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Commissioner Of Income Tax Vs. M. S. Aggarwal
April, 30th 2018
$~
*        IN THE HIGH COURT OF DELHI AT NEW DELHI
+                  INCOME TAX APPEAL No. 169/2005
                                               Reserved on :1st November, 2017
%                                              Date of decision:23rd April, 2018

THE COMMISSIONER OF INCOME TAX                   ......Appellant
                  Through: Mr. Asheesh Jain, Senior Standing
                  Counsel with Mr. Shahrukh Ejaz and Mr.
                  Prashant Bhargava, Advocates for the Income
                  Tax Department.

                        Versus

M. S. AGGARWAL                                                 .....Respondent
                               Through Mr. Salil Kapoor, Mr. Sanat Kapoor, Ms.
                               Ananya Kapoor, Ms. Soumya Singh and Mr.
                               Sumit Lal Chandani, Advocates.

                   INCOME TAX APPEAL No. 895/2008

COMMISSIONER OF INCOME TAX                           ......Appellant
                  Through: Mr. Asheesh Jain, Senior Standing
                  Counsel with Mr. Shahrukh Ejaz and Mr.
                  Prashant Bhargava, Advocates for the Income Tax
                  Department.

                         Versus
M. S. AGGARWAL                                                  .....Respondent
                               Through Mr. Salil Kapoor, Mr. Sanat Kapoor, Ms.
                               Ananya Kapoor, Ms. Soumya Singh and Mr.
                               Sumit Lal Chandani, Advocates.

CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MS. JUSTICE PRATHIBA M. SINGH




ITA No. 169/2005+connected appeal                                  Page 1 of 77
SANJIV KHANNA, J. :

       Afore-stated appeals under Section 260-A of the Income Tax Act,
1961 (Act` for short) have been preferred by the Revenue, the
Commissioner of Income Tax, Delhi (Central)-III.

2.        ITA No.169/2005 challenges order of the Income Tax Appellate
Tribunal (the Tribunal, for short) in IT(SS)A. No.52/Delhi/2003 dated 19th
January, 2003 deleting addition of Rs.61,80,000/- as undisclosed income on
merits and also on the ground that this addition could not have been made in
the Block Assessment Order for the period from 1st April, 1989 to 15th
January, 2000.

3.    ITA No.895/2008 arises from order of the Tribunal dated 12th October,
2007 in IT(SS)A No.400/Del/2005, whereby the Tribunal has deleted the
penalty imposed by the assessing officer under Section 158 BFA (2) of the
Act on the ground that the additions made in the Block Assessment Order
were set aside by the Tribunal vide order dated 19th January, 2003.

4.     By order dated 23rd May, 2005 ITA 169/2005 was admitted and the
following substantial question of law was framed:-

            Whether the Income Tax Appellate Tribunal was
            correct in law in deleting an addition of Rs.51,00,000/-
            being the undisclosed income although the assessee
            himself admitted in his statement before the Income
            Tax Authorities that he had paid money to buy these
            gifts?

5.     By order dated 6th September, 2010 ITA 895/2008 was admitted and
the following substantial question of law was framed for consideration, with
the direction that the two ITAs would be heard together:-




ITA No. 169/2005+connected appeal                                 Page 2 of 77
            Whether the ITAT was correct in law in deleting an
            addition of Rs.51,10,000/- being the undisclosed
            income although the assessee himself admitted in his
            statement before the Income Tax Authorities that he
            had paid money to buy these gifts?
6.     With the consent of counsels for the parties, we had reframed the
substantial question of law vide order dated 31 st October, 2017 to the
following effect:-

            "1.      Whether the Income Tax Appellate Tribunal
            was correct in law in deleting the addition of
            Rs.51,00,000/- (Rupees Fifty One Lacs) as undisclosed
            income and accepting the case of the assessee that he
            has been able to establish genuineness of the gift?
            2, Whether the Income Tax Appellate Tribunal was
            right in holding that the Assessing Officer could not
            have added the income of Rs.51,00,000/- as
            undisclosed income in the Block assessment
            proceedings under chapter XIV B of the Income Tax
            Act, 1961?"
It was also clarified in the said order that the first question includes the issue
whether the decision and reasoning of the tribunal is perverse or not.
Substantial questions of law primarily relate to and arise in ITA
No.169/2005. Decision in ITA No.895/2008 would be consequential to the
decision of this Court in ITA No.169/2005. The substantial question of law
in ITA No. 895/2008 should appropriately read as under:-

            Whether ITAT was correct in law in deleting the
            penalty imposed by the Assessing Officer under
            section 158 BFA(2) of the Act




ITA No. 169/2005+connected appeal                                   Page 3 of 77
7.      Search and seizure operations under Section 132 of the Act were
conducted on 25th November, 1999 in the case of BSL Group and Mr. M.S.
Aggarwal, who has been hereinafter referred to the respondent/ assessee.

8.       During the course of search, several incriminating documents and
material were found and seized. The respondent /assessee was carrying on
benami business in the name of M/s. Universal Enterprises, M/s. Vishal
Vyapar, M/s. Kumar Traders, M/s. Nutan Enterprises, M/s. Krishna Traders
and M/s. Evergreen Corporation, which were not accounted for and reflected
in the books of accounts. These firms were trading in acrylic sheets, off-cuts
and scrap. As per the Revenue on the basis of the papers and documents
found     during      search,       these   benami   entities     belonging         to     the
respondent/assessee          had      unaccounted     for       turn-over      of        over
Rs.26,35,25,144/-.

9.      Respondent /assessee in his statement recorded on oath under Section
132(4) of the Act on 25th November, 1999 admitted having procured, in the
current year, gifts of Rs.50,00,000/- and Rs.10,00,000/- from Mr. Kamlapati
Singhania, resident of Kamla Tower, Kanpur, U.P in his name and in the
name of M/s. Gupta & Sons (HUF). These gifts were arranged by the
respondent/assessee's Chartered Accountant, Mr. V.K Goel of M/s. V.K.
Goel and Co., to whom the respondent/assessee had paid Rs.60,00,000/- in
cash. Mr. V.K Goel was also paid 3% commission for arranging the gift.
Respondent/assessee confessed that he had never met Mr. Kamlapati
Singhania, an industrialist based in Kanpur and Chairman of J.K. Synthetic
and J.K. Cement. The respondent/assessee or his family members did not
know Mr. Kamlapati Singhania personally. Respondent/assessee knew of no
reason why Mr. Kamlapati Singhania had given him and his HUF gifts of
Rs. 50,00,000/- and Rs.10,00,000/-, respectively. This was the only gift


ITA No. 169/2005+connected appeal                                           Page 4 of 77
which the respondent/assessee had received in the last 10 years.
Respondent/assessee himself had not given gift during the last 10 years.
Respondent/assessee in his subsequent statement recorded under Section
131 of the Act on 6th January,2000 had again accepted and admitted that the
gifts were bogus and had offered the same to be taxed. For clarity, we have
subsequently reproduced entirely or relevant portions of the statements on
oath made by the respondent/assessee on 25th November, 1999, 29th
December, 1999 and 6th January, 2000.

10.     Pursuant to notice under Section 158 BC dated 20th November, 2001,
the respondent assessee filed block return for the block period on 4th
January, 2002 accepting and declaring undisclosed income of Rs.86,82,110/.

11. During the course of the block assessment proceedings, the
respondent/assessee vide letter dated 13th March, 2002 retracted his
admission on bogus gifts, asserting that the gift of Rs.50,00,000/- given to
him by Mr. Rama Pati Singhania was genuine and not procured. The gifts
were given by way of two cheques dated 8th May, 1999 and 12th May, 1999
of Rs.25,00,000/- each, drawn on Hong Kong & Shanghai Banking
Corporation Limited. Mr. Rama Pati Singhania, who was a regular assessee
with the Income Tax Department, Kanpur, had sold his residential flat at
Bombay for Rs.2,75,00,000/- for which he had obtained clearance from the
Income Tax Department. Mr. Rama Pati Singhania had duly disclosed the
gift in his assessment proceedings. Admissions recorded on 25th November,
1999     were      dictated     confession,   extracted   and   feigned    as       the
respondent/assessee wanted to be free and leave his residence to attend a
family function. His signatures were taken wherever the search party felt
necessary. Respondent/assessee it was stated was ailing, and subsequently



ITA No. 169/2005+connected appeal                                    Page 5 of 77
on medical advice was admitted to a nursing home and discharged on 3rd
December, 1999.

12.    The assessing officer rejected the volte face after referring to the
statement of the respondent/assessee dated 25th November, 1999 under
Section 132 (4) of the Act, admitting that the gifts were sham and
subterfuge. He rejected the contention that the confession was extorted
under coercion, pressure and duress observing that the retraction and
explanation justifying the gift was given for the first time in March, 2002.
Respondent/assessee in his subsequent statement under Section 131 of the
Act recorded in the presence of his counsel on 6th January, 2000, unwilling
go into details and justify the alleged gifts to himself and the HUF had
voluntarily offered the gift amounts for taxation. Thus, in January, 2000, 40
days post the search, the respondent/assessee had again confessed and
accepted that the gifts were bogus and should be considered as undisclosed
income.

13. The assessing officer vide Block Assessment Order dated 27th March,
2002 made an addition of Rs.61,80,000/- treating gifts of Rs.50,00,000/- and
Rs.10,00,000/- in favour of the respondent /assessee and M/s.Gupta and
Sons (HUF), respectively, as bogus and undisclosed income. Rs.1,80,000/-
statedly paid as commission to arrange the gifts was added to treat
Rs.61,80,000/- as undisclosed income.

14. Block assessment order refers to incriminating documents found and
seized during the course of search and observed that the respondent
/assessee had unaccounted business turnover of Rs.26,35,25,144/- from the
six benami concerns, consisting of undisclosed sales recorded in          bank
accounts of Rs.18,80,71,883/- and cash sales of Rs.7,54,53,311/- recorded in



ITA No. 169/2005+connected appeal                               Page 6 of 77
seized Annexures A-40, 42 and 46. The assessing officer applying net profit
rate of 5%, had estimated undisclosed income from the said turnover at
Rs.1,31,76,257/-. This computation it was observed would match the sum
total of undisclosed income declared by the respondent/assessee of
Rs.82,82,110/-, arranged gift of Rs.50,00,000/- in the name of the
respondent /assessee, arranged gift of Rs.10,00,000/- in favour of M/s.
Gupta & Sons (HUF) and the commission of Rs.1,81,000/- for arranging the
gifts.

