officer of Devendra Gajendranath Chaturvedi which was requisitioned from the police u/s 132A of the IT Act. The post search enquiries conducted on the evidence and material requisitioned u/s 132A of the IT Act clearly revealed that assessee made undisclosed investment in the property in question which was not disclosed to the Revenue Department prior to the search in the regular return. In the case of Manish Maheshwari (supra) the following conditions were held to be precedent for proceeding u/s 158BD of the IT Act.
(i) satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person other than the person with respect to whom search was made under section 132 of the Act,
(ii) the books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person and
(iii) the Assessing Officer has proceeded under section 158BC against such other person.
15The block assessment order in the case of Devendra Gajendranath Chaturvedi in Para 23 clearly recorded the above facts by the Assessing Officer (ACIT, Central Circle 2(2), Ahmedabad) It was also noted that since the assessee could not explain source of the investment in the above property in question, therefore, the matter is referred to the Assessing Officer of the assessee i.e. ACIT, Circle-6, Ahmedabad. The block assessment order in the case of the present assessee is completed by ACIT, Circle-6, Ahmedabad. The finding in the case of Devendra Gajendranath Chaturvedi therefore, clearly discernible the satisfaction of the Assessing Officer in the case of the person searched and the seized material handed over to the Assessing Officer of the assessee. It would, therefore, prima facie prove that the conditions of section 158BD of the IT Act were satisfied before invoking jurisdiction in the case of the assessee. The assessee has not raised these issues before the Assessing Officer or the learned Commissioner of Income Tax (Appeals). The additional ground raised above is not purely legal in nature and is not arising out of the impugned orders of the authorities below. It involves investigation of facts which have not been brought on record by the assessee. In these circumstances, the assessee should have raised this ground at the earliest before the authorities below. No facts or material has been brought on record by the learned Counsel for the assessee in support of the additional ground of appeal. Since additional ground is raised by the assessee, therefore, assessee shall have to prove that the same is fit for admission. The onus on assessee is not discharged in this case. The challenge to the notice u/s 158 BD of the IT Act is not made before the authorities below and the assessee filed the return for the block period without any objection. ITAT Amritsar Special Bench in the case of Smt. Mahesh Kumari Batra Vs JCIT 95 ITD 152 held as under:
16"Any defect with regard to issue of notice under 158BC cannot render block assessment proceedings to be null and void; such defect will be rectifiable under section 292B."
7.5 The learned Counsel for the assessee relied upon several decisions of the Tribunal which are decisions on merits in their own facts. These are not relevant to the admission of the additional ground of appeal. In the case of P. K. Ganeshwar (supra), Hon'ble Madras High Court held that "since the fixed deposits in fictitious names not detected during search but by investigation following after search, therefore, not includable as undisclosed income". In the case of M.K. Gabriel Babu and others (supra) Hon'ble Kerala High Court considered the scope of section 132 of the IT Act as regards seizure of immovable property. In the case of Bhagawandas Narayandas (supra), Hon'ble Gujarat High Court considered the issue of limitation for seizure and the things or articles which can be retained u/s 132(5) of the IT Act. In the case of Dawn View Firms Pvt. Ltd. (supra) it was found that conditions of Section 158 BD are not satisfied. Therefore, departmental appeal was dismissed. The above decisions would not support the contentions of the learned Counsel for the assessee for admission of the additional ground. Learned Counsel for the assessee lastly argued that the material and evidence connected with invoking of the jurisdiction u/s 158 BD of the IT Act are the internal record of the department and assessee could not lay hand on the same. The submission of the learned Counsel of the assessee is devoid of merit because all materials connected with block assessment are part of the record of the block assessment and available with the Assessing Officer. The assessee could inspect the record or get the copy of the same by making a request in accordance with rules. The failure on the part of the assessee to do the needful would not support the contention of the learned 17 Counsel for the assessee. Considering the above discussion, we are not inclined to admit the additional ground of appeal at the second appellate stage. We accordingly reject the request of the assessee for admission of the additional ground of appeal.
