Commissioner of Income-tax Cent.II,Chennai v. A.N.Dyaneswaran

The assessee's father, lateNamasivayam, passed away in the year 1991 and subsequently hismother also passed away in July 1996. The assessee has two sons,A.D.Senthureswaran and A.D.Sugavaneswaran. Sri. Senthureswaran isa bank officer and married. Sri. Sugavaneswaran, at the relevantpoint of time, was a student. The assessee is the karta of hisHUF with his two sons as co-parceners and claims to possessagricultural lands received on family partition. The assessee'sfather, late Namasivayam, had two wives, and the other wife, namely, Mrs. Ariapoo Ammal had six children. https://hcservices.ecourts.gov.in/hcservices/ iii)There was a search under Section 132 of the Income-taxAct ("Act" in short) in the case of the assessee, on 19th and 20thJanuary 1996. As a result of search, substantial quantity of cash, jewellery and various other documents evidencing investment inmovable and immovable properties and bank deposits in the name ofthe assessee, his mother, his children and some of his associatesand also documents indicating his earnings from certainundisclosed sources, were found and seized.

The search was spreadover to different places where the assessee had interest, but themain places were:-a) M-26, 10th Street, Anna Nagar, Madras andb) Assessee's Official Chamber in TAMIN at No.31, Kamarajar Salai, Chepauk, Madras-5.Subsequently, notice under Section 158BC of the Act was issued tothe assessee on 26.06.1996. Since the assessee was in the CentralPrison, notice under Section 158BC was served on him on 29.06.1996through the Superintendent of Central Prison, Madras. As per thisnotice, the assessee ought to have filed in the prescribed FormNo.2-B his Return of undisclosed income duly verified, within 16days of the service of the notice. While receiving the notice, theassessee stated that his remand has been extended upto 11.07.1996and while in remand, it is not possible for him to prepare andsubmit the Return. Therefore, he requested for 15 days time forfiling the Return after his coming out of the prison on bail.

Hecame out of the prison on 13.08.1996 and he finally filed hisReturn only on 29.11.1996 admitting "NIL" undisclosed income. Anotice under Section 143(2) of the Act was issued to the assesseeon 13.12.1996. The Assessing Officer completed the assessmentunder Section 143(3) r/w Section 158BC of the Act on 31.01.1997for the block period from 1986-87 to 1996-97 up to 20.01.1996,determining the undisclosed income at Rs.41,98,79,090/- anddetails regarding the same are as under:-"The total undisclosed income of the assessee for the block periodis computed as under:-Asst. Investments Income assessable Totalyear under sec.69 under other sources (after set off) ------------------------------------------------------------------------------------- Rs. Rs. Rs. 1986-87 -- Nil 1987-88 44,370 -- 44,370 1989-90 64,304 -- 64,304 1991-92 20,179 -- 20,179 1992-93 48,02,858 15,25,673 63,28,531 1993-94 32,28,198 1,48,98,436 1,81,26,634 1994-95 -- 4,46,34,244 4,46,34,244 1995-96 -- 6,66,67,346 6,66,67,346 https://hcservices.ecourts.gov.in/hcservices/ 1996-97 -- 28,39,93,480 28,39,93,480 --------------------- ----------------------- -------------------- 81,59,909 41,17,19,179 41,98,79,088 --------------------- ----------------------- -------------------- Total undisclosed income Rs.41,98,79,088 Rounded off toRs.41,98,79,090 ================ Income-tax thereon at 60% Rs.25,19,27,454 ================ "While determining the undisclosed income, the Assessing Officermade a number of additions.

Aggrieved by the order, the assesseefiled an appeal to the Income-tax Appellate Tribunal ("Tribunal"in short). The Tribunal deleted most of the additions made by the Assessing Officer and allowed the appeal partly. The disputeinvolved in the present appeal is related to the followingadditions. They are as under:-Addition No.1 relating to Question No.1:Addition of Rs.38,95,74,550/- made in respect of collections fromapplicants for granting mining licence. Addition No.2 relating to Question Nos.2 and 7:Addition of the amount of Rs.1,64,24,550/- being cash found in theresidence and office of the assessee accepting the assessee'scontention that outof this money, Rs.152 lakhs belonged to TamilNadu Basket Ball Association and Rs.12 lakhs belonged to theassessee's son. Addition No.3 relating to Question No.3:-Addition made in respect of investments made by the assessee'smother and sons amounting to Rs.2,60,45,591/- on the ground thatthe assessee's mother had filed a declaration under KVSS and thesonis a bank officer who has an independent source ofincome.

Addition No.4 relating to Question No.4:-Addition of Rs.1,69,19,621/- being donations received byDr.Dharmambal Namasivayam Trust and interest on donation ofRs.2,91,958/- on the ground that the Trust is an independententity. Addition No.5 relating to Question Nos.5 and 6:-Addition made in respect of investment in costly sarees amountingto Rs.10.12 lakhs and also deletion of addition of Rs.7,50,000/-made towards estimated marriage expenses of the assessee's son. Addition No.6 relating to Question No.8:-Addition of Rs.1,34,46,588/- being secret commission received fromforeign companies for sale of granite. https://hcservices.ecourts.gov.in/hcservices/ Addition No.7 relating to Question No.9:-Addition of foreign currency amounting to Rs.1,93,040 found at theresidence of the assessee at the time of search. Addition No.8 relating to Question No.10:-Addition of Rs.20,000/- in respect of fixed deposit in the name ofMr.Narayanan. Aggrieved by the order of the Tribunal, the Revenue has preferredthe present tax case.

The assessee also did not denyanywhere that he has not received the said amount. Further theassessee did not ask for cross-examining the persons seekingmining lease and hence the additions made by the Assessing Officeris justified.ii)In respect of the second addition, the counsel for the Revenue submitted that the Department seized Rs.15.59 lakhs fromthe assessee's bedroom and further a sum of Rs.1.49 Crores fromthe office of the assessee. The Assessing Officer rightlyrejected the explanation that the money belonged to the Tamil NaduBasket Ball Association. Actually the monies found in theassessee's residence as well as in the office room belongs to theassessee only. Hence, the Assessing Officer after makingelaborate enquiry, rightly came to the conclusion that the entirecash amounting to Rs.1,64,24,550/- found at the assessee'sresidence as well as his office room represented the assessee'sundisclosed income and is assessable under Section 69A of the Actfor the assessment year 1996-97. iii)In respect of third addition, it is submitted that theassessee's mother was a pensioner and no accumulated fundsavailable in her bank account.

It is also submitted that there isno evidence that it was used for purchase of property. Hence the https://hcservices.ecourts.gov.in/hcservices/ Tribunal is wrong in deleting the addition. Further it is statedthat the declaration filed by the mother of the assessee underKVSS was accepted by the Revenue and the same has become final. Hence the benefit of KVSS will not be extended to the assessee. Coming to the other part, the assessee's son did not state how theproperties were purchased, but subsequently he stated that theproperties were purchased out of the agricultural income and thatthe money was received from his grandmother and that there is noevidence for the same. Hence the Tribunal is wrong in deletingthe addition. iv)In respect of fourth addition, the counsel for the Revenue submitted that the Tribunal failed to see that Sri SampathKumar who has arranged the donations for Dharmambal Trust hascategorically stated before the Enforcement Directorate that hehas arranged the donations by availing loans from banks on thesecurity of the Fixed Deposits in the name of the NRI Sri.