15.      The Commissioner of Income Tax (Appeals) affirmed the additions
made, observing that the respondent /assessee had voluntarily offered the
gifts for taxation during the course of search. There was no coercion. The
second statement was recorded 40 days after the search in the presence of
his counsel. There was corroborative evidence that the said gifts, though
paid by cheques, were sham and arranged for as search party had found
documents that the respondent/assessee was doing business through benami
concerns, which had undisclosed sales turnover of Rs. 26,35,25,144/-,
including      sales     through    bank    accounts        of     Rs.     18,80,71,883/-.
Respondent/assessee with this unaccounted turnover could have bought the
gifts as was accepted by him on two occasions.                           Interestingly, the
respondent/assessee to justify the gifts had stated that the gifts "may" have
been made because of assistance given by his forefather to the forefather of
the      donor.    Submission       was    rejected    as        hypothetical      as        the
respondent/assessee had used the word "may". Further, it was unlikely that
Mr. Rama Pati Singhania would have given a gift to the respondent/assessee,
whom he had never met. The respondent/assessee in the first statement did
not even know the correct name the donor. If the respondent/assessee had




ITA No. 169/2005+connected appeal                                             Page 7 of 77
indeed received the gift of the high amount he would have known the name
of the donor.

16.    The Tribunal in the impugned order dated 19th January, 2003 has
deleted the entire addition of Rs. 61,80,000/- including additions made on
account of gift of Rs.50,00,000/-.     In paragraph 28 of the impugned order
the Tribunal records that three questions had arisen for consideration. The
first was whether the addition of Rs. 61,80,000/- on account of the gifts and
the commission could have been made in the block assessment order, being
undisclosed income as defined under Section 158BB of the Act. The second
question was whether the admission made by the assessee that the gifts were
arranged and an equivalent amount had been paid in cash would constitute
conclusive and final evidence against the assessee; and thirdly, if the second
question was answered in favour of the respondent/assessee, then whether
the respondent/assessee had succeeded in disproving the admission and
establishing the genuineness of the gifts.

17.    On the first question, the tribunal had held as under:-

            29.       The first issue as indicated above concerns the
            scope and ambit of undisclosed income as
            contemplated under Chapter XIV ­B of the Income-tax
            Act. Chapter XIV-B consisting of sections 158B to
            section 158BH was introduced by the Finance Act,
            1995 with effect from 1.7.1995 to make procedure of
            assessment of search cases more effective. The chapter
            is titled Special procedure for assessment of search
            cases. The scheme of block assessment enacted under
            this chapter laying down procedure for block
            assessment proceedings is intended by the legislature
            to operate simultaneously with the normal and regular
            scheme of assessment indicated under Chapter XIV of
            the Income-tax Act. Both the tax schemes are
            independent of each other and they are not mutually


ITA No. 169/2005+connected appeal                                  Page 8 of 77
            exclusive. Block assessment under Chapter XIV-B is
            not intended to be a substitute for regular assessment.
            Its scope and ambit is limited in that sense to materials
            unearthed during search. It is in addition to regular
            assessment already made or to be made. Clause (b) of
            section 158B contains inclusive definition of
            undisclosed income and reads as under:
                  (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.}.
            If we analyse the aforesaid definition, it provides that
            undisclosed income includes-

                  (i) Any money, bullion, jewellery or other
                  valuable article or thing or,
                  (ii) any income based on any entry in the
                  books of account or other documents or
                  transactions;
                  (iii) such money, bullion, jewellery, valuable
                  article, thing, entry in the books of account
                  or other documents or transactions represents
                  wholly or partly income or property;
                  (iv) which has not been or would not have
                  been disclosed for the purposes of this act.

                 From the aforesaid analysis of the definition, it
            clearly emerges that if any asset or any income as
            recorded in the books or documents has been disclosed
            or intended to be disclosed to the Income-tax

ITA No. 169/2005+connected appeal                                  Page 9 of 77
            authorities, this would be outside the pale of
            undisclosed income as defined under clause (b) as
            above.
            30.       We may next refer to section 158BB which
            provides for computation of undisclosed income or
            block period. The section expressly and unequivocally
            provides that the undisclosed income has to be
            computed on the basis of evidence found as a result of
            search... and such other materials or information as are
            available with the AO and relatable to such evidence.
            The expression relatable to such evidence has been
            inserted by the Finance Act, 2002 retrospectively w.e.f.
            1.7.1995. A bare reading of this provision would
            indicate that undisclosed income has to be computed
            on the basis of evidence and material found during
            search. Any material or evidence available to the
            Assessing Officer which is not related to the search
            would not form the basis for computation of
            undisclosed income.
18.     On the second question, the tribunal had held as under:-

            31.        The issue regarding the jurisdiction of the
            Assessing Officer to consider the genuineness of the
            gift transaction and treat such gifts as undisclosed
            income would be required to be considered in the
            backdrop of the aforesaid legal position. The facts are
            undisputed that no evidence has been found during the
            course of search which may impeach the genuineness
            of the gifts received by the assessee and his HUF from
            Shri Rampathi Singhania. No documents or papers
            have been found during search proving that the gifts
            are non-genuine. The main stay of the Department`s
            case is the statement of the assessee recorded on
            25.11.99 and 6.1.2000 admitting the gifts to be non-
            genuine. First statement dated 25.11.99 is placed in
            the paper book filed by the Id. Sr. DR at pages 4 to 21.
            A part of the statement from pages 1 to 10 upto
            Question No. 19 and Answer thereto has apparently
            been recorded prior to the commencement of search
            and is a preliminary statement. Subsequent portion of


ITA No. 169/2005+connected appeal                                  Page 10 of 77
            the statement has apparently been recorded after the
            commencement of the search proceeding inasmuch as
            prior to recording Question No. 20, the authorized
            officer has recorded the title statement taken during
            the course of search. In fact, the Assessing Officer
            has referred to the statement as preliminary statement
            at page 5 of the block assessment order. From these
            facts, it is amply evident that statement of the assessee
            admitting the gifts to be non-genuine has been recorded
            before the commencement of the search and cannot
            conceivably be construed as a statement u/s 132(4) of
            the Income-tax Act. The decision of Allahabad High
            Court in R.R. Gavit Vs. Smt. Sher Banu Hasan Daya
            161 ITR 793 support the view taken by us. The
            statement of admission dated 25.11.99, which is the
            sole basis adopted by the Assessing Officer for
            bringing the gifts within the purview of undisclosed
            income u/s 158BB for the purposes of block
            assessment cannot thus be treated as evidence found as
            a result of search. We are, therefore, of the view that
            the genuineness of the gifts cannot possibly be treated
            as covered within the limited scope and purview of
            undisclosed income under the block assessment. On
            this legal ground alone, the impugned addition of
            undisclosed income treating the gifts as non-genuine is
            held to be outside the purview of block assessment and
            liable to be deleted.
19.       Turing to the third question, the tribunal observed as under:-

            32.       We may next consider the facts concerning
            the gifts received by the assessee and his HUF in the
            context of definition clause, namely, section 158B(b)
            which defines the undisclosed income as reproduced
            above. The important limb of the definition which
            constitute the basic essence is income or property
            which has not been or would not have been disclosed
            for the purpose of the act. In the case of L.R. Gupta
            Vs. Union of India 194 ITR 32, the Delhi High Court
            while construing the expression undisclosed income as
            used u/s 132 (1) has held that the income which is
            hidden from the Department is undisclosed income. In

ITA No. 169/2005+connected appeal                                  Page 11 of 77
            the instant case before us, gifts have been received by
            the assessee and his HUF by account payees cheques
            which have been duly deposited into the bank account
            as reflected at pages 109 and 111 of the first paper
            book filed by the assessee. From these bank accounts,
            the assessee and his HUF have issued cheques for
            making advances to the sister concerns, namely,
            Haryana Acrylic company Pvt. Ltd. and Mono Acrylic
            Manufacturing Co. Pvt.Ltd. Both these companies are
            existing assesses and amounts advanced by the
            assessee and his HUF have been duly credited in the
            books of account of the said companies. Copies of
            bank accounts of these two companies as well as
            copies of accounts of the assessee in the books of the
            said companies have been duly furnished during the
            course of assessment proceedings before the Assessing
            Officer and are placed in the assessee`s first paper
            book at pages 112 to 125. Assessee and his family
            members are promoters, directors and shareholders in
            these companies and the amounts advanced by the
            assessee out of the gifts have been duly entered in their
            books of account and accepted in their tax assessments.
            Similarly with regard to source of the gift amount, we
            find that Shri Rampati Singhania is a leading
            industrialist belonging to Juggi Lal Kamalapath
            Singhania family of Kanpur. The donor has sold his
            property in Bombay for a sum of Rs. 2.75 crores and
            has received clearance from Income-tax Department in
            Form No. 34A and 37I for the sale of the property.
            Further Income-tax as well as Wealth-tax assessment
            of the donor for the assessment year 2000-2001, during
            which the gifts in question have been made have been
            completed after scrutiny in Central Circle, Kanpur by
            the Officer of the rank of the Joint Commissioner of
            Income-tax. All such documents were provided to the
            Assessing Officer during the block assessment
            proceeding and also form part of the paper book filed
            before us. Ld. Counsel has drawn our attention to gift
            deed dated 20th June, 1999 as well as 30th May, 1999
            which were executed by the donor as well as the donee
            and produced during the assessment proceedings


ITA No. 169/2005+connected appeal                                  Page 12 of 77
            before the Assessing Officer. Shri Rampati Singhania
            has sworn affidavit dated 13.5.1999 and 20.6.1999
            much before the search and these affidavits have been
            filed during the block assessment proceedings and are
            placed in the first paper book filed before us. From
            these facts, it is amply evident that the gift transactions
            are duly disclosed and accounted for in the books of
            account of the donor as well as the donees. These
            transactions cannot be considered as secret, hidden or
            concealed. The surrounding facts and circumstances
            like routing the transactions through regular banking
            channels by the donor and the donees and accounting
            for all the amounts in their respective books of account
            and further gifts being evidenced by gift deeds as well
            as the affidavits of the donor provided ample evidence
            that the transactions are disclosed and accounted for
            and lie outside the pale of the definition of undisclosed
            income as contained u/s 158B(b). We feel that the
            gifts in question have been duly disclosed and reflected
            in the books of account as well as tax returns of the
            donor and the donees. Such transactions would clearly
            fall outside the purview of block assessment. On this
            ground also, the impugned addition as undisclosed
            income in the block assessment is liable to be deleted.
            33.       Thus, the first issue regarding the
            applicability of section 158B(b) to the gifts in question
            is decided in favour of the assessee and we hold that
            the issue of genuineness of the gifts lies beyond the
            purview of the block assessment.
            34.      The second and third issue as formulated by
            us above, arising from the present appeal, are basically
            concerned with the genuineness of the gifts in question.
            Without prejudice to our finding that the issue of
            genuineness of gifts lies outside the purview of block
            assessment as envisaged under Chapter XIV-B, we
            proceed to consider this aspect of the controversy also.
            The sheet anchor of Department case is the admission
            made by the assessee that the gifts are non-genuine and
            have been arranged through a Chartered Accountant on
            payment of commission@ 3% Ld. Counsel was at