8. Now, we consider the main issue on merit. The learned Counsel for the assessee reiterated the submissions made before authorities below and submitted that assessee purchased the property in question on 04-07-1998 for a sum of Rs.4 lacs from Shri Bhikhabhai Maijibhai and Amarben vide sale deed PB-65. PB-80 is the unregistered Will dated 25-12-1997 of Shardaben Ratilal Shah. PB-78 is affidavit of executor to the Will Shri Nimesh Jitendrabhai Shah. According to the Will Rs.4,11,000/- was given in cash to the assessee on the death of the deceased (testator) on 16-02-1998. He has however, admitted that the affidavits of the witness to the Will were not filed before the authorities below. He has submitted that Smt. Amarben, seller of the property was called and her statement was recorded by the Assessing Officer in which she admitted to have sold property to the assessee which was two/three storied building. He has submitted that Assessing Officer made reference to the DVO for valuation of the property on 18-10-2005 and the DVO filed his report of valuation on 25-11-2005 and on the same day the Assessing Officer passed the order for block assessment. He has submitted that no other evidence was recovered to show more investment in the property. Therefore, reference to the DVO is illegal. Learned Counsel for the assessee very fairly admitted that assessee has not shown or disclosed investment in property in a sum of Rs.4 lacs to the Revenue Department prior to the search and the same is also not shown in the books of accounts of the assessee. He has relied upon decision of Hon'ble Delhi High Court in the case of CIT Vs Ashok Khetrapal 294 ITR 143 (Del) in which it was held "when no adverse 18 material found during course of search, no addition by treating investment as undisclosed could be made". He has relied upon the decision of the Hon'ble Delhi High Court in the case of CIT Vs Manoj Jain 287 ITR 285 (Del) in which it was held "addition based on estimate of value of property not valid". He has relied upon decision of M P. High Court in the case of CIT Vs Khushal Chand Nirmalkumar 263 ITR 77 in which it was held "that a perusal of the unamended and amended provisions and the circular of the Central Board of Direct Taxes would make it clear that there had been no specific effect that the amendment effected to section 158BB in the Finance Act, 2002, with effect from July 1, 1995, would be applicable to the instant case as the block period covered ten years commencing 1986 to 1996. Emphasis had been given to the fact that the evidence must have been found during search and only thereafter the question of gathering any material information would arise based on the search inquiry. Admittedly, during the search in the premises of the assessee nothing was found with regard to the investment in the house. The contention that the valuation report of the Departmental Valuation Officer was obtained and was confronted to the assessee but he was not able to give any explanation and therefore it should be accepted as evidence could not be accepted in view of the provisions of section 158 BB and the law laid down by the Bombay High Court in the case of CIT v. Vinod Danchand Ghodawat [2001] 247 ITR 448". He has also relied upon decision of Hon'ble Bombay High Court in the case of CIT Vs Vinod Danchand Ghodawat 247 ITR 448 in which it was held "During the search, it was found that the assessee had constructed a bungalow. It was found that the assessee had incurred an expense of Rs.4.16 lakhs. The Assessing Officer, thereafter referred the matter to the Department Valuer, who valued the property at Rs.6.66 lakhs and, accordingly the difference had 19 been added to the income of the assessee as undisclosed income:
Held, that the above basis clearly showed that the Department had not understood the scope of Chapter XIV-B of the Act. The addition did not fall within the Chapter XIV-B.". He has also relied upon decision of Hon'ble Gauhati High Court in the case of CIT Vs Bimla Auto Agency 314 ITR 191 in which by following the above decision it was held that "DVO's report does not constitute material or information relatable to search. Tribunal deleting addition justified". On the other hand, Learned Departmental Representative relied upon orders of authorities below and submitted that assessee has not shown investment in property in the return of income. No source of investment proved. The Will and affidavit are fabricated and afterthought. The sale deed did not show exact value and construction in the property. Therefore, Assessing Officer was justified in making reference to the DVO for estimating the valuation of investment in property. The Learned Departmental Representative therefore, submitted that appeal of the assessee may be dismissed.