NadadurVaradhan and he has received equal amounts of money pluscommission from the assessee. The documents seized from SriSampath Kumar also clearly indicate the receipt of money after thedonations are made. Also, it was found that the variouscontentions made by the Trust are bogus and the said amountbelonged to the assessee only. Hence the Tribunal is wrong indeleting the addition.v)In respect of fifth addition, there were costly sareesfound and listed at the time of search. The estimated cost of thesaree is at Rs.10,12,000/-. The assessee has not offered anyexplanation in respect of source of acquisition in respect of thesarees. In respect of wedding, the assessee's son got married on30.08.1995 and a reception in connection with the marriage washeld in Madras on 08.09.1995 in Rani Meyyammai Hall. Inconnection with the marriage reception, a music concert by GangaiAmaran & Party was organised.

It is stated that more than 3000people attended the marriage reception. The marriage expensesincurred has not been explained properly by the assessee. Hence, the Tribunal is wrong in deleting the addition. vi)In respect of the sixth addition, the Assessing Officerclearly given a finding that on the basis of the seized documents, which reasonably indicate that the payments were made by theforeign companies to the Chairman of TAMIN in his personalcapacity. Also, the Revenue found from the assessee's brief case,10 documents giving details of payments made by two foreigncompanies. Further the Department also verified with TAMIN and itwas confirmed by them by letter dated 27.11.1996 that large numberof these transactions could straight away be connected to saleinvoices to those concerns. Hence the Tribunal is wrong indeleting this addition without any valid material. https://hcservices.ecourts.gov.in/hcservices/ vii)In respect of the seventh addition, it is submitted bythe counsel appearing for the Revenue that the Tribunal is wrongin deleting the addition on the ground that the said foreigncurrencies belonged to Smt.

Seethalakshmi and it is seen from therecords that the said Smt. Seethalakshmi did not respond to thesummons issued. It is also submitted that the Tribunal is wrongin merely relying on the statement of the assessee that the amountpertains to one Seethalakshmi, and the mere preliminary statementwill not absolve the assessee of his onus.viii)In respect of the eighth addition regarding theaddition in the hands of the assessee, in respect of fixeddeposits amounting to Rs.20,000/- in the name of Narayanan, thelearned counsel for the Revenue submitted that the said Narayanandid not produce any material evidence to show that he has enoughresources available to him to make the fixed deposits. The fixeddeposit certificates relating to the fixed deposits were kept inthe personal custody of the assessee and no proper reasons weregiven by the said Narayanan as to how these fixed depositcertificates were kept in the personal custody of the assessee.

Hence the said fixed deposits belong to the assessee only. Therefore, the Tribunal is wrong in disregarding the relevantmaterials and came to the conclusion that it pertains to the saidNarayanan, without basis and justification. In view of the above, it is strenously contended by the learnedSenior Standing Counsel appearing for the Revenue that all thedeletions of the additions made by the Tribunal are without basisand justification and hence the same should be set aside.4.i)Learned Senior Counsel appearing for the assesseesubmitted that, with regard to the first addition, the Revenue hasnot established that the assessee has received an amount ofRs.38,95,74,550/- and that the Assessing Officer merely relied onthe documents seized which do not lead to any evidence regardingthe fact of collection of any money by the assessee by grantingmining licenses from various parties. Further it is submittedthat in the seized material there were no indication to show thatthe decimals or coded figures found in these papers stand forlakhs and thousands.

Further he submitted that no assets in thename of the assessee or cash to the extent claimed has been foundand as such there is no material evidence in this respect. TheAssessing Officer only made these additions on presumptions andthere is no corroborative evidence. He further submitted that theadditions were made only by circumstantial evidence. It is also afact that the assessee was officially concerned with the grant ofmining licences as a Member of High Level Committee only from10.03.1995 after the issue of Government Order. A new Rule 39 wasintroduced by G.O. No.97 dated 09.03.1993 empowering the StateGovernment to grant quarry leases on terms and conditions. This https://hcservices.ecourts.gov.in/hcservices/ was struck down in Madras High Court, but was upheld by SupremeCourt. After the order of the Supreme Court, a High LevelCommittee was appointed vide G.O.No.52 dated 10.03.1995. Thethree members of High Level Committee appointed by Government bythe G.O. were Additional Secretary / Joint Secretary, Commissioner/ Director of Geology and Mining and the Chairman and ManagingDirector of TAMIN. The Committee is only a recommendatory bodyand the ultimate power to grant or reject the licences is onlywith the Government.

So, whatever additions made in the financialyears 1992-93, 1993-94 and 1994-95 have to be deleted andadditions concerned with financial year 1995-96 alone should beconsidered. Further it is emphasised by the counsel that theaddition made for the assessment year 1996-97, there are no datesavailable in the seized material When the dates are notavailable in the seized material, the Assessing Officer was of theview that the amount will have to be assessed in the year ofsearch, i.e., financial year 1995-96, relevant to the assessmentyear 1996-97. It is further submitted that in the TabularStatement against each addition in the last column, it is given asamount D/L/P, but it was not indicated among which category thisparticular addition comes. It is also further submitted thatthere is no corroborative evidence except the slips of paperseized by the Department. Hence, the addition ofRs.38,95,74,550/- has been made without any basis andjustification.ii)In respect of the second addition, the learned SeniorCounsel submitted that the assessee had already given explanationthat the money seized from him belonged only to Tamil NaduBasketball Association ("TNBA" in short).

The money found at thehome also pertains to the rest of the family. It is the fact thatthe Government of Tamil Nadu hosted the SAF Games, 1995 an International Event at Chennai and the assessee was nominated asone of the three Joint Secretaries in charge of fund raising forinfrastructure facilities for stadium. The Government agreed tofund through TAMIN to air-condition the Indoor Stadium of TNBAwhere the basketball event was to be held and issued two G.Os.,namely G.O.Ms.No.276, Industries MME-2 Dept, dated 13.12.1995 andG.O.Ms.(LD)No.3 dated 06.01.1996. Anticipating delay in releaseof funds, General Council of TNBA by a resolution, authorised theassessee to collect funds up to Rs.2 Crores. The said TNBAcollected Rs.170 lakhs from 9 persons. After spending Rs.18 lakhsfor works connected with face lifting and temporary air-conditioning, the balance amount earmarked for air-conditioningamounting to Rs.152 lakhs kept in the chamber of assessee's officeand in the brief case of the assessee at Anna Nagar residence, since the basketball event was advanced preventing permanent air-conditioning work to be taken up though work was entrusted toM/s.Blue Star Co.

It is pertinent that this amount of Rs.152lakhs tallies with the amount sanctioned in the G.Os., i.e.,Rs.152 lakhs. The assessee discharged the primary onus by https://hcservices.ecourts.gov.in/hcservices/ establishing the identity of the party, capacity of the party andgenuineness of the transaction. The Revenue is wrong in rejectingthe explanation of the assessee. The assessee has proved thesources of the amount and it is wrong on the part of the Revenueto expect to prove the source of sources. The said TNBA has filedits Return for the year 1996-97 subsequently including the amountof Rs.1,48,65,650/- seized from TAMIN office and Rs.3.35 lakhsseized from residence and the same has been accepted by the Department. The assessment was also completed under Section 143(3) of the Act in the case of TNBA. So, it is wrong in makingaddition in the hands of the assessee.iii)In respect of third addition, it is submitted by thelearned Senior Counsel that the assessee's mother was a Doctor inthe Government Hospital for a long time.

Not only the assessee'smother availed declaration under KVSS but also the assessee's sonwho is a bank officer, also availed the declaration under KVSS forthe assessment year 1992-93 to 1996-97. Hence there cannot be anylevy of tax on the very same income. Tax has already been acceptedfrom the mother under the Samadhan Scheme. Hence it is wrong onthe part of the Revenue in making addition of the same amount asundisclosed income in the hands of the assessee which amounts todouble taxation. In respect of the amount assessed in the handsof the assessee's son on protective basis, it is wrong on the partof the Revenue to make the addition in the hands of the assessee. Further the assessee's son had sent a statement at the time ofsearch that he received a cash gift of about Rs.9 to 10 lakhs. Hence the assessee as well as his son have explained the sourceand therefore the income already assessed in the hands of theassessee's son should not be assessed in the hands of theassessee. iv)In respect of the fourth addition, there is no proofseized from the residence of the assessee or from office at thetime of search, linking the assessee directly with any of theallegations made in the assessment order.