ITA No. 169/2005+connected appeal                                    Page 13 of 77
            pains in emphasising that the statement has been
            procured by the assessee under coercion and pressure
            and is contrary to CBDT`s instruction issued in march,
            2003 pursuant to Kelkar Committee Report wherein
            the Committee has acknowledged the prevalence of the
            practice amongst the search parties to obtain forced
            confessions of undisclosed income from the assessees.
            The proposition is well established that admission
            made by an assessee during search operations
            constitute substantive evidence in view of sections 17
            and 21 of the Evidence Act. However, such admission
            cannot be considered as conclusive evidence against
            the assessee. It has been held by the Apex Court in
            Pullangode Rubber Produce Co. Vs. State of Kerala 91
            ITR 18, relied upon by the Id. counsel, an admission
            is an extremely important piece of evidence but it
            cannot be said that it is conclusive. It is open to the
            assessee who made the admission to show that it is
            correct.
            35. Reference may further be made to the decision of
            Delhi High Court in S. Arjun Singh Vs. CWT 175 ITR
            91, cited by the Id. Counsel where a similar proposition
            has been laid down. The Punjab & Haryana High
            Court in Kishan Lal`s case 88 ITR 293 have taken the
            same view and observed, it is an established principle
            of law that a party is entitled to show and prove that
            admission made by him is in fact not correct and true.
            Such admission raise a presumption against the persons
            making the admission but such presumption is
            rebutable.
            36. A very heavy onus lay upon the assessee to refute
            and controvert the admission made at the time of
            search operation. In the instant case before us,
            documents and evidence filed by the assessee during
            the course of assessment proceedings before the
            Assessing Officer to which reference has been made
            hereinbefore by us amply established that the gifts in
            question have been made by Shri Rampati Singhania, a
            leading industrialist of Kanpur belonging to J.K. Group
            and such gifts are evidenced by gift deeds duly


ITA No. 169/2005+connected appeal                                 Page 14 of 77
            executed before the date of the search. Source of the
            gift, creditworthiness of the donor as well as
            genuineness of the transactions have been established
            by filing the copies of the bank account of the donor
            showing credit of sale proceeds of the property as duly
            reflected in the Income-tax and Wealth ­tax
            assessment of the donor. With regard to the mass of
            evidence filed by the assessee before the Assessing
            Officer, the revenue authorities have not been able to
            assail or refute such evidence while treating the
            impugned gifts as non-genuine. Even before us, the Id.
            Sr. DR when called upon to comment upon such
            evidence fairly conceded that Income-tax and Wealth-
            tax assessment in the case of Shri Rampati Singhania
            donor have been made by the Joint Commissioner of
            Income-tax, Central Circle after the search operations
            accepting the return version.
            37.       With regard to the addition of Rs. 1,80,000/-
            on account of alleged commission paid by the assessee
            for arranging the gifts, we have not been told as to
            whom the alleged commission has been paid. No
            documents have been found during search operations
            to the effect that any intermediatory was involved in
            these transactions. Neither any enquiry has been made
            by the revenue authorities regarding the identity of the
            alleged intermediatory who is reportedly a Chartered
            Accountant. The addition in the block assessment has
            apparently been made merely on the basis of
            preliminary statement dated 25.11.1999 and 6.1.2000
            which have been disproved by the assessee by filing
            substantial documentary evidence including gift deeds,
            copies of bank accounts. Income-tax and Wealth-tax
            orders of the donor as well as sworn affidavit of the
            donor. We feel that the assessee has discharged the
            onus to disprove the admission regarding genuineness
            of the gift transactions.
            38. At this stage, we may refer to the contention of the
            Id. Sr.DR that there was no occasion or relationship
            between the donor and the donee for making the gifts
            in the instant case. In our considered view genuineness







ITA No. 169/2005+connected appeal                                 Page 15 of 77
            of the gift transaction has to be considered on the basis
            of attendant facts and circumstance of the case like
            identity of the donor, financial capacity and factum of
            the transaction. Even though relationship between the
            donor and the donees as well as the occasion for the
            gift may be relevant circumstances for adjudication of
            the issue of genuineness of the transaction yet no
            inference can be drawn merely on the basis of surmises
            and conjectures. Relationship or occasion for the gift
            are not in any case essential elements as engrained in
            the definition of gift under the Gift Tax Act. The view
            taken by us is amply reinforced by the decision of
            Chandigarh Bench of the Tribunal in the case of R.K.
            Syal Vs. ACIT 66 TTJ 656 cited by the Id. Counsel . In
            this decision, the Chandigarh Bench held as under:
                  The gifts made cannot be rejected merely
                  on the ground that there was no occasion or
                  relationship for making the same. The
                  element close relationship or occasion for
                  making gift do not flow from the definition
                  of gift as given in Sec.2 (Xii) of the Gift Tax
                  Act. The conditions laid down there are
                  there should be transfer by one person to
                  another of any existing movable or
                  immovable property, the transfer should be
                  voluntary and should be made without
                  consideration of any money.
            39. At this stage, we may also refer to the observations
            of the Delhi High Court in the case of CIT Vs. Sunita
            Vacchani 184 ITR 121 as refereed by the Id. Counsel.
            The Hon`ble high Court observed, The Tribunal has
            examined the evidence which was available on the
            record and has arrived at the aforesaid findings. Even
            though it may be surprising as to how large sums of
            money are received by a family in India by way of gifts
            from strangers from abroad, unless there is something
            more tangible than suspicion, it will be difficult to
            regard the moneys received in India from abroad as
            money representing the income of the assessee in
            India. On the facts as existing on the records, we are


ITA No. 169/2005+connected appeal                                   Page 16 of 77
            unable to come to the conclusion that any question of
            law arises. The petition is dismissed.
            40. Having regard to the aforesaid discussions, we feel
            that the assessee has succeeded in disapproving the
            admission regarding the genuineness of transaction and
            adequate evidence has been brought on record to
            establish the genuineness of the gifts.

Genuineness of the gift of Rs.50,00,000/- made to the
respondent/assessee.
20.        Before we examine the legal issue relating to difference between
regular and block assessment, we would like to examine the aspect of
genuineness of the gift, which we would hold is a mixed question of law and
fact. Onus to prove that the gifts were genuine would be on the
respondent/assessee, the facts being in the exclusive and personal
knowledge of the respondent/assessee.        If we uphold findings of the
Tribunal that the gift was genuine, the legal question whether addition
should have been made as undisclosed income in block assessment or as a
disallowance in the regular assessment need not be decided. Finding on
genuineness of the gift would also form the foundation of facts to answer the
issue of regular and block assessment.

21.    We would begin by reproducing for clarity entire statement of the
respondent/assessee recorded on oath under Section 132(4) of the Act on
25th November, 1999, which is as under:-

            Statement of Shri Mahender Singh Aggarwal s/o Sh.
            Mangat Ram Aggarwal aged 54 years R/0 2/34 Roop
            Nagar Delhi recorded on oath during the search and
            seizure operation u/s 132 of the Income-tax Act, 1961
            on 25.11.99 at 2/34 Roop Nagar, Delhi.

            Sd/-25.11.99                            Sd/- 25.11.99


ITA No. 169/2005+connected appeal                                Page 17 of 77
            (MS Aggarwal)                      Pawan K. Kumar IRS
            Oath Taken                     Dy. Director of Income tax
                                                        (Inv) Unit-II,
                                    E/2, ARA Centre Jandewalan Extn.,
                                                   New Delhi 110055
                                                   Oath Administered
            Q.1 Please identify yourself

            Ans. I am Mahender Singh Aggarwal s/o Sh. Mangat
            Ram Aggarwal aged 54 years R/o 2/34 Roop Nagar,
            Delhi.
            Q.2      Please give the details of your bank lockers in
            your name or in the name of your family members?
            Ans.     My wife Smt. Prabha Aggarwal has a locker
            in Indian Overseas Bank, Model Town, Delhi. I will
            be giving the key of locker. Second locker is in name
            of Sanjay Aggarwal and Monica Aggarwal in Punjab
            National Bank, Subzi Mandi, Delhi locker No. 933.
            Q.3      Please give details of your and yours family
            members` immovable properties.
            Ans.     We have following immovable properties:
                    1. House at                       Anscestral
                    2/34, Roop                        property
                    Nagar,
                    Delhi

                     2. Godown                           In       my
                     at Khasra                          name
                     No. 53.
                     Siraspur,
                     Delhi

                     3. Factory
                     28                                  Delhi
                     Rajasthan                          Acrylic
                     Udyog
                     Nagar,Delhi

                     4.Factory at                       In name
                     Vill.- Bad                         of
                     Malik                              Haryana
                                                        Acrylic


ITA No. 169/2005+connected appeal                                      Page 18 of 77
                     Sonepat,
                     Haryana.

                     5. Factory                      In name
                     at Village                      of Delhi
                     Dhaturi                         Acrylic
                     Distt.
                     Sonepat ,
                     Haryana

                     6. Land at                      In   my
                     Near Vill                       name
                     Bhondsi
                     Gurgaon
                     (One Acre)

                     7. Plot (200
                     Sq. Yards)
                     in Narela                       In   my
                     Housing                         name
                     Scheme

               There is not other immovable property my name or
            in name of my family members or our business
            concerns.
            Q.4.      Have your or your family members received
            and gift during the last ten years?
            Ans.      I have received a gift of Rs. 50,00,000/- in
            Indian rupees from Sh. Kamla Pati Singhania R/o.
            Kamla Tower, Kanpur UP in this year.
            Q.5       How do your know Sh. Kamlapati Singhania?
            Ans.      I know him through our chartered accountant
            Sh. V.K. Goyal of V.K. Goyal & Co. (CA) ­ Sixth
            Floor Amba Deep Building, New Delhi.
            Q.6       What is the source of livelihood of Sh.
            Kamlapati Singhania?
            Ans.      He is industrialist of J.K. Group of companies
            based in Kanpur and he is the chairman of J.K.
            Synthetic and J.K. Cement.
            Q.7       Have you ever met Sh. Kamlapati Singhania?
            Ans.       No, never


ITA No. 169/2005+connected appeal                                 Page 19 of 77
            Q.8        Have you given any gift to any person during
            the last ten years?
            Ans.       No, never
            Q.9        Have you or your family members given any
            gift to Sh. Kamlapati Singhania or his family
            members?
            Ans.       No, never.
            Q10.       Can you give any reason which prompted Sh.
            Kamlapati Singhania to give this gift to you?
            Ans. I don`t know the reason.
            Q.11       Do you want us to accept that Sh. Kamlapati
            Singhania has given you a gift of Rs. 50,00,000/-
            without knowing you, without any relationship and
            without any basis. Please comment. I would like to
            explain to your that if you give a false statement you
            are liable to be prosecuted.
            Ans. This gift was arranged by my CA Sh. V.K. Goyal
            for 3% commission. Besides this I have given Rs.
            50,00,000/- incase to Sh. V.K. Goyal.
            Q.12       Do you maintain any books of accounts? If
            yes, please tell where are the same lying.
            Ans. Books of accounts for my business concern are
            maintained. All the books of my companies/business
            concerns are lying in office located here at ground
            floor 2/34, Roop Nagar, Delhi. Following are the
            business concerns.
             1. Delhi Acrylic Manufacturing Director:
             Co. Pvt. Ltd., 28, Rajasthan, (i)         Sanjay
             Udyog Nagar                        Aggarwal
                                                (ii) Prabha
                                                Aggarwal