9. We have considered rival submissions and material available on record. As noted above the provisions for block assessment under Chapter XIV- B would apply in case of requisition was made u/s 132A of the IT Act. In the present case, the documents and material found in the search by the police was requisitioned by the Revenue Authorities u/s 132A of the IT Act and was also handed over to the IT Department. The definition of undisclosed income u/s 158B (b) is inclusive of the items referred to in the above provisions. The computation of undisclosed income for the block period could be made in accordance with provisions of this Act on the basis of evidence found as a result of search or requisition of books of accounts or other documents and such other material or information as are available with the Assessing Officer and 20 relatable to such evidence. The Finance Act 2002, has amended section 158 BD of the IT Act with effect from 01-07-1995, to clarify that the block assessment of undisclosed income is to be based on evidence found in the search and material, or information gathered in post search enquiries made on the basis of evidence found in the search. In the present case, key of the property and the property in question was admittedly belonging to the assessee. Statement of Devendra Gajendranath Chaturvedi was recorded by the police in which he has admitted to have purchased the property in question from the assessee for Rs.12 lacs. During the block assessment proceedings in his case, he has denied to have purchased the property and claimed that the property belong to the assessee. The assessee in his statement admitted ownership of the property in question but could not explain the source of investment. The investment in the property was also not shown to the Revenue Department prior to the search. The assessee's Counsel also admitted that same was not shown in the books of accounts of the assessee. Therefore, it prove on record that undisclosed income found in this case was based on evidences found in the search and material and information gathered in post search enquiries made on the basis of evidence found in search. The sale deed shows assessee made investment in purchase of property in a sum of Rs.4 lacs. The assessee tried to explain that Rs.4 lacs was invested after inheriting cash amount of Rs.4,11,000/- through the Will of Smt. Shardaben R. Shah. The assessee in his statement dated 04-10-2004 did not explain the execution of Will or inheritance of any amount through the Will. The Will is unregistered. The Will is attested by the witnesses I. K. Khalsa and K. L. Patel. The affidavits of the witnesses to the Will were not filed before the Assessing Officer and the CIT(A). As per section 68 of the Evidence Act the document (Will) cannot be used in evidence until one of the attesting witnesses has been called for the purpose of proving its 21 execution. The onus of proving a Will is on the propounder. Proof of signature of the testator, the testamentary capacity and at the time of execution, the testator was in a sound and disposing mind has to be proved. However, assessee did not discharge onus upon him in this regard. The affidavit of exacutor to the Will Shri Nimesh Jitendrabhai did not disclose if original Will was handed over to him along with the cash by the deceased or that he has distributed the cash as per the Will of the deceased. In the absence of satisfactory explanation, the execution and existence of the unregistered Will itself is doubtful and cannot be used in evidence. No reliance could be placed on the above Will or the contention of the learned Counsel for the assessee. It appears to be fabricated and created Will afterthought in order to explain investment in property which was never disclosed to the Revenue Department prior to search/requisition. It thus proved that assessee failed to explain the source of investment in the property in a sum of Rs.4 lacs. The above evidences, material or information were discovered during the course of search and requisition u/s 132A of the IT Act and the post search enquiries made on the basis of above evidences, material and information. Therefore, authorities below were justified in making the addition on account of undisclosed income in the block period. However, the question would be as to whether authorities bellow were justified in making addition of Rs.15,20,000/- in this matter. Admittedly, reference to the DVO is made after the search on 18-10-2005 to make the valuation of the property. No evidence is found in the course of search or requisition or in post search enquiries that the assessee made any further investment in the property in question. The DVO filed his report of calculation on 25-11-2005. Thus, the reference to the DVO and his report of valuation cannot be treated as evidence found during the search or requisition u/s 132A of the IT Act. The decisions cited by learned Counsel for the assessee above squarely apply 22 to the above case. The addition of Rs.1,5,20,000/- cannot be made. However, the assessee has failed to explain the source of investment in the property in question in a sum of Rs.4 lacs. The same investment was also not shown to the Revenue Department prior to the search and the assessee has not established that he had any intention to show the above investment to the Revenue Department. Therefore, the addition of Rs. 4 lacs shall have to be made as undisclosed income within the block period under Chapter XIV B of the IT Act. We accordingly, modify the orders of the authorities below and restrict the addition to Rs.4 lacs as against Rs.15,20,000/- made by the authorities below. As a result this ground of appeal of the assessee is allowed partly.
10. No other point is argued or pressed.
11. As a result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 7-05- 2010.
SSd/- Sd/-
(N. S. Saini) (Bhavnesh Saini)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date : 7/05/2010
Lakshmikant/-
Copy of the order f orwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A) concerned
5. The DR, ITAT,
6. Guard File
BY ORDER
ूित //True Copy//
DY.R/AR, ITAT, AHMEDABAD