There is no proof thatit is the assessee's money which was given to the Trust. OneMr.Sampathkumar has filed a sworn affidavit on 12.05.1996 in Enforcement Department clearly explaining his role. Most of thedonors who were enquired have confirmed about their donation tothe Trust. There is no direct payment by the assessee. Hisinvolvement was not at all proved by the Revenue. It is also seenthat the entire donations have gone to the Trust and have beenaccounted for in its books. The said amount cannot be treated asassessee's undisclosed income and also the Trust is a separatejuristic person and cannot be held as benami for somebody. Separate assessments have been made for the years 1994-95, 1995-96and 1996-97 for the entire amount of Rs.1.69 Crores as that of the Trust. For the assessment years 1994-95 and 1995-96 the appealwas allowed by the appellate authority, but for the assessmentyear 1996-97, the appeal is pending before the Tribunal.

Hence, https://hcservices.ecourts.gov.in/hcservices/ when already similar amount was assessed in the hands of the Public Trust, it is wrong on the part of the assessee to includethe same amount as undisclosed income in the hands of theassessee. The addition was made in the absence of valid materialsand the same is without basis and justification. v)In respect of the fifth addition, it is submitted by thelearned Senior Counsel that most of the sarees found were giftspresented during the marriage of the son performed in August 1995and also the assessee's mother, assessee's wife as well as theassessee's daughter-in-law are living in the same house and theyare the owners of the sarees which were acquired from time totime. It is also submitted that the value of the sarees weredetermined at exorbitant cost without any basis and justification. Hence the addition has been made only on the presumption.

Hence, the addition made is without basis and justification. Also, it iswrong on the part of the officer to make addition of Rs.7,50,000/-towards marriage expenses of the assessee's son and the trip to Singapore, as the same are purely on estimation. The assessee'smother has filed an affidavit admitting that she incurred theexpenditure of her grandson in respect of the marriage expenses. Hence the addition made by the Revenue is without basis andjustification. vi)In respect of the sixth addition made in connection withthe secret commission received from foreign companies, it has beenmade without basis and justification and the Revenue failed toproduce any evidence to show the assessee's own involvement in thetransaction. There is no corroborative evidence to show thatthese secret commissions were made directly or indirectly to theassessee. There is also no evidence as to how and to whom thepayments were made.

Hence the Assessing Officer is wrong inmaking addition on account of the secret commission received fromforeign companies for sale of granite and the Tribunal is right inrejecting the Revenue's stand. Hence the addition has been madewithout application of mind and the same cannot be sustained. Hence the Tribunal has rightly deleted the addition.vii)In respect of the seventh addition made with regard tothe foreign currency found in the assessee's house belonged to oneSeethalakshmi, the assessee had given a detailed explanation tothe Enforcement Officer on 27.03.1996 and also the saidSeethalakshmi appeared before the Enforcement Directorate inperson and recorded her statement confirming the whole issue. When the confirmation letter was filed, the source is explainedwithout doubt. Hence the Tribunal is right in deleting theaddition made by the Assessing Officer.viii)In respect of the eighth addition, the learnedSenior Counsel appearing for the assessee submitted that the saidNarayanan has explained before the authorities that he made the https://hcservices.ecourts.gov.in/hcservices/ fixed deposit out of the agricultural income and the fixed depositcertificates were kept in the safe custody of the assessee.

Further, the said Narayanan has also availed the benefit underKVSS. Hence it is not open to the Revenue to reject theexplanation offered by the said Narayanan on the ground that theassessments were made on protective basis. Also the Revenue iswrong in ignoring the declaration made by the said Narayanan underKVSS and including the said Narayanan's fixed deposit amounts inthe hands of the assessee.

Some slips contain the quality of granite suchas black, paradiso, kashmiri etc. and some slips containcertain denominations of money. b) The second category of data is hand written notes, primafacie, in the handwriting of Shri Dyaneswaran onhis own letter heads and the letter heads of the TAMIN(confirmed to be his hand writing by the Govt. Examinerof Questioned Documents). Each of the entries containdetails such as Sl.No., name of the applicant, name ofthe place, survey number and extent and the amount. Generally, this amount is shown in a coded form that toodecimal places. Apparently, the whole number stood forlakhs and the decimals stood for thousands. Some of theentries have been rounded off and / or tick-marked. Inrespect of some others, another coded number is writtenbelow that, probably indicating the amount received orreceivable.c) The third set of documents are typed sheets withdetails of the name and brief address of the applicant, the details of the mine, viz., the village, taluk andsurvey number, the nature of granite and extent.

These https://hcservices.ecourts.gov.in/hcservices/ were probably prepared by the staff who prepared papersfor consideration of the High Level Committee or thosewho prepared the minutes of the meetings of the HighLevel Committee. Against most of the times, in a codedform some handwritten numbers with two decimal placeshave been recorded. These handwritten numbers areprimafacie in the handwriting of Shri. Dyaneswaran. Infact, on some of the typed sheets where some columns areleft blank, they are seen to have been filled up by himin his hand. The coded numbers in the last column intheir list and the list referred to above at (b) cannotbe just wished away as inconsequential or meaninglessnumbers as they have been totalled and certaincalculations have also been made based on such numbers. "The Assessing Officer made the addition in respect of thecollection from the applicants for mining licences which has beenclassified into three categories:-1.Those in Mr.Dyaneswaran letter head and in the letter headof TAMIN - marked as 'D'.2.

Those appearing in the typed lists which apparently weremade for / by the High Level Committee - marked as 'L'.3.Slips in the handwriting of the applicants / their representatives - marked as 'P'.The year-wise total collection is arrived at based on the datesfound in the materials seized. Where date is not available, suchamounts are totalled and shown separately. For the purpose oftaxation, the amount for which dates are not available are beingconsidered in the year of search, i.e., the assessment year 1996-97. Details of additions made are as under:- Financial year Asst. year Amount No. of (Rs.) licences 1992-93 1993-94 17,93,500 11 1993-94 1994-95 4,43,12,200 134 1994-95 1995-96 5,98,51,250 306 1995-96 1996-97 8,04,18,250 198 Dates not 1996-97 20,31,99,350 345 available --------------- ------- TOTAL 38,95,74,550 994 =============== =======The Assessing Officer, when he made the assessment, he was of theview that the complete one-to-one matching of the entire dates isnot possible and further stated as under:-Thus, a complete one-to-one matching of theentire data is not possible.

But it could beseen as per the list enclosed that in a numberof cases, the data is traced in all the threelists and in some cases, the data is traced intwo lists. Of the documents seized, 164documents are of the type referred to in thefirst category described in (a) above. Of https://hcservices.ecourts.gov.in/hcservices/ these details relating to the mines mentionedin 125 records have corresponding matchingentries in one or both of the other twocategories described above and detailsrelating to mines mentioned in 70 recordsappear in all the three categories listed. Ofthe total data available in respect of mines(995) for which licences were applied, detailsrelating to 359 mines appear in more than onelist. The internal consistency of thematerials seized from the assessee also showsthat the papers relate to grant of mininglicences only and unless they had somesignificance the assessee would not haveretained them.