             2.      Haryana        Acrylic   Director:
             Manufacturing Co. Pvt. Ltd.      (1) Sanjay
             20th Mile Jatheri Road, Vill.    Aggarwal
             Bralmalik Sonepat, Haryana       (2) Prabha
                                              Aggarwal
                                              (3) Bhupender
                                              Nath R/o.C-186,
                                              Pushpanjali



ITA No. 169/2005+connected appeal                                Page 20 of 77
                                                   Enclave

             3. Mono Acrylic Manufacturing Director:
             Co. Pvt. Ltd 53, Gurudwara (1) Manish
             Road, Siraspur, Delhi         Aggarwal
                                           (2) Sanjay
                                           Aggarwal

             4. M.S. Marble & Granite Co. Director:
             Pvt. Ltd., 28, Rajasthan Udyog (1) S.S. Garg,
             Nagar, Delhi                   Manager
                                            (2) Bhupender
                                            Nath

             5. Acry Monomour Pvt. Ltd. Director:
             Vill. Dhaturi, Sonepat, Haryana (1) Sanjay
                                             Aggarwal
                                             (2) Manish
                                             Aggarwal

            Q13 What are your source of income?
            Ans. Investment in shares of the companies mentioned
            in answer to the Question no. 12 is the only source of
            my income.
            Q.14 Give full details of your family members, age,
            occupation residence and their source of income. Also
            state their income tax particulars, if any.

                                        Age     Occupatio Source
                                                n         of
                                                          income
            Myself         M.S.         Age -54 Business
                           Aggarwal     yrs.
                           2/34, Roop
                           Nagar
            Wife           Prabha       Age 45    Business   Salary
                           Aggarwal     yrs                  from
                                                             Delhi
                                                             Acrylic
            Son            Sanjay       31 yrs.   -- do --   Salary
                           Aggarwal                          from
                                                             Haryana


ITA No. 169/2005+connected appeal                                      Page 21 of 77
                                                            Acrylic
            Daughter       Monica      29 yrs    House      NIL
            in law         Aggarwal              wife
            Son            Manish      24 yrs    Business   Salary
                           Aggarwal                         from
                                                            Mona
                                                            Acrylic
            Daughter       Ritu        21 yrs.   House-
            in law         Aggarwal              wife
                           w/o.
                           Sh.Manish
                           Aggarwal


               M.S. Aggarwal (myself), Prabha Aggarwal, Sanjay
            Aggarwal and Manish Aggarwal are assessed to tax.
            Other income tax particulars I will given later on.
            Q. 15. Please give details of bank accounts, FDR,
            share investment, and other investments including
            investment in moveable properties in your name and in
            name of your family members?
            Ans. Details of Bank account is as under:

             Name of         Account Bank`s Name         Nature
             Holder                                      and a/c.
                                                         No.
             1. Delhi Acrylic    Indian Bank, Pahar Ganj Current
                                 (D.B. Road) Delhi       2752
             2. Haryana Acrylic   -- do --               Current
                                                         1825
             3. Mona Acrylic     -- do --                Current
                                                         2958
             4. M.S. Marbles     Canara Bank, Subzi Current
                                 Mandi, Delhi            1192
             5. Acry Monomers    India Bank Phara Ganj   -- do --
             6. M.S. Aggarwal    Indian Overseas Saving Saving
                                 Bank, Model Town
                                 (ii) IOB Roop Nagar     Saving
             7. Sanjay Aggarwal  IOB Roop Nagar          Saving
                                                         15175
             8. Monica Aggarwal  -- do --                Saving
                                                         15176
             9. Prabha Aggarwal  IOB Model Town          -- do --
             10. Sanjay Aggarwal Punjab National Bank, -- do --


ITA No. 169/2005+connected appeal                                     Page 22 of 77
             & Monica Aggarwal        Ghanta Ghar
             11. Manish Aggarwal      IOB Model Town         -- do --
             12. Haryana Acrylic      Canara Bank, 15-A, 1145
             Mft. Co. Pvt. Ltd.       Opp. Birla Mill, Kamal
                                      Nagar


            FDRs - There is no FDR in my name or in the name of
            my family members or business concerns.
            Investment in shares - Neither my family member nor
            me have ever invested in shares of any company except
            our family companies .
            We have following vehicles:-

             1. DL1CF 1695 Esteem                 Haryana Acrylic`s
                                                   a/c.
             2. DL 8C 9495          Opel          Delhi Acrylic`s a/c.
             3.       4738          Zen           Mona Acrylic`s a/c.
             4.       3721          M.V.          --
             5.       2658          M.V.          --

            There is no other investment in my name or in the name
            of my family member.
            Q. 16. How much cash jewellery and other valuables
            are lying in this premises ?
            Ans. About Rs.4,00,000/- in cash and jewellery of
            about 70 tolas is lying in this premises.
            Q. 17 Do you know M/s. Loe Ram Munshi Ram
            Shroff ?
            Ans. Yes, I know . it is business concern of my brother
            Mr.Munshi Ram and My grandfather Sh. Leo Ram (
            Late ) . The address of the firm is Baratooti Chowk
            ,Sadar Bazar , Delhi (ph: 7771630). My brother Sh.
            Munshi Ram resides at 2/80 Roop Nagar, Delhi
            Q. 18 Do you, your family members have any bank
            account outside India?
            Ans. No. There is no foreign bank account in my name
            or in name of my family members . No bank account
            outside India is being maintained by me or my family
            members
            Q. 19 Whether you have received or borrowed any
            cash / jewellery from anybody for business purpose or

ITA No. 169/2005+connected appeal                                       Page 23 of 77
            otherwise or kept any valuables , money or contains as
            amanat , which is not recorded in the regular books of
            account. Please give the details and evidence thereof?
            Ans. No cash belonging to any other person or cash
            received or borrowed from anybody is lying in this
            premise. However some jewellery belonging to Mrs.
            Shashi w/o     Anil Aggarwal is lying here in this
            premises.
            Sd/-
            25.11.1999

            Statement taken during the course of search
            Q.20 During the course of search we have found two
            diaries marked Neel Gagan Note book which contains
            detailed account of receipt and payment during the
            F.Y. 1997-98 and 1998-99 . Please explain the nature
            of transaction.
            Ans. These transaction relate to M/s. Universal
            Enterprises which run and controlled by me through
            Sh. Vipin Bansal R/o South Exten. ( the exact no, I will
            furnish later on )
                    The nature and detail of transactions are nothing
            but import of acrylic sheet by this entity which are
            being sold in open market on cash basis. The purchase
            are being made through Indian Bank, Pahar Ganj
            Branch in which deposits are made in cash and
            consequently the sale are made on cash basis and
            rotated through this bank.
            Q. 21 Please explain where are the books of accounts
            for M/s. Universal Enterprises for the last three years
            and current year.
            Ans. No books of account are maintained for this
            concern and the stock lying at Siraspur (most of the
            stock) belong to M/s Universal Enterprises and some
            of the stock relates to M/s. Mono Acrylic Pvt. Ltd.
            (MAMPL) and M/s. Haryana Accrylics Manufacturing
            Co. Pvt. Ltd. ( HAMCPL)
            Q. 22 What is the present purchase price of imported
            acrylics Sheet and sale price in domestic market for the
            same.

ITA No. 169/2005+connected appeal                                  Page 24 of 77
            Ans. It varies from 300 to 500 dollars / ton
            depending upon thickness , size and colour of sheet
            for import. Sale price of sheet varies from Rs. 30 to
            50 per Kg. in domestic market depending again on
            the same parameters.
            Q.23 Please explain as to what are expenses incurred
            on the items imported before being sold in market
            and con sequent profit margin on sale of items.
            Ans. There is about 85% of the CIF incurred expenses
            which include 73% as custom duty and 12% misc.
            expenses. This leaves 15% margin of profit on sale.
            The break this as follows:
                    CIF / Kg.               Rs.14
                       Duty / Kg.               Rs.10
                       Other Expenses           Rs.2
                       (Transportation
                       etc.)
                                                Rs.26
                       Balance Rs.4/- per kg. is profit

            Q.24 Whether same processing are done on the
            material imported or the same is directly sold.
            Ans. There is no processing operation done on the
            material imported. The imported goods are sold
            after sorting & cutting to saleable size whose cost
            has already included in other expenses mentioned
            above.
            Q. 25 What is the total turnover of M/s. Universal
            Enterprises per year during the last three years.
            Ans. This entity done business only during about last
            two years and the average turnover per year is about
            Rs. 1.5 crores per year.
            Q. 26 Please explain whether any sales tax or income
            tax has been paid on the sale and income earned
            through this entity.
            Ans. The sale of imported acrylic sheet attract 4%
            sales tax and since no books of regular accounts are
            maintained hence no income tax return for the income
            earned through this entity has been declared in my I.
            Tax return. Also no sales tax has been deposited.


ITA No. 169/2005+connected appeal                              Page 25 of 77
               However, a memorandum record in shape of diary is
            maintained which has been found during the search.
            Q. 27 I am showing you small diaries marked as
            Annexure A-40 to A-46 wherein C1, C-2 , C3 to C-14
            have been written alongwith the names to whom
            payments have been made . Please explain the nature
            of these codes.
            Ans. These codes relate to the various persons handling
            cash in various places of the company. For example
            C-3 relates to Mr. Umesh , the person handling cash
            affairs in Siraspur, C-10 is the person namely Mr.
            Mishra who is handles cash at 2/34 Roop Nagar ,Delhi
            C-5 -- relates to Vijay Gupta at 28, Rajasthani Udyog
            Nagar, C-8 relates to Jarnail Singh who handles cash at
            Q. 28 I am showing you key No. 323 Godrej found
            during the course of search from the almirah of your
            bed room. Please give the name of the bank and loker
            to which it belongs.
            Ans. This key may belong to a locker I had in Indian
            Overseas Bank , Roop Nagar, Delhi in my previous
            wife name i.e., Pushpa AGgarwal which is currently
            in operative after the death of my wife for the last
            seven years.
            Q.29 Please confirm whether you or your family
            member have a bank locker in 10B, Roop Nagar,
            Delhi.
            Ans. To the best of my knowledge, no locker except
            locker in name of Late Smt. Pushpa Aggarwal, is in
            10B, Roop Nagar, Delhi Probably we have
            surrendered the locker and the key could have not
            been found at that time.
            Q. 30 Please confirm the name of the donor who has
            given you a gift of Rs. 50,00,000/- which has been
            stated to have been accepted as per statement given on
            25.11.1999 morning.
            Ans. It may be Rama Pati Singhania of JK Group who
            is director in Companies belonging to JK Group.
            Q.31 Was any gift deed executed? If yes, please
            produce the same gift deed as no gift deed has been
            found during the search of your residence.