The amounts mentioned in codeddecimal form is in lakhs and thousands as inmany cases, the decoded amounts tally with theamounts mentioned in the slips in thehandwriting of the parties and / or theirrepresentatives and in some of the cases eventhe denomination for the amount was recorded. The results of random verification carried outwith the applicants who parted with money infavour of Shri Dyaneswaran for grant oflicenses is given below. But one thing thatneeds to be pointed out here is that it isneither humanly possible nor is it requiredunder the law that in respect of each andevery person money has been paid and receivedas per details noted in the seized documents. All that one can and has to establish was thatthere was a practice of collection of moneyfor grant of licenses and infact in manycases, the rates are also fixed. [It probablydepended on the quality of the granite and inmany cases, it works out to Rs.1,50,000/- peracre.

Whereas in respect of limestone, it wasa different figure and for quarries, yetanother figure etc.] and with reference to asample population that payment has actuallybeen made by the applicant for obtaining thelicence [or to be more correct forrecommending the grant of licence]. Thesehave been conclusively brought out in thestatements of the persons examined. "From the above it is clear that out of the seized materials, only23 cases were examined as against 994 licencees. In this case, the Assessing Officer selected only 23 mining licencees out of 994licencees and obtained the statements from the said 23 mininglicencees. Based on the statements given by them, he came to theconclusion that the assessee received illegal money and the same https://hcservices.ecourts.gov.in/hcservices/ is treated as undisclosed income of the assessee. In respect ofremaining 971 mining licencees, there was no further enquiry or nostatements were obtained by the Assessing Officer, and withoutfurther enquiry and investigation into the matter, the AssessingOfficer came to the conclusion that the assessee would havereceived illegal money and the same is treated as undisclosedincome.

Here, it is seen that even though he obtained statementsfrom 23 persons, no opportunity was given to the assessee tocross-examine. Further in respect of others, no statement wasobtained or no cross verification was done. Also, no otherevidence were produced by the Revenue. When the assessee askedfor cross-examining in respect of 23 persons, the AssessingOfficer has not given any opportunity to cross-examine. Besides, no opportunity is given by the Revenue to cross-examine theremaining persons. The papers seized from the brief cases hadbeen divided into three, one prepared by the applicants or theirrepresentatives in their handwriting with their address, location, etc. in which there is no mention of any of the assessee's allegedhandwriting. The second category are written notes, whichaccording to the Revenue, prima facie, by the assessee in hisletter head or that of TAMIN, which is in the handwriting of theassessee, which fact had been confirmed by the handwriting expert.

These papers contain coded numbers with two decimals whichapparently stand for lakhs and thousands, according to the Revenue. In the same papers, another coded number is written belowthe first coded figures which, according to the Revenue, probablyindicate the amount received or receivable and the third set ofpapers is said to be prepared by the staff who prepare such papersfor the High Level Committee for its meeting. Again, in thesepapers there were coded hand-written number with decimals whichagain prima facie, according to the Revenue, is in the handwritingof the assessee. From the above, it is clear that that regardingthe first set of papers, there is no claim even by the Revenuethat it is written in the assessee's handwriting and only in somepapers there is mention of some denominations of money. It is notclear how the Assessing Officer arrived at the conclusion that thecoded figures are standing for lakhs and thousands.

It is againnot certain whether it is a receipt or payment. The Revenue was ofthe view that it stands for receipt. There is no corroborativeevidence to hold that it is actually receipt. But in this case, the Assessing Officer, in the Assessment Order, gave illustrationsthat the slips for the summary of the statements recorded from 23applicants were seized from the assessee. But no opportunity wasgiven to the assessee to confront the person concerned by way ofcross-examining the applicants. There is no dispute that noopportunity was given to the assessee, even though there was aspecific request made by the assessee. Hence, the statementstaken are only from persons said to have made the payments andthey do not establish that the figures mentioned in the seizedpapers are speaking nothing, nor was the assessee given anopportunity to cross-examine these deponents. It is seen from the https://hcservices.ecourts.gov.in/hcservices/ statements that most of the persons claim that they have not madedirect payment, but it was made through some of their employees.

Their statements are not brought on record. The Tribunal hadgiven a finding at Paragraph 78 that the assessee was not given anopportunity to contradict the statements of such persons. If theassessee specifically makes such a request, it is imperative thatan opportunity should be extended to the assessee which has notbeen complied with. Therefore, we are of the view that thestatements cannot be acted upon. In Paragraph 81 of the Tribunal's order, it is stated as follows:-"Another statement recorded is from one ShriP.Rajasundar Singh, Partner of M/s.EagleGranites, Madras. This statement was recordedon 31-12-96. Answering question No.4, thedeponent says that he made the application tothe Collector of the District in the formatprescribed and made the deposit required asper the law. The application was forwarded bythe Collector to Mining & GeologicalDepartment and to the Tahasildar andDy.Director of Mines and Geology, Madras forinspection, and it is the Director of Miningand Geology who will recommend and send theapplication to the Industries Department.

Answering Question No.7, the deponent says"No', we have not paid any money to anybodyapart from the legal fees etc. for clearingthe licence. When the deponent was confrontedby the seized material from the assessee'sbrief case, ultimately he agrees he made somepayments in addition to this. Answeringquestion No.15, he says that he made thepayment to the assessee about two months priorto the issuance of the licence. At the end, heexpressed his regret for the mistake by nottelling the truth first. We are unable totake this statement also at its face value. It is very difficult to attribute the paymentto the assessee as for getting the quarrylicence. The procedure followed is clear fromthe answer to question No.4. The applicationwas made to the District Collector who in turnforwarded it to the concerned Tahasildar forinspection and to report to the Director of Mining & Geology for recommendation forissuance of licence.

It is again to be seenthat the assessee was never afforded anopportunity to confront the deponent. Revenuesays that all the papers were subsequentlygiven to the assessee. It is also the case ofthe Revenue that it is not relying on these https://hcservices.ecourts.gov.in/hcservices/ statements. If he is not relying on thesestatements, then there is no meaning in takingstatements and putting them on record. Further, in the absence of any cross-examination of the deponents by the assessee, none of these statements could be used againstthe assessee. Therefore, we are of the viewthat the Revenue's case that the seizedmaterials speak voluminously for thecollection of illegal receipt by the assesseeis not established. There is no corroborativeevidence except the slips of papers seized. It is true, the assessee is neither denying oradmitting receipt of payments in connectionwith the issuance of licence for quarrying.

It is established by the Revenue that some ofthe papers are prepared in the office of HighLevel Committee for the purpose of High LevelCommittee. At least the staff who are said tohave prepared these papers should haveexamined to find out the truth of thesepapers. If the applicant says he paid moneyto the assessee, then it was very essential togive an opportunity to the assessee toconfront the person who claimed to have madethe payment to the assessee, assessee beingthe affected party or the accused. Evenotherwise, we find that the decision of the Hon'ble Allahabad High Court reported in 183ITR 388 (Pushkar Harain Sarraf v. CIT) doesnot support the case of the Revenue that sub-section (4A) of s.132 is a presumption in Revenue's favour. In this case, the Hon'bleHigh Court held at page 391 that "Taking thefirst question first, we are clearly of theopinion that the presumption arising undersection 132(4A) is available only in regard toand in the context of search and seizure.

Sections 132 to 132B of the Income-tax Act, inour opinion, embody an integrated schemelaying down comprehensively the procedure forsearch and seizure and the power of theauthorities making the search and seizure toorder the confiscation of the assets seizedunder section 132 of the Act, that is, thepresumption arising under sub-section (4A) ofsection 132 applies only in relation to theprovisional adjudication which is contemplatedunder sub-section (5) of section 132. Sub-section (5) of section 132 provides forestimation of the undisclosed income or the https://hcservices.ecourts.gov.in/hcservices/ calculation of the amount of tax on the incomeso estimated and the determination of theamount of interest payable or the amount ofpenalty imposable in a summary manner. Forthis limited purpose, the Legislature hasprovided under section 132(4A) that the booksof accounts, other documents, money, bullion, jewellery or other valuable articles seizedfrom the possession of the assessee shall bepresumed to belong to the assessee if they arefound in the possession or control of theassessee in the course of the search.