ITA No. 169/2005+connected appeal                                Page 26 of 77
            Ans. The gift deed was delivered to me by Mr. V.K.
            Goyal after 2 to 3 months of payment of gift. I will
            produce the gift deed in 2 or 3 days.
            Q. 32 Please confirm whether any gift deed was singed
            when the gift was made or it is still to be done.
            Ans. I remember have received the gift deed from
            Mr. V.K.Goyal after payment of Rs.50,00,000/- and
            3% commission in cash.
            Q. 33 Please furnish the latest address of Sh. Vipin
            Bansal and also clarify whether he is employee in your
            company / in any other firm owned and controlled by
            you or your family members.
            Ans. He is independently handling the affairs of M/s.
            Universal Enterprises on my behalf. He is signatory
            in the bank (India Bank Pahar Ganj and Sales Tax
            Authority. His latest address is not known to me, His
            previous phone No. was 4638999 latest telephone is
            also not known to me.
            Q. 34 Please confirm how much initial investment was
            made in M/s. Universal Enterprises. Also state by
            whom this investment was made.
            Ans. The initial investment of Rs. 10,00,000/- was
            made by me.
            Q. 35 Please state the mode and source of above
            investment
            Ans. It was cash, generated through unaccounted
            transactions of M/s. Delhi Acrylic Manufacturing Co.
            Pvt. Ltd. or Mono Acrylic, invested in Universal
            enterprises.
            Q. 36 During the course of search it was informed by
            the central room that you have purchased a property
            in village Dhaturi. Please state the total consideration
            paid and also where are the receipts of cash for the
            same.
            Ans. The land was purchased for Rs.48.77 lacs. The
            land measured appox. 5 acres. Rs.38.77 lacs was paid
            in cash and the documents was registered for a sale
            consideration of Rs.10,00,000/- only. No receipt for
            cash was taken as we has taken the possession by the
            time the cash payment was made.



ITA No. 169/2005+connected appeal                                 Page 27 of 77
            Q. 37 Please explain the source of cash of Rs.38.77
            lacs paid for the land at Dhaturi.
            Ans. It was from the unaccounted trading transaction
            of our group concerns.
            Q. 38 During the course of search, papers, pertaining
            the purchase of one half portion of property No. 2/34
            Roop Nagar from your uncle have been found. On a
            prima facie examination of the documents it appears
            that the property is undervalued . Please comment.
            Ans. Total consideration paid was Rs. 40 lacs out of
            which approx. 28 lacs was paid in cash which came
            from unaccounted trading transactions of our group
            concerns, namely Delhi Acrylic Manufacturing Co.
            Pvt. Ltd. and Mono Acrylic.
            Q. 39 During the course of search the papers
            pertaining to purchase of properties at various places
            were found. Please given details of properties owned
            , mentioning the sale consideration . source and mode
            of payment ?
            Ans. The details of properties owned, sale
            consideration, source and mode of payment is as under
            :
             Property           Total          Sale Source & Mode
                                consideration paid of payment
                                in    cash    from
                                unaccounted money
             Burari             Rs.3,00,000        Unaccounted
                                                   transaction of
                                                   DAMCO and
                                                   Mono Acrylic
             Bhondari           Rs.4,00,000        -- do --
             Sukher             Rs.2,00,000        -- do --
             Udaypur
             Siraspur           Rs.7,00,000        -- do --
             Garhi              Rs.5,00,000        -- do --
             Khusro
            Balance payment is mentioned on the documents.


ITA No. 169/2005+connected appeal                               Page 28 of 77
            Q. 40 During the course of search proceedings it has
            been informed by control room that certain papers
            were found from the premise belonging to M/s. British
            Scaffolding India Pvt. Ltd. showing certain agreement
            with M/s. Acry Monomers Pvt. ltd. for the purchase of
            plant and machinery by your concern initially at a
            consideration of Rs. 1.20 crores which however, was
            substantiated later on by another agreement showing
            sale consideration at Rs.65 lacs. Please explain how
            and when the balance consideration was -- passed to
            M/s. British Scaffolding Pvt. Ltd.
            Ans. The balance consideration of Rs. 55 lacs was
            paid in cash in the office of Sh. H.R. Shive at 75-76
            Manisha, Nehru Place, New Delhi . The cash was
            received by the cashier of the company. The name of
            cashier, I do not remember. The amount was paid
            probably in more than two installments.
            Q. 41 What factors compelled you to reduce the sale
            consideration reflected in books of a/cs from Rs. 1.20
            crores to Rs. 65 lacs ?
            Ans. It was the demand of other party and they insisted
            on receiving the cash.
            Q.42. Please explain the sources of the amount paid in
            cash.
            Ans. It was out of the income generated out of the
            books from Mono Acrylic and Delhi Acrylic
            Manufacturing Co. Pvt. Ltd.
            Q. 43 I am showing you paper found and seized during
            the course of proceedings at Ground Floor 2/34 Roop
            Nagar Delh marked as Annexure A- which confirms
            the payments made by your concern to M/s. BSL in
            cash amounting to Rs. 55 lacs and also a copy of
            agreement wherein necessary changes have been made
            in pencil whereby the consideration has been reduced
            to Rs.65 lacs from Rs.120 lacs , please comment.
            Ans. Yes, I have already disclosed to you the facts
            regarding the cash payment even before you could
            trace out the paper from my office.
            Q. 44 During the course of survey operation u/s. 133A
            of the I.T. Act 1961 at Sirsapur Godown of M/s. Mono.


ITA No. 169/2005+connected appeal                                Page 29 of 77
            Acrylic Manufacturing Co. Pvt. Ltd. and M/s.
            Universal Enterprises, inventory of stock of Acrylic
            Sheets and poly carbonate sheet was prepared which is
            placed on record. Please furnish the detail regarding
            the purchase vouchers relating to those items and also
            throw some light on sale price etc.
            Ans. Average purchase price of Acrylic sheet is
            approx. Rs. 40/- per kg. and poly-carbonate is Rs.80/-
            per Kg. The average sale price is in cash of. acrylic,
            around to Rs.45 to 50/- per Kg. and in case of poly
            carbonate, it is Rs.85 to 95/- per. Kg.
            Q. 45 Where are purchase and sale vouchers and books
            of accounts of your concerns?
            Ans. Books of accounts, purchase and sale vouchers
            are lying here only i.e. 2/34 Roop Nagar, Delhi. Books
            of account are maintained on computer also.
            Q.46 What is the amount of cash balance as per the
            cash books of your company?
            Ans. I have no idea about the cash balance. The books
            are probably maintained on computers, only after
            checking the computer I will be able to give an idea of
            cash balance.
            Q. 47 Where do you keep the cash belonging to your
            business concerns?
            Ans. At the top floor of house where is a small room
            allotted to Sh. Mishra the cashier wherein the cash
            belonging to my business concerns is kept.
            Q. 48 Do you want to say anything else ?
            Ans. No, nothing.                              Signed
            26.11.99
            I have read over the above statement and understood
            the same . I found that it has been correctly recorded.
            The above statement has been given by me without any
            pressure, fear or coercion.

            Sd/- 26.11.99                         Sd/- 26.11.99
            (MS Aggarwal)                  Pawan K. Kumar IRS
                                     Dy. Director of Income tax
                                                 (Inv) Unit-II,


ITA No. 169/2005+connected appeal                                Page 30 of 77
                                    E/2, ARA Centre Jandewalan Extn.,
                                                 New Delhi 110055
            W-1 Sd/-

            W-1 Sd/-

22.    Second statement on oath of the respondent/assessee under Section
131 of the Act was recorded on 29th December, 1999, in the presence of Mr.
Vinay Kumar Goel, Chartered Accountant. Relevant portion of this
statement reads:-


            "Statement of Shri M.S. Aggarwal s/o Sh. M.R
            Aggarwal R/o 2/34 Roop Nagar New Delhi recorded
            on oath during the proceedings u/s. 131 of the I.T.
            Act 1961 on 29.12.1999 at Room No. 267, ARA
            Centre Jhandewalan Extn. New Delhi in the
            presence of his AR, Sh. Vinay Kumar Goyal , CA.
            I hereby under take to state the truth and only truth
            In the name of God

         Sd/-29.12.99(3.40pm)                       Sd/- 29.12.99
         (MS Aggarwal)                     Pawan K. Kumar IRS
         Oath Taken                      Dy.Director of Income tax
                                                (Inv) Unit-II,
                                         E/2, ARA Centre Jandewalan
                                         Extn.,
                                                    New Delhi -110055
                                                    Oath Administrator
            Q.1 Please identify yourself.
            Ans. I am Mahender Singh Aggarwal S/o Sh. Mangat
            Ram Aggarwal aged 54 years r/o 2/34 Roop Nagar,
            New Delhi                                     Oath
                                               Administered
            Q.2 Please explain whether the income  tax return for
            the last financial
            year has been filed or not by you.

            Ans. After consulting my tax consultant , I submit
            that it has not been filed.


ITA No. 169/2005+connected appeal                                   Page 31 of 77
            Q.3 Please explain whether any wealth tax return has
            ever been filed by you.
            Ans. After consulting my tax consultant, I submit that
            during last two -- three years, no wealth tax return has
            been filed.
            Q.4 Please furnish the list of all bank accounts
            held in India and aboard by you, your family
            member and business concerns in which you or your
            family members have business interest, or are partners,
            directors or sole proprietor.
            Ans. The complete list I will submit latest by
            05.01.2000.
            Q.5 Please furnish the list of business concerns started
            or controlled by you or your family members, the
            particulars of which have not been disclosed to
            department so far.
            Ans. I will furnish the exhaustive list of all the entities
            lastest by 05.01.2000 positively.
            Q. 6 xxx
            Ans. xxx
            Q. 7 Please explain whether regular books of accounts
            are maintained for the concerns which have not been
            disclosed to department.
            Ans. Apart from some diaries wherein record for only
            for some period was maintained here and there and
            which have been seized during the course of search by
            the Department, there are bank accounts maintained
            by those concerns wherein complete details are
            available. Also some import files are with us wherein
            details of shipments by those concerns are available
            Q. 8 Where these records available in your
            residence/office on the day of search?
            Ans. No, these were maintained by Sh. Vipin Bansal
            who looks after those concerns and were available with
            him.
            Q. 9 xxx


ITA No. 169/2005+connected appeal                                    Page 32 of 77
            Ans. xxx
            Q.10 xxx
            Ans. xxx
            Q. 11 xxx
            Ans. xxx
            Q. 12 I am showing you Annexure A-38 to A-46
            seized from your residence during the course of
            search. Please explain in whose handwriting these
            are written and also the details of entries contained
            therein.
            Ans. Annexure A-38 is written in my hand and relates
            to my various business entity like HAMCO,
            MAMCO, Trust etc. wherein on the left side of the
            half page receipts are recorded and on the right side
            of same, payments recorded. For example on page-6
            on LHS Anupam 1.00 means rs. 1,00,000/- has been
            received from Anupam by C-2 in the Indian Bank of
            MAMCO. On the RHS the entries are the withdrawals
            from bank. For example, documents referred entry
            9.18 means the payments Rs. 9,18,000/- have been
            made for import. Similarly on page-2 one entry
            Capital Plastic 25,000/- is on LHS which means rs.
            25,000/-has been recd from M/s. Capital Plastic.
            On page -7 LHS there is on entry of Advista 150 it
            means Rs. 1,50,000 have been received from Advistas
            150 it means Rs.1,50,000 have been received from
            Advistas.
            Annexure A-39
                  This probably relates to the details of payments
            made for purchases which have not been reflected in
            my regular books of a/cs and some pages from pages
            No. 15 onward pertain to M/s. Universal Enterprises
            which has not filed any return of income so far. The
            exact details shall be known once my employee who
            has written it shall came and explain.



ITA No. 169/2005+connected appeal                               Page 33 of 77
                    Annexure A-40, A-42 and A-46
                  These are relating to the cash transactions which
            are not reflected in our regular books of accounts.
            However, some entry may be reflected in our regular
            books of accounts which I cannot point out at this
            moment.
                   The LHS (Half page) reflects the receipts and
            the other half show payments made.
                    Annexure A-41
            This diary contains details of stock purchase/and sold
            item-wise as well as container wise.
            Annexure A-43
            This diary seems to contain partywise account of goods
            sold and payments received.
            Annexure A-44
            It contains entries relating to some of our companies as
            well as others. It appears to be a ledger account.
            Annexure A-45
            It relates to Universal Enterprises' details appears to be
            of consignment/container's detail.
            These diaries are in the hand writing of some of my
            key employees namely Tarun Kumar, Mr. Mishra and
            Sh.Bhushan who may be able to completely explain the
            contents.
            Q.13 Whether this kind of memoranda records
            containing the detail of unaccounted transactions is
            being maintained in computers as well?
                  Ans. As far as I remember these records are not
            kept on computers.
            Q.14 Pl. furnish the name and address of the banks
            wherein the entities which have not been disclosed to
            department, maintain their bank A/cs.


ITA No. 169/2005+connected appeal                                   Page 34 of 77
            Ans, Mainly the accounts are maintained in following
            two bank
            1 lnddian Bank, DBG Road Pahar Ganj, New Delhi.
            2. Indian Overseas Bank, Model Town, Delhi
            However, complete name of entities and bank A/cs will
            be furnished on 05.01.2000.
            A.15 Pl. explain the nature of business activities
            carried out by different business concerns owned and
            controlled by your and your family members.
            Ans. All my entities broadly are engaged in import of
            acrylic sheet, poly carbonate sheets, vinyls and sale
            thereof, manufacturing of acrylic sheets and there
            fabrication and exports of fabricated items.
            Q. 16 I am showing you all the pages of Annexure A-
            76, Pl. explain the nature of transaction with M/s.
            British Scaffolding International Ltd.
            Ans. This annexure contains all the papers relating to
            transactions with M/s. BSIL regarding purchase of
            plant. The original agreement was for Rs. 125 lacs out
            of which Rs. 5 lacs was paid as services charges and
            Rs. 55 lacs was paid in cash and balance Rs.65 lacs
            was paid by cheques. The details of the item purchased
            are given on page No. 68 and 69 annexed to the
            agreement showing sale consideration at Rs. 120 lacs
            and at page No. 56 and 57 annexed to the revised
            agreement showing consideration at Rs. 65 lacs. Thus
            the items purchased were the same and only balance
            consideration was passed on to the seller in cash out of
            undeclared sources of income.
            Q.17 These plant and machinery are still used by you
            or has again been re-sold.
            Ans. The Plant and machinery purchased from BSIL
            has been installed and being used by M/s. Acry
            Monomers (I) Pvt. Ltd.




ITA No. 169/2005+connected appeal                                 Page 35 of 77
            Q. 18 Please confirm to whom the cash amount was
            delivered at the premises of BSIL
            Ans. It was given to the cashier, whose name I do
            not remember at the premises of BSIL.
            Q. 19 Who asked you to deliver the cash to the cashier
            ?
            Ans. Once I had gone myself to deliver the cash and I
            was told by Sh. Neerav Hans S/o. Sh. H.R. Shiv to
            deliver the cash to their cashier sitting at the same
            office premise at Nehru Place, New Delhi.
            Q. 20 How many time the cash was delivered to BSIL
            for the purchase of machinery?
            Ans. Probably three times.
            Q. 21 Who gave the cash from your side on other
            occasion.
            Ans. I do not remember the name, perhaps Tarun
            Kr. My employee would have given the cash. I will
            tell the name after consulting my staff.
            Q. 22 Will you and your staff be able to identify the
            man to whom cash was delivered at BSIL.
            Ans. It might be possible that my employee who
            delivered the cash may recognize the person to whom
            the cash was delivered.
            Q.23 Who signed the receipt of cash delivered by you
            and your staff.
            Ans. All the case receipt and agreement was signed by
            Mr. Ashok Mandal on behalf of M/s BSIL
            Q. 24 xxx
            Ans. xxx
            Q.25 Please explain why the gift deed has not been
            furnished so far.
            Ans. If available, I will furnish it in next hearing.


ITA No. 169/2005+connected appeal                                   Page 36 of 77
            Q. 26 Please furnish the details of bank account where
            the gift-cheques have been deposited.
            Ans. I will furnish the details on 05.01.2000.
            The statement is temporarily concluded at 7:05 p.m.
            at the request of Sh. M.S. Aggarwal as he is feeling
            tired, to be continued on 05.01.2000
            Sd/- (MS Aggarwal)
            29.12.99

              The above statement has been read and I find it has
            been correctly recorded.
            Sd/- (Vinay Goel)
                29.12.99
            Sd/- 29.12.99
            (MS Aggarwal)
            Sd/- 29.12.99
             Pawan K.Kumar IRS
             Dy.Director of Income tax
                    (Inv) Unit-II,
            E/2, ARA Centre Jandewalan Extn., New Delhi


Second statement of the respondent/assessee recorded on 29th December,
1999 was more than a month after the first statement at the time of the
search on 25th November, 1999. By then, respondent/assessee had been
discharged and had got over the initial shock and trepidation associated with
the search and seizure operation. In this statement recorded in the presence
of    his    Chartered       Accountant   on   29th   December,   1999,       the
respondent/assessee did not retract and contradict his earlier admission on
arranged and bogus gifts. The respondent/assessee had not complained or
protested that his earlier admission was factually incorrect and was recorded
by force and under coercion. The respondent/assessee took time to furnish
the gift deeds and details of bank accounts.



ITA No. 169/2005+connected appeal                                 Page 37 of 77
23.    The respondent/assessee`s third statement on oath, under Section 131
of the Act, recorded on 6th January, 2000 on the aspect of gifts is as relevant
and significant as the statement on 25th November, 1999. This statement
reads:-

            "The statement is in continuation of the statement
            temporarily concluded on 29.12.1999
            Q. 27 Please furnish the details of all the bank accounts
            names of firms/companies including the particulars of
            bank a/cs, firms, companies which have not been
            disclosed to the department & also the addresses of
            some of the employees and the details of gifts taken by
            you.
            Ans. I am filing the above information in three list.
            Q. 28 What about the details of gifts taken by you
            which were informed during the course of search?
            Ans. It was taken from Sh. Rama Pati Singhania r/o
            Kamla Tower, Kanpur (UP). It was taken in the form
            of cheque for about Rs.50 lacs. I have no evidence of
            the gift & I hereby voluntarily offer the same for
            taxation.
            Q. 29 When were the cheques deposited & in
            which account & how many cheques were received.
            Ans. It was received in the current financial year, i.e.
            about six to eight months back. The amount was
            received in two/three cheques which was duly
            deposited in my bank account around the same time. I
            do not remember the particulars of bank account where
            the same were deposited. It was received probably in
            my name. I will furnish the exact details in three-four
            days.
            Ans. It was received in the current financial year, i.e.,
            about six to eight months back. The amount was
            received in two/three cheques which was duly
            deposited in my bank account around the same time. I
            do not remember the particulars of the particulars of
            the bank account where they were deposited. It was
            received probably in my name. I will furnish the exact
            details in four-five days.


ITA No. 169/2005+connected appeal                                  Page 38 of 77
            Q. 30 Can you explain the reasons for receiving the
            gifts?
            Ans.      I do not want to go in details since I am
            willing to pay taxes on the same.
            Q. 31 Please explain whether you have received similar
            gifts from the same person or other persons in earlier
            years in your name or in the name of family members
            & vice-versa, you have also given the gifts to others or
            the same person .
            Ans. As far as I remember there was no gift received
            by me or given by me to any person or the same person
            & also by my family members.
            Q.32 Please explain the occasion on which the gifts
            was taken.
            Ans. There was no special occasion.
            Q. 33 Please explain whether any Gift Deed was
            executed & if yes, why the same was not found during
            the course of search and also it has not been furnished
            till date despite a specific requisition for the same in
            the notice u/s.131 of the I.T. Act 1961
            Ans. To the best of my knowledge it was executed
            but I do not remember it was registered or not & at
            present I am not able to trace the same.
            Q.34 Please furnish the details of mode & manner in
            which gift transactions was completed.
            Ans. It may be considered out of the income generated
            from my undisclosed firms.
            Q. 35 How the undisclosed funds were used in the gift
            transaction?
            Ans. This may have been done in cash/ kind.
            Q.36 Please furnish the copy of bank accounts with
            narration in respect of the entities not disclosed to the
            department.
            Ans. All the entities not disclosed to the department as
            per the list furnished were started in 1997 & 1998 and
            even in 1999. Some of them have been closed in 1998
            and in 1999. At present M/s. Kumar Traders & M/s.
            Universal Enterprises are running, I shall be able to
            furnish the copies of bank a/cs within a week's time.




ITA No. 169/2005+connected appeal                                  Page 39 of 77
It is noteworthy that even on 6th January, 2000, no attempt was made to
retract the admission on bogus gifts or explain the basis and assert that the
gifts were genuine. The third statement affirms and corroborates the first
statement that the gift of Rs.50,00,000/- was procured by paying equal
amount in cash. This statement, which is critical and crucial, was never
retracted as extracted by extending threats or under compulsion. It is also
apparent that the respondent/assessee did not produce the gift deed etc. on
6th January,2000 and had consciously preferred to accept the truth in the
spirit of atonement.

24.    The first attempt and retraction came in the letter dated 13th March,
2002 filed by the assessee during the course of the block assessment
proceedings. Till then no specific communication was written to retract and
withdraw the admission and confession that the gifts were bogus and
procured by paying cash.