Asimilar presumption may also be made as to thecorrectness of the contents of the books ofaccount so seized. So also the signature andevery other part of the books of account maybe assumed to be in the handwriting of theperson by whom it is purported to have beenwritten"."Further, in the absence of any cross-examination of the deponentsby the assessee, none of these statements could be used againstthe assessee. Therefore we are of the view that the Revenue'scase that the seized materials speak voluminously for thecollection of illegal receipt by the assessee, is not established. There is no corroborative evidence except the slips of papersseized. It is true that the assessee is neither denying oradmitting receipt of payments in connection with the issuance oflicence for quarrying. From a reading of the above, it is clearthat the Assessing Officer had not given any opportunity to theassessee. In the assessment order, it is clearly stated that itis humanly impossible to correlate.

It is further stated in Paragraph 3.61 as follows:-"Otherwise if one were to concede theassessee's demand one should have gone aboutand examined the 1000 and odd parties, allowedopportunity of cross examination to theassessee and based on results of suchexamination and cross examination, reexamineall of them for completion of the exercise andadd up such payments to arrive at theundisclosed income from this source. Anybodycan imagine that such a procedure is notpragmatic and not rational. The slips ofpapers in parties handwriting givingdenomination of the amounts, assessee's ownletter head showing in his own handwriting andidentical details in a typed list where againsuch details tally in a number of instancesand the meticulous way they were carefullypreserved by the assessee cannot be brushedaside as inconsequential and irrelevant, the https://hcservices.ecourts.gov.in/hcservices/ way the assessee would like them to be dealtwith.

They have to be taken to a logical end, because they are not without a meaning or asignificance. Their significance is crystalclear already with circumstantial evidences, such as getting the quarry lease licencewithin a short time from the date of payment(mentioned in the party's slips)."Further it is seen in this case that notice under Section 158BCwas issued on 26.06.1996. Later notice under Section 143(2) wasissued on 13.12.1996. Further the statements were taken only from23 applicants on various dates and the last one was taken only on27.01.1997. The assessment was completed on 31.01.1997, i.e.,the last due date for completing the assessment. From the above itis clear that there is a paucity of time to call for thestatements from other applicants and also no opportunity has beengiven to the assessee to cross-examine the applicants. Obviously, the reason is that the Assessing Officer had to make theassessment on or before 31.01.1997 under Section 158BE of the Act.

The said provision deals with time limit for completing theassessment which says that the Assessing Officer has to completethe assessment within one year from the end of the month in whichthe last of the authorisations for search under Section 132 or forrequisition under Section 132A, as the case may be. One of themain reason given by the Tribunal for disregarding the statementsand documents relied on by the Revenue is that, no opportunitygiven by the Assessing Officer to the assessee to cross-examinethe same. Taking into consideration all the above factors, we areof the view that the assessments were completed without givingproper opportunity to the assessee to cross-examine theapplicants. In this case, the Assessing Officer has called only23 persons and obtained the statements. The balance of the seizedmaterials related to several applicants and the Assessing Officerdid not make any attempt to correlate or verify or try to obtainthe statements from the other applicants, as has been done for 23cases.

On the basis of the statements given by the 23 persons, the Assessing Officer presumed that whatever figures appearing inthe seized material would represent the undisclosed income of theassessee. Also, it is seen that for the seized materials relatingto 345 applicants, no dates have been mentioned. In respect ofthe same, the Assessing Officer totalled the amount and made theaddition of Rs.20,31,99,350/- in the year of search, i.e., for theassessment year 1996-97. The said huge addition is made withoutverification from the 345 persons. The fact whether really theamounts have been paid or not is not mentioned. Even if we assumethat the said amounts were paid, the details regarding the datesof payment are also not mentioned. Without considering the aboveaspects, the Assessing Officer made this addition without basisand justification. There are procedural irregularities, defectsand infirmities, which are as follows:- https://hcservices.ecourts.gov.in/hcservices/ a)No opportunity given to the assessee to cross-examine.b)The Revenue obtained statements only from 23 applicants and left out 971 applicants who applied for licence.c)In respect of 345 applicants, no dates are mentioned in the seized materials.

The Assessing Officer, simply totalledthe amounts and made an addition of Rs.20,31,99,350/- for theassessment year 1996-97.d)The Assessing Officer himself stated that it is impossibleto correlate and obtain statements from the licencees.e)Paucity of time to complete the assessment - Notice givenunder Section 143(2) of the Act on 13.12.1996. The statementtaken from one of the 23 mining licencees was only on27.01.1997 and immediately the assessment was completed on31.01.1997. In the present case, the Tribunal allowed the appeal of theassessee mainly on three grounds:-a)There is no examination on the deponent by the assessee and hence none of the statements can be used against theassessee.b)There is no corroborative evidence except the slips of papers seized.c)Merely because these slips of papers were found in the assessee's residence, the entire papers cannot be attributedto the assessee without getting elucidated from the partiesconcerned.

From a reading of the above, it is clear that the assessment wasmade without proper enquiry and in this case, the assessment orderpassed by the Assessing Officer suffers from proceduralirregularities, defects and infirmities. The Tribunal ought tohave remitted the matter to the Assessing Officer for furtherinvestigation. In view of the above procedural irregularities, defects and infirmities in the order of the Assessing Officer, especially in the interest of justice, we set aside the order ofthe Tribunal and remit the matter to the Assessing Officer with adirection to consider the matter afresh, keeping in view of thediscussions made above, and pass orders after giving opportunityto the assessee in accordance with law. Question Nos.2 & 7 - Cash found in the assessee's office andresidential premisesDuring the search a cash amount of Rs.15,58,900/- was found inthe assessee's bed room. Out of it, Rs.15,50,000/- was seized.

Apart from this, cash to the extent of Rs.1,48,65,650/- was foundand seized from the assessee's official chamber at TAMIN. Theassessee stated that he had kept the cash belonging to the TNBA,of which he is the Chairman-cum-Chief Patron, with him and suchcash would be about Rs.2 to 3 lakhs. When questioned about thecash found at his office, the assessee stated that about one croreof rupees in cash may be available and that the entire money https://hcservices.ecourts.gov.in/hcservices/ belonged to TNBA. It was stated that the money was collected fromTNBA enthusiasts as a stop gap arrangement till the moneysanctioned by the Tamil Nadu Government was released. It wasfurther stated that no receipts had been given to the persons whogave the money and also the receipts were also not recorded in thebooks of TNBA. The collections were done on a war-footing becausethe Government had not released the funds sanctioned.

Whenquestioned further, the assessee gave the names of some personsand they are as under:-1. Karthikeyan of Salem Basketball Association2. Sivanadiyan of Madurai Basketball Association3. Kalaiselvan of Trichy Basketball Association4. Viswanathan of Karur Basketball Association5. Shanmugasundaram of Periyar Dt. Basketball AssociationIt was stated that these persons had given loans from AssociationFunds or from private individuals. It was also stated thatnobody other than the assessee was keeping the funds belonging toTNBA. It was also stated that Madurai Association has paid Rs.3to 5 lakhs, Trichy and Karur Associations have paid Rs.5 to 10lakhs and Periyar and Salem Associations have paid Rs.5 to 10lakhs etc. The main case of the assessee is that the moneybelongs to TNBA but was in the possession of the assessee for thework of the stadium. The said money was collected from parties asadvance for the work of the stadium.