25.     The Tribunal, in our opinion, has incorrectly observed and held that
initial and first question and answers on gift, with reference to the statement
recorded on 25th November, 1999, were at the preliminary stage and before
the search, and question No. 20 onwards form part of the statement recorded
during the search.         The said finding of the Tribunal is fallacious and
unacceptable.       It ignores the first portion or the preamble before the
statement was recorded, which reads as under:

            Statement of Shri Mahender Singh Aggarwal s/o Sh.
            Mangat Ram Aggarwal aged 54 years R/0 2/34 Roop
            Nagar Delhi recorded on oath during the search and
            seizure operation u/s 132 of the Income-tax Act, 1961
            on 25.11.99 at 2.34 Roop Nagar, Delhi.




ITA No. 169/2005+connected appeal                                 Page 40 of 77
26.    Clearly questions no. 4 to 11 quoted above and recorded on 25th
November, 1999 were made during the course of search and seizure
operation. These were recorded after the search warrant was enforced and
executed. After recording answers to the first 19 questions, there was a time
gap. Therefore signatures were affixed. The recording of the statement
subsequently continued from question No. 20 onwards. In this situation,
before question no. 20 the words "statement taken during the course of
search" were again recorded. We fail to understand how the tribunal came
to the conclusion that questions after question no. 20 were recorded during
the course of search, while the first 19 questions were preliminary in nature
and were recorded before the search had commenced. This was not pleaded
before the Assessing Officer or Commissioner of Income Tax (Appeals).
The search had commenced the moment various officers, including the
Deputy Director of Income Tax (Investigation Unit 2) had reached the
residence of the respondent/assessee and had shown and executed the search
warrant.

27.    The Tribunal in the impugned order correctly records that the
admissions were compelling. However, thereafter the Tribunal observed that
the statements should be ignored and would not be accepted, as the assessee
had been able to rebut the admissions as the gifts were made by Mr. Rama
Pati Singhania a leading industrialist from a well known family of Kanpur
who had sold a property worth Rs. 2,75,00,000/- in Bombay. The sale of
property and gifts were declared by Mr. Rama Pati Singhania in his Income
Tax returns, which were filed on record. Gift deeds dated 20 th June, 1999 as
well as 30th May, 1999 executed by the donor as well as the donee were
produced before their assessing officer. Affidavits dated 13th May, 1999 and
20th June, 1999, sworn by Mr. Rama Pati Singhania much before the search,


ITA No. 169/2005+connected appeal                               Page 41 of 77
were also placed on record during the block assessment proceedings. The
transactions were therefore not hidden and concealed but were duly
disclosed in the books of account of the donor and donee.

28.    On the aspect of genuineness of the gift, we would observe that the
Tribunal has missed the core issue and question that had arisen for
consideration and required an answer. There was no dispute and challenge
that the purported gifts were made through bank transactions and donor and
his financial status was known.      The issue was whether the gifts were
arranged and bogus, in the sense that the respondent/assessee had paid cash
to procure the gifts from an unrelated person with whom he had no personal
relations, love and affection as was admitted by the respondent/assessee in
his two statements, before taking a u-turn after two years in 2002. This core
issue has been overlooked and ignored by the Tribunal to hold that the gift
was genuine.

29.    Gift as defined in Section 122 of the Transfer of Property Act means
voluntary transfer of existing movable or immovable property made without
consideration by the person called donor to another called the donee. Three
important and essential characteristics of gifts are that it should be
voluntary, it should be without consideration and there should be
acceptance by the donee. Expression without consideration was e xplained
and elucidated in Kumari Sonia Bhatia versus State of U.P. and Others,
(1981) 2 SCC 585, which exposition need not be referred to in detail in view
of the limited legal issue that arises in the present case, albeit it is beyond
cavil that the gift must be voluntary and without consideration. Asokan
versus Lakshmikutty and Others, (2007) 13 SCC 210, reiterates that
absence of consideration is an essential element of gift and that concept of
payment of consideration in whatsoever form is unknown. Therefore, when


ITA No. 169/2005+connected appeal                                 Page 42 of 77
there are cross-transactions in form of payment of cash for issue of cheque,
in the absence of explanation, there would be consideration and the
transaction/transfer would not be a genuine gift but a sham and camouflage.
Genuine gifts received during the current year were un-taxable, but sham
and bogus gifts would fall foul and attract correction and taxation under
Section 68 of the Act. In State of Karnataka versus J. Jayalalitha and
Others, (2017) 6 SCC 263, Ghose, J. in paragraph 213 of the said citation
had referred to Section 68 of the Act and relied on Sumati Dayal versus
Commissioner of Income Tax, Bangalore, 1995 Supp (2) SCC 453, to
observe that payment by way of cheques may not per se be of consequence
in all cases and circumstances. When genuineness of the transaction was
examined, the assessee must justify the cash credit by explaining the nature
and reason of the transaction, otherwise Section 68 of the Act could be
invoked even when there was evidence that the money was received by
cheque or though bank transaction. This would not ipso facto determine and
decide whether the transaction was genuine and truly a gift.            It was
observed:-

            215. In Yash Pal Goel v. CIT (Appeals) [Yash Pal
            Goel v. CIT (Appeals), 2009 SCC OnLine P&H 664 :
            (2009)      310       ITR      75]     , Kusum      Lata
            Thakral v. CIT [Kusum Lata Thakral v. CIT, 2009 SCC
            OnLine P&H 7276 : (2010) 327 ITR 424]
            , CIT v. Sandeep Goyal [CIT v. Sandeep Goyal, 2014
            SCC OnLine P&H 24763 : (2014) 369 ITR 471 (P&H)]
            and ITO v. Mukesh Bhanubhai Shah [ITO v. Mukesh
            Bhanubhai Shah, 2009 SCC OnLine ITAT 1489 : (2009)
            318 ITR (AT) 394 (Bom)] , the common issue was with
            regard to applicability of Section 68 of the Income Tax
            Act, 1961 vis-à-vis receipts which were claimed by the
            assessees to be by way of gifts and thus exempted from
            income tax. In all these cases, the assessees were asked
            to provide explanation to bring the receipts within the


ITA No. 169/2005+connected appeal                                Page 43 of 77
            purview of gifts exempted from income tax and the AO
            on an in-depth scrutiny thereof had concluded that the
            transactions were only smoke screen/subterfuge to avoid
            income tax. The decision in Sumati Dayal [Sumati
            Dayal v. CIT, 1995 Supp (2) SCC 453], with reference
            to Section 68 of the Income Tax Act was relied upon.
            Further, the significant aspects of creditworthiness of
            donors and genuineness of the transactions were
            highlighted. The relationship between the donors and the
            assessee was also examined so as to furnish an
            acceptable reason or justification for such gift out of
            natural love and affection.

            216.      It was emphasised that to examine the
            genuineness of a gift, the test of human probability was
            very appropriate. It was reiterated that a gift cannot be
            accepted as such to be genuine merely because the
            amount has come by way of cheque or draft through
            banking channels unless the identity of the donor, his
            creditworthiness, relationship with the donee and the
            occasion was proved. Unless the recipient proved the
            genuineness of the transaction, the same could be very
            well treated as an accommodation entry of the assessee's
            own money, which was not disclosed for the purpose of
            taxation.

            217.      In all, however, the process undertaken by the
            Income Tax Authorities under Section 68 of the Act is
            only to determine as to whether the receipt is an income
            from undisclosed sources or not and is unrelated to the
            lawfulness of the sources or of the receipt. Thus, even if
            a receipt claimed as a gift is after the scrutiny of the
            Income Tax Authorities construed to be income from
            undisclosed sources and is subjected to income tax, it
            would not for the purposes of a charge under Section
            13(1)(e) of the Act be sufficient to hold that it was from
            a lawful source in the absence of any independent and
            satisfactory evidence to that effect.




ITA No. 169/2005+connected appeal                                  Page 44 of 77
30.    It is in this context that the statements on oath made by the
respondent- assessee on two occasions, i.e. 25th November, 1999 and 6th
January, 2000 become relevant and significant.

31.    Section 114 of the Evidence Act states that Courts may presume
existence of certain facts having regard to common course of natural events,
human conduct and public and private business in relation to facts of a
particular case. Illustration clause (e) states that judicial and official acts
could be presumed were regularly performed.         Thus, there would be a
presumption as to the admission recorded, though the presumption is not
absolute. Similarly, Section 57 of the Evidence Act states that Courts could
take judicial notice of facts enumerated therein, albeit the list is not
exhaustive. Judicial pronouncements hold that doctrine of judicial notice is
wide and would include matters of common and general knowledge
including facts that had acquired universal notoriety and have regular
occurrence. It is in this context that observations made in the Kelkar Report
regarding use of threats and compulsion to extract admissions, etc. and
adverse observations in some judicial pronouncements would be relevant.
Judicial notice of pernicious practice of procuring gifts could also be taken.
However, it would be incorrect to apply presumption under Section 114 of
the Evidence Act or the facts that could be judicially noticed, as affirmative
or negative universal principles cast in stone. The factual background, i.e.
facts and circumstances, matter and would be compelling.

32.    Confessions are important for when voluntarily made there is a
presumption that no person would make a statement against his interest
unless it is true. Therefore, courts have to be cautious and careful that the
confession recorded was voluntarily and not obtained under coercion and by
force and wrongful inducement.      Force and coercion are not synonymous


ITA No. 169/2005+connected appeal                                 Page 45 of 77
and cannot be mixed and equated with mere anxiety and stress due to search
and seizure operations, or inducement propelled by remorse and atonement
to make an admission and confess a wrong. Motive of the person making
the admission to gain indulgence, advantage or avoid evil of a temporal
nature, cannot be treated as equivalent to inducement, coercion or fraud.
Whether a confession is voluntary or induced by force, threat, coercion and
wrongful inducement would primarily be one of fact, albeit any judicial
verdict and decision on the issue must take all relevant facts and
circumstances of the case into consideration and should not be guided by
mere pre-ordained impressions. Factors like time of retraction, nature and
manner of retraction etc. are relevant. Mere retraction does not make or
proves that the admission was obtained by inducement, threat etc. Further,
prudence requires that the court would examine the truthfulness and
correctness of the admission when admissions are accepted and relied.
Corroboration by attending circumstances may be justified.[See K.T.M.S.
Mohd. and Another versus Union of India, (1992) 3 SCC 178, Telstar
Travels Private Limited and Others Versus Enforcement Directorate,
(2013) 9 SCC 549, Adambhai Sulemanbhai Ajmeri and Others versus
State of Gujarat, (2014) 7 SCC 716 and Seeni Nainar Mohammed versus
State, (2017) 13 SCC 685)].

33.    In the present case, the respondent-assessee had stated that he had
paid cash to convert his unaccounted money to procure the gift.          This
admission and confession was made in two statements after a time gap of
nearly forty days. It would be difficult, if not impossible, to get direct
evidence to ascertain and vouch for the truth or falsity of this inculpatory
admission. The answer would largely depend on inference founded on
surrounding circumstances, antecedent and subsequent. In the facts of the


ITA No. 169/2005+connected appeal                              Page 46 of 77
present case, the surrounding circumstances compellingly affirm that the gift
was procured and not a genuine one. These circumstances are as under:-

       (i)     Gift of Rs.50,00,000/- was a substantial amount of money in
               1999.