The assessee identified ninepersons and the names of all these persons were given. TheAssessing Officer examined these persons and all of them confirmedhaving advanced money. The persons who had been examined, confirmed having advanced money to the extent of Rs.1.2 Crores. The other persons who claimed to have advanced money to the extentof Rs.50 lakhs have not been examined by the Assessing Officer. So, the assessee had discharged the primary onus of giving theidentity of persons and the assessee is not supposed to dischargethe onus of proving the source of sources. Seven persons who hadbeen questioned, have admitted that they had handed over the moneyto the assessee. The Assessing Officer only disbelieved itbecause they have no source. The Assessing Officer alsodisbelieved the explanation because TNBA has no proper source. The statements given by various persons who had made the donationsto the TNBA, have been considered by the Tribunal in its order, from paragraphs 102 to 127.

It is seen that the Tribunal foundthat most of the names given by the assessee are of BasketballAssociation Members. The collection of the funds may not be in alegally accepted way. It was not denied that there were someattempts to air-condition the entire stadium and also there wereworks undertaken in anticipation of funds from the Government. So, the money collected for the above purpose, though not in alegally accepted way, cannot be treated as the assessee's personalasset. It is seen that, subsequently TNBA had filed its Returnand the same has been accepted with the condition that this wouldnot preclude the Revenue from contesting the issue in higherforums. In the hands of the TNBA, the assessee had been denied https://hcservices.ecourts.gov.in/hcservices/ the benefit of exemption and an amount of Rs.152 lakhs had beenbrought to tax. Assessment had been completed under Section 144r/w Section 143(3) and penalty had also been levied which meansthat the Revenue had treated this assessment as substantive andthe tax had been accepted.

So, the assessee had discharged thepreliminary onus by establishing the identity of the party, capacity of the party and genuineness of the transaction. Theidentified party, i.e., TNBA acknowledged their role and disclosedthat nine persons who are mostly concerned with basketballactivities, have advanced the money of Rs.170 lakhs. Out of ninepersons, the revenue examined seven persons and all of themconfirmed having advanced monies, i.e., Rs.120 lakhs for thepurpose. Revenue had not examined two persons who gave Rs.50lakhs though all details about them were furnished. The source ofTNBA also have been proved. Hence the monies seized from theresidence as well as the office of TAMIN belong to TNBA. TheGovernment of Tamil Nadu hosted the SAF Games 1995, an International event at Chennai and the assessee was nominated asone of the three Joint Secretaries in charge of fund raising forinfrastructure facilities for the stadium.

The Government agreedto fund through TAMIN, to air condition the Indoor Stadium ofTNBA. Anticipating delay in release of funds, the General Councilof TNBA by a resolution, authorised the assessee to collect fundsupto Rs.2 Crores. TNBA collected Rs.170 lakhs from 9 persons. After spending Rs.18 lakhs for works connected with face liftingand temporary air conditioning, the balance amount earmarked forair conditioning amounting to Rs.152 lakhs was kept in the chamberof the assessee's office and in the red brief case of the assesseeat Anna Nagar residence, since the basketball event was advancedpreventing permanent air conditioning work to be taken up thoughwork was entrusted to M/s.Blue Star Co. The Tribunal accepted theabove explanation and held that the monies seized from theresidence and office premises of the assessee belong to TNBA.Merely not withdrawing the writ petition by the TNBA and also nosuit or claim filed by the person who is said to have paid themoney, would not alone be sufficient to include the amount asundisclosed income in the hands of the assessee.

It is also seenthat the TNBA has filed its Return for the assessment year 1996-97and subsequently it had included the amount of Rs.1,48,65,650/-seized from TAMIN office and Rs.3.35 lakhs seized from residence, and the same have been accepted. The assessment was alsocompleted under Section 143(3) of the Act. Hence the assessee hasproved the identity, capacity and the genuineness of the sources. The finding given by the Tribunal is based on valid materials andevidence. It is a pure question of fact and is also not aperverse one. In view of the same, the Tribunal has correctlycome to the conclusion that these monies should not be included inthe hands of the assessee, and rightly deleted the addition. Hence we are of the view that the deletion of addition made by the Tribunal is justified. https://hcservices.ecourts.gov.in/hcservices/ Question No.3 - Investments made in the names of assesses's motherand the assessee's sonIn respect of the investments made in the names of assessee'smother and the assessee's son, in the course of search it wasfound that there are various movable and immovable properties inthe names of assessee's mother Dr.Dharmambal and the assessee'sson Sri Senthureswaran, as follows:-"I. Dr.Dharmambal: Sl.No.

Name of investment Period Amount Asst.year1. No.9, Waterworks Colony, 1983-84 Rs.2,30,000 Kilpauk, Madras-10. Additional Construction 1983-84 Rs.1,70,0002. House site at Mogappair 1994-95 Rs.2,05,0003. House constructed in 1996-97 Rs.6,31,000 Arasangudi4. Investment in M/s.Aahhaa 1996-97 Rs.1,00,000 Exports as a partner5. Investments in Shilpigrih 1995-96 & Rs.59,46,738 Constructions 1996-976. Investment in Sri Bala 1992-93 & Rs.68,46,000 & Co. 1995-967. Investment in Plutogranites 1996-97 Rs.11,05,0008. Loan to Sri Arivazhagan 1996-97 Rs.10,00,0009. Advance for purchase of 1996-97 Rs.13,00,000 8, Waterworks Colony, Kilpauk, Madras-10 to Sri Marthandam10. Investment in INAS Benefit 1996-97 Rs. 1,00,000 Fund11. Repayment of loan and interest to Indian Members Benefit Fund - Principal Rs. 9,00,000 Interest (in various years) Rs. 7,72,853 https://hcservices.ecourts.gov.in/hcservices/ II. Sri Senthureswaran:1.

Half share in M-26, 1993-94 Rs.10,93,000 Anna Nagar, 10th St., Madras-102.2. Addition to the above 1995-96 & Rs. 7,24,000 building 1996-973. Agl.lands at Arasangudi 1995-96 Rs. 1,05,0004. Vacant site at Mogappair 1994-95 Rs 1,90,0005. Land at Mogappair 1994-95 Rs. 2,05,0006. Fixed deposit with Indian 1993-94 Rs. 1,20,000 Bank7. Investment in INAS 1996-97 Rs. 1,00,000 Benefit8. Investment in Unique 1996-97 Rs. 1,50,000 Minerals (as a partner)9. Shares 1995-96 & Rs.21,69,000" 1996-97As regards the investments in the name of Dr.Dharmambal, the wholething had been attempted to be explained as out of her allegedearnings from agriculture, professional income from medicalpractice and Rs.51 lakhs allegedly received by her from herhusband. In respect of the investment made by the assessee's son, it was explained that the source was from agriculture as well asthe amount given by the assessee's mother Dr.Dharmambal.

Eventhough the Tribunal did not believe the explanation offered by themother of the assessee in respect of the source, it is stated inparagraph 168 of its order, as under:-"However, we find that inspite of all these, Dr.Dharmambal has availed the benefit underKVSS and Revenue has accepted it. By thisaction, Revenue has treated the protectiveassessment made in the hands of Dr.Dharmambalas substantive assessment. Another importantfactor in the assessment of Dr.Dharmambal isthat it is a regular assessment. Normally, ifany undisclosed income belonging to any personhas been detected during the search andseizure action under s.132 or requisitionunder s.132A, the assessment would have been https://hcservices.ecourts.gov.in/hcservices/ done under s.158BD read with s.158BC. Asagainst this, it has been assessed as aregular assessment. In the light of the abovefact, we are of the view that the additionmade in the hands of the assessee onsubstantive basis with reference toDr.Dharmambal cannot be confirmed.

Unders.158BB(1), the undisclosed income of theblock period shall be the aggregate of thetotal income computed on the basis of theevidence found as a result of search orrequisition or other document found as aresult of materials gathered or informationreceived. "It is seen that the same amount was already declared under the Samadhan Scheme and was assessed. Also, if certain documents arefound against a third party, then he should have completed theassessment against the third party under Section 158BD r/w Section158BC of the Act. Instead of doing that, it has been assessed asregular assessment. We do not find any error or illegality in thereasoning given by the Tribunal even though the assessments areprotective assessments in the hands of the assessee's mother andthe assesee's son. Also having accepted the declarations madeunder KVSS, the assessments were completed on a regular basisunder Section 143(3) of the Act.

Hence the Revenue is wrong inadding the amounts in the assessee's income as undisclosed income. Hence we are of the view that the deletion of addition made by the Tribunal is justified. In respect of the assessee's son, the Revenue made protective assessment in the hands of the assessee'sson and the assessee's son, who is a Bank Officer had also given astatement at the time of search that he received the gifts ofabout 9 to 10 lakhs in cash during the marriage reception and alsoreceived gold items. This preliminary statement was made beforethe revenue authorities at the time of search. The Revenue isalso unable to give any material or evidence to take a differentview. Hence the Tribunal is right in deleting this addition. Question No.4 - Deposits in Dharmambal Namasivayam Trust ofRs.1,69,19,621/- and Rs.2,91,958/-The Trust is a Public Charitable Trust formed by lateDr.Dharmambal. Dr.Dharmambal is the executor of the Deed.

Theassessee, the assessee's wife and the assessee's sonSri. Senthureswaran are the Trustees. The object of the Trust isrelief to the poor, education and medical relief and advance ofany other charitable object of general public utility. The Trustapplied for registration under Section 12A of the Act on03.02.1993 and recognition under Section 80G was also granted. The Assessing Officer was of the view that several lakhs of rupeesreceived by the Trust were in fact assessee's money, routedthrough various sources. The Assessing Officer also stated thatone of the persons who is said to have given donation was Sri https://hcservices.ecourts.gov.in/hcservices/ Nadalur Vardhan, a USA citizen of Indian Origin. On the date ofthe search, one Sampathkumar, entered the premises of the assesseewith cash amounting to Rs.2,16,000/- and US $ 5015/- along withother documents. The said Nadalur Vardhan is said to be a cousinof Sampathkumar.

From the papers seized from the brief case of Sampathkumar and on subsequent enquiries, it came to light thatthe State Bank of India of India, N.R.I. Branch Madras hadsanctioned loans to Sri Vardhan on various dates amounting toRs.1,33,49,000/- which was credited in the account of the Trust byway of donation. Subsequently, repayments were made by Sampathkumar amounting to Rs.1,03,49,000/- to the bank account andthe balance of Rs.30 lakhs was adjusted out of the maturity of oneof the deposits. The Assessing Officer was of the view that it isvery unnatural for a distant acquaintance or a close relative orfriend to donate to the tune of Rs.1.34 crores and hencedisbelieved the theory of donation and treated the amount asundisclosed income of the assessee. It is also seen from therecords that there were various donations from various persons andwhile completing the assessment, the Assessing Officer held thatall these donations indicate that the claim of donations was falseand he made the impugned addition of Rs.1,69,19,621/- and interestthereon of Rs.2,91,958/-. After considering the argumentsadvanced by the assessee as well as the written arguments by the Revenue, the Tribunal had given a factual finding as follows:-"We are afraid, this alone is not sufficientto prove the assessee's involvement in theabsence of direct payments by the assessee.

It is also to be seen that the amount is goingfrom the account of Shri Sampath Kumar to thetrust. There may be shady deals which lead tostrong suspicion, but suspicion will not takethe place of evidence. It is to be seen that Shri Sampath Kumar is having financingbusiness even according to the Revenue. Asrightly contended by Mr.Ravi, if the trustviolated the deed the consequences shouldvisit the trust adversely. There is noevidence to show that assessee had repaid anymoney either to Sampathkumar or toMr.Varadhan. It is the case of Revenue thatinspite of giving opportunity, Shri Varadhanwas not produced by assessee. To demonstratethat assessee is wrong and Mr.Varadhanreceived back the money, Revenue has not takenalso any step. No summons were issuedrequiring his presence. It is to be seen thatmoney has gone to Trust from some accountother than that of the assessee. To come tothe conclusion that such huge amount would nothave been donated if equal amount has beenreceived back is only on the basis of a https://hcservices.ecourts.gov.in/hcservices/ reasoning and not on the basis of anyevidence.

In the absence of clear evidencefound as a result of search, no addition canbe made under Chapter XIV-B. If the Trustviolated the deed and received money whichcannot be explained, the consequences shouldvisit the Trust and not the assessee. In thelight of the above facts, we are of the viewthat the addition made in the hands of theassessee is not justified. The same isdeleted. "From the above it is clear that the Tribunal had given a factualfinding and there is no direct involvement of the assessee in thecase and the amounts have been assessed under the Income-tax Act. Also, the entire donation amounts have been accounted for in thebooks of the Trust. Further, there is no evidence available fromthe Department, to show that the assessee had repaid any moneyeither to Sampathkumar or Varadhan. Hence the additions made inrespect of amounts in the name of Dharmambal Namasivayam Trust hadbeen correctly deleted by the Tribunal on the ground that the Trust is a separate juristic person and also the same is assessedunder the Income-tax Act.

The Income-tax Department have alsomade a separate assessment n the case of Dr.Dharmambal NamasivayamTrust for the assessment years 1994-95, 1995-96 and 1996-97 forthe entire amount of Rs.1.69 Crores. Further some assessments arealso pending before the Tribunal. In view of the above reasons, we are of the view that the deletions made by the Tribunal are inaccordance with law. Question No.5 - Costly sarees worth Rs.10.20 lakhs found duringthe searchIn respect of this addition, the Department found and listednumber of costly sarees at the time of search. Such list formspart of the Panchanama. The total cost had been estimated atRs.10,12,000/- (Mysore silk sarees 26 at Rs.2,000/- + silk sarees192 at Rs.5,000/- average). The Assessing Officer made theaddition of the amount for the assessment year 1996-97 on theground that the acquisition in respect of the same had not beenexplained. There was a marriage function in which admittedlyabout 3000 guests participated.

The assessee's son also in hispreliminary statement, stated that most of these items were giftsreceived at the time of marriage. The Revenue cannot presume thatthe assessee had not received any gift at the time of marriage ofhis son and this explanation was not considered properly by the Assessing Officer and he simply rejected and no material evidenceproduced by the Revenue. In the absence of any evidence directlylinked with the assessee, the addition made is without basis andjustification. The explanation given by the assessee's son wasaccepted by the Tribunal and we do not find any error or infirmityin the order of the Tribunal. Also the facts given by the Tribunal are based on valid materials. Hence we are of the view https://hcservices.ecourts.gov.in/hcservices/ that the Tribunal correctly deleted the addition on this count. Question No.6 - Estimated marriage expenses of the assessee's sonThe addition in respect of the estimated expenses towards marriageof the assessee's son Sri.

Senthureswaran is of Rs.7,50,000/-. Theassessee's mother had filed an affidavit in which it was statedthat she incurred the expenditure for the marriage of hergrandson. Likewise, the assessee's son accepted that he had metthe expenses incurred for the Singapore trip. In her Will whichwas probated, the assessee's mother had mentioned about thisaffidavit sworn in January 1996. It was also brought on recordthat the marriage expenditure in respect of booking the hall wasmade by Dharmambal Namasivayam Trust. These explanations wereaccepted by the Tribunal. The addition made by the AssessingOfficer is purely a guess work and the Tribunal has rightlydeleted the addition made by the Assessing Officer. Question No.8 - Secret commission received by the assessee fromforeign companies for sale of graniteThere are ten documents in the seized material markedNGN/B&D/LS/S-14 indicating certain details of payments made by twoforeign companies by name M/s.MAGTI and M/s.INBRA. The address ofthese two concerns are as under:-1.

MAGTI Marble & Granite Trading Inc. Via S.Balestra, 18 6901, Lugano.2.INBRA AG. Uhland Str.2, 6901 Wisenbac, Haida. Both the concerns are regular customers of TAMIN of which theassessee was the Principal Officer with substantial dealings. Copies of these documents were forwarded to TAMIN for theircomments regarding the relevance of their contents and TAMIN alsoby letter dated 27.11.1996, replied that a large number of thesetransactions mentioned in the documents could be straightawayconnected with sale invoices to these concerns. Some of thedocuments contained certain notings obviously in the handwritingof the assessee. On the basis of the same, the Assessing Officerrelied on Section 132(4A) on the presumption that these documentswere seized from the assessee's possession. Then, the AssessingOfficer came to the conclusion that the amounts mentioned in theseized documents represented payments to the assessee from thesecompanies.

Hence the Assessing Officer included these amounts inthe assessee's undisclosed income. The Tribunal considered thedetails of these documents and found out that in most of thesepapers it was mentioned as "not shipped" which indicates that ithas not been exported so far. The Assessing Officer himselfrecorded that these writings are in the handwriting of theassessee. The Tribunal had given a finding as to how the Assessing Officer came to this conclusion and further stated thatthe handwritings given at Page 102 and 103 in the Annexure-E ofthe Revenue's paper book, are of the same person. The Tribunalfurther held that copies of documents forwarded to TAMIN for https://hcservices.ecourts.gov.in/hcservices/ comments were not placed before the Tribunal. TAMIN, in its replyby letter dated 27.11.1996, had stated that "a large number ofthese transactions mentioned in the document may be straightawayconnected with this".

This letter had also not been placed beforethe Tribunal as well as before us. The assessee specificallyasked for the copy of the above reply of TAMIN, but the same wasnot given. Further, the Tribunal had given a finding in Paragraph257 of its order, as under:-"Finally, though the amount was treated aspassed on to the assessee, there is no mentionhow this amount was received by the assesseeexcept coming to a conclusion that these arethe secret commission received by theassessee. Under these circumstances, we areunable to uphold any of these additions madeby way of secret commission. The additionsmade on account of secret commission aredeleted. We have to record one of thearguments of Mr.Ravi that assessee as Chairmanused to get messages from parties / officewith regard to very earlier dealings andsometimes such papers are also kept in thebrief case. The presence of 1992 papers inassessee's brief case, therefore, is not ofmuch consequence.

"Hence, the finding given by the Tribunal is based on validmaterials and evidence and it is not a perverse one. In view ofthe same, we do not find any error or infirmity in the order ofthe Tribunal on this count, so as to warrant interference. Hencewe are of the view that the Tribunal has correctly deleted theaddition made by the Assessing Officer. Question No.9 - Seizure of foreign currencies from the assessee'shouse valuing Indian Rupees 1,93,040/-In the house of the assessee at M-26, Anna Nagar, Madras-102, thefollowing foreign currencies were found and seized. CURRENCIES FOUND SEIZED VALUE IN INDIAN RUPEES U.S. $ 5061 5061 Rs.1,77,135/- Singapore $ 527 527 Rs. 13,175/- Malaysian $ 210 210 Rs. 2,730/-In respect of the above, the assessee stated that oneMrs. Seethalakshmi Nagaraj who is a family friend of the assesseecame to see his mother Mrs.A.Dharmambal, who was not well before Pongal in the month of January 1996, and requested her permissionto leave the foreign currencies U.S. $ 5111, Singapore $ 527 and Malaysian Ringet 210 for safe custody in the assessee's house at https://hcservices.ecourts.gov.in/hcservices/ M-26, Anna Nagar, Madras-102.

Since she had to go away on ashort tour, the assessee's mother gave permission and the abovesaid foreign currencies, which was kept in a hand bag withmarking, was kept at the above Anna Nagar house of the assessee. The said Mrs. Seethalakshmi Nagaraj is a green card holder ofU.S.A. and her husband Mr.Nagaraj is an Engineer and now workingin an American Company at U.S.A. Since he was deputed to work"Enron Project" at Maharashtra, they both came to India. Theyboth bought U.S. Dollars and other currencies in permitted levelwhen they came to India. Since there was a problem in "EnronProject", the said Mrs. Seethalakshmi Nagaraj came to live at Madras with her two minor sons. Since she was alone, the assesseeused to be their custodian and when she wanted to go away, shecame to the assessee's Anna Nagar house to leave their currenciesfor safe custody. This fact was revealed by the Income-taxDepartment and also when the said Mrs.

Seethalakshmi Nagaraj cameto the assessee's house to get back her money, the fact of seizurewas informed to her. She also made a claim to the AssistantDirector of Income-tax (Inv.) at Madras by a letter and laterexplained the same when she was summoned. Therefore, it wasstated that the foreign currencies seized from the assessee'spremises belong to the said Mrs. Seethalakshmi Nagaraj, an NRI fromU.S.A. It was also stated that the said Mrs. Seethalakshmi Nagarajfiled a letter on 06.02.1996 before the Assistant Director of Income-tax stating that the currency seized from M-26, Anna Nagar, Madras, belongs to her and her husband and they were legallybrought into India during their trips from U.S.A. and that theyare within the exemption / permissible limits under the FERAregulations. She was temporarily in India on some domesticassignment and the seized currencies were entrusted for temporarysafe custody in the house of the assessee.

In this case, the saidMrs. Seethalakshmi Nagaraj, had, in her sworn statement before the Enforcement Directorate, explained how the money was brought into India. For the above statement given to the EnforcementDirectorate, the said Mrs. Seethalakshmi Nagaraj also given aletter explaining the same to the Income-tax Department. Afterconsidering the statement and the explanation given by the saidMrs. Seethalakshmi Nagaraj that the money belongs to her, the Revenue also did not produce any material or evidence to provethat these currencies exclusively belong to the assessee. TheTribunal correctly come to the conclusion that the explanationgiven by the assessee is probable and plausible and deleted theaddition made by the Assessing Officer, for the assessment year1996-97. The finding given by the Tribunal is based on validmaterials and evidence and it is not a perverse one. It is only apure question of fact and the same does not require interference.

Question No.10 - Fixed deposits in the name of NarayananIn respect of the addition made towards fixed deposit in the handsof the assessee, the said Narayanan admitted that the fixeddeposits amounting to Rs.20,000/- have been made out of his own https://hcservices.ecourts.gov.in/hcservices/ income. The said Narayanan stated that he had taken the propertyby way of lease from the year 1985 onwards and out of that incomehe made deposits and had also written a letter dated 04.02.1996 toADA (Inv.), Madras stating that the fixed deposit certificateskept in the personal custody of the assessee are his personalproperty. It is also seen that the said Narayanan had settledthe matter by declaration under KVSS against his assessmentcompleted under Section 143(3) of the Act. Hence, based on theexplanation offered by the said Narayanan as well as the fact thathe had offered the said amount under KVSS, the Tribunal rightlycame to the conclusion that the addition cannot be made in thehands of the assessee.

The Tribunal correctly deleted theaddition and also it is a pure question of fact. Hence the samedoes not require interference. Question No.11 - Whether the Tribunal was hyper technical ininsisting only on direct evidence to prove each addition and innot accepting circumstantial evidence:-The Tribunal has given reasons to delete the addition. It isincorrect to state that the Tribunal deleted the addition ontechnical ground. In respect of Question No.1, which is relatedto the first addition, we have remitted the matter to the Assessing Officer with certain directions. Regarding the otheradditions, the Tribunal deleted the additions by relying on validmaterials and evidence available on record and the same wereconfirmed. Hence the above question now becomes academic andtherefore the same does not require consideration by this Court.