       (ii)    There is no evidence or material or even an effective attempt to
               show that the respondent-assessee and Mr. Rama Pati
               Singhania were extremely close friends. Blood relationship is
               not claimed.

       (iii)   The respondent-assessee before the Commissioner of Income
               Tax (Appeals) had stated that their forefathers may have helped
               forefathers of Mr. Rama Pati Singhania, a vague statement
               which in fact admits and accepts that the respondent-assessee
               did not personally know Mr. Rama Pati Singhania.

       (iv)    The respondent-assessee`s retraction was nearly two years after
               he had admitted having procured or arranged the gifts.

       (v)     Statement dated 6th January, 2000 admitting that the gift was
               bogus and not genuine was made by the respondent-assessee in
               the presence of the Chartered Accountant.

       (vi)    The respondent-assessee does not claim that the statement
               recorded on 6th January, 2000 was extracted and given under
               force, threat or coercion.

34.    A gift is given out of natural love and affection to a person who is
close to the donor or for the purposes of charity. Plea of charity has not
been raised in this case. There is no evidence or even an indication as to
how the respondent-assessee knew the donor, a well known businessman,


ITA No. 169/2005+connected appeal                                 Page 47 of 77
who gave the gift to the respondent-assessee. In view of the aforesaid
discussion, we have no hesitation in holding that the gift in question of
Rs.50,00,000/- purportedly received by the respondent/assessee from Mr.
Rama Pati Singhania was a procured one and the admissions/confession
made as recorded in the statements dated 25th November, 1999 and 6th
January, 2000 are trustworthy, true and correct. Finding of the Tribunal on
accepting the gift as genuine is contrary to law being perverse and contrary
to facts and material on record.

Whether addition of Rs.50 lacs would have been made as undisclosed
income in the block assessment order or should have been made in the
regular assessment order
35.    Chapter XIV-B relating to procedure for assessment in search cases
was introduced with effect from 1st July, 1995 by Finance Act, 1995. The
provisions of this Chapter have undergone several amendments, including
some with retrospective effect from 1st July, 1995 by Finance Act, 2002.
This has resulted in confusion and divergent interpretation of provisions of
the said Chapter. Initially undisclosed income relating to the block period
was taxed at 60% as prescribed under Section 113, with immunity from
specified interest and penalty contemplated under Section 158BF on the
undisclosed income. This had no bearing on tax, interest and penalty payable
on normal/regular assessment, even if pending and when the assessment was
subsequent to the search. Legal position underwent a change with enactment
of Section 158BFA by way of the Income Tax (Amendment) Act, 1997 with
effect from 1st January, 1997, in respect of searches under Section 132 or
requisition under Section 132A on or after 1st January,1997. New provision
of Section 158BFA had authorised levy of interest and penalty in certain
cases. Conflicting and different stands taken pre and post enactment of



ITA No. 169/2005+connected appeal                              Page 48 of 77
section 158BFA by the Revenue have also contributed to the said confusion,
which have resulted in somewhat conflicting judicial pronouncements.

36.    The relevant provisions of Chapter XIV-B, namely, Section 158B
clause(b), 158BA, 158BB and 158BC, including amendments made vide
Finance Act, 2002 with retrospective effect from 1st July, 1995, read as
under:-

               Section 158B. In this Chapter, unless the context
            otherwise requires,-
            xxx
            (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.
                                        (underlined portion was inserted by
                                        Finance Act, 2002 w.r.e.f. 1st July,
                                        1995)

            xxx
            158-BA. Assessment of undisclosed income as a result
            of search.--(1) Notwithstanding anything contained in
            any other provisions of this Act, where after the 30th
            day of June, 1995 a search is initiated under Section 132
            or books of account, other documents or any assets are
            requisitioned under Section 132-A in the case of any
            person, then, the Assessing Officer shall proceed to
            assess the undisclosed income in accordance with the
            provisions of this Chapter.




ITA No. 169/2005+connected appeal                                       Page 49 of 77
            (2) The total undisclosed income relating to the block
            period shall be charged to tax, at the rate specified in
            Section 113, as income of the block period irrespective
            of the previous year or years to which such income
            relates and irrespective of the fact whether regular
            assessment for any one or more of the relevant
            assessment years is pending or not.
            Explanation.--For the removal of doubts, it is hereby
            declared that--
            (a) the assessment made under this Chapter shall be in
            addition to the regular assessment in respect of each
            previous year included in the block period;
            (b) the total undisclosed income relating to the block
            period shall not include the income assessed in any
            regular assessment as income of such block period;
            (c) the income assessed in this Chapter shall not be
            included in the regular assessment of every previous
            year included in the block period.
            (3) Where the assessee proves to the satisfaction of the
            Assessing officer that any part of income referred to in
            sub-section (1) relates to an assessment year for which
            the previous year has not ended or the date of filing the
            return of income under sub-section (1) of Section 139
            for any previous year has not expired, and such income
            or the transactions relating to such income are recorded
            on or before the date of the search or requisition in the
            books of account or other documents maintained in the
            normal course relating to such previous years, the said
            income shall not be included in the block period.
                                        (underlined portion was inserted by
                                        Finance Act (No.2), 1998 w.r.e.f. 1st
                                        July, 1995)

            xxx
            158-BB. Computation of undisclosed income of the
            block period.--(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,


ITA No. 169/2005+connected appeal                                        Page 50 of 77
            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 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
            subsection (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







ITA No. 169/2005+connected appeal                                   Page 51 of 77
            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 245-D, on the basis of such
            order;
            (f) where an assessment of undisclosed income had been
            made earlier under clause (c) of Section 158-BC, 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 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 income determined before allowing
            deduction of salary, interest, commission, bonus or
            remuneration by whatever name called:
            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 subsection (1-B) of
            Section 143.




ITA No. 169/2005+connected appeal                                  Page 52 of 77
            (2) In computing the undisclosed income of the block
            period, the provisions of Sections 68, 69, 69-A, 69-B
            and 69-C 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 subsection
            (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.
                                     (underlined portion was inserted by Finance
                                    Act, 2002 w.r.e.f. 1st July, 1995. Prior to its
                                    substitution, clause (c) read as under,
                                     (c) where the due date for filing a return of
                                    income has expired but no return of income has
                                    been filed, as nil)
             xxx
            158-BC. Procedure for block assessment.--Where
            any search has been conducted under Section 132 or
            books of account, other documents or assets are
            requisitioned under Section 132-A, in the case of any
            person, then,--
            (a) the Assessing Officer shall--
            (i) in respect of search initiated or books of account or
            other documents or any assets requisitioned after the
            30th day of June, 1995 but before the 1st day of January,
            1997, serve a notice to such person requiring him to
            furnish within such time not being less than fifteen days;



ITA No. 169/2005+connected appeal                                              Page 53 of 77
            (ii) in respect of search initiated or books of account or
            other documents or any assets requisitioned on or after
            the 1st day of January, 1997 serve a notice to such
            person requiring him to furnish within such time not
            being less than fifteen days but not more than forty five
            days,
            as may be specified in the notice a return in the
            prescribed form and verified in the same manner as a
            return under clause (i) of sub-section (1) of Section 142,
            setting forth his total income including the undisclosed
            income for the block period:
            Provided that no notice under Section 148 is required to
            be issued for the purpose of proceeding under this
            Chapter:
            Provided further that a person who has furnished a
            return under this clause shall not be entitled to file a
            revised return;
            (b) the Assessing Officer shall proceed to determine the
            undisclosed income of the block period in the manner
            laid down in Section 158-BB and the provisions of
            Section 142, sub-sections (2) and (3) of Section 143,
            Section 144 and Section 145 shall, so far as may be,
            apply;
            (c) the Assessing Officer, on determination of the
            undisclosed income of the block period in accordance
            with this Chapter, shall pass an order of assessment and
            determine the tax payable by him on the basis of such
            assessment.
37.    In Commissioner of Income Tax, Delhi-II versus Ravi Kant Jain,
[2001] 250 ITR 141 (Delhi), after referring to sub-section (1) to Section
158BA, which starts with a non obstante clause, it was observed that block
assessment under Chapter XIV-B was in addition to the regular assessment
in respect of each previous year. Income assessed in block assessment does
not form part of regular assessment. Further, procedure under Chapter XIV-



ITA No. 169/2005+connected appeal                                  Page 54 of 77
B was intended to provide for a mode of taxing undisclosed income detected
as a result of search and was not a substitute for a regular assessment.
Assessment for the block period could only be done on the basis of the
evidence found as a result of search or requisitioning the books of account or
documents or such other information available with the assessing officer.
Legal position on scope and ambit of undisclosed income has been
elucidated and explained by the Supreme Court in Assistant Commissioner
of Income Tax, Chennai versus A.R. Enterprises, (2013) 3 SCC 196, which
specifically made reference to the expression which has not been or would
not have been disclosed` for the purpose of the said Act. Referring to the
latter portion of Section 158B(b), it was observed as under:-

            "17. The genesis of the issue before us lies within the
            folds of this section. Sections 158-BD and 158-BC,
            along with the rest of Chapter XIV-B, find application
            only in the event of discovery of undisclosed income
            of an assessee. Undisclosed income is defined by
            Section 158-B as that income which has not been or
            would not have been disclosed for the purposes of this
            Act. The legislature has chosen to define undisclosed
            income in terms of income not disclosed, without
            providing any definition of disclosure of income in
            the first place. We are of the view that the only way of
            disclosing income, on the part of an assessee, is
            through filing of a return, as stipulated in the Act, and
            therefore an undisclosed income signifies income not
            stated in the return filed. Keeping that in mind, it
            seems that the legislature has clearly carved out two
            scenarios for income to be deemed as undisclosed: (i)
            where the income has clearly not been disclosed, and
            (ii) where the income would not have been disclosed. If
            a situation is covered by any one of the two, income
            would be undisclosed in the eyes of the Act and hence
            subject to the machinery provisions of Chapter XIV-B.
            The second category viz. where income would not have
            been disclosed, contemplates the likelihood of


ITA No. 169/2005+connected appeal                                  Page 55 of 77
            disclosure; it is a presumption of the intention of the
            assessee since in concluding that an assessee would or
            would not have disclosed income, one is ipso facto
            making a statement with respect to whether or not the
            assessee possessed the intention to do the same. To
            gauge this, however, reliance must be placed on the
            surrounding facts and circumstances of the case.
            xxxx

            25. Hence, the computation of undisclosed income
            for the purposes of Chapter XIV-B has to be construed
            in terms of the total income received, accrued,
            arisen; or which is deemed to have been received,
            accrued or arisen in the previous year, and is computed
            according to the provisions of the Act. According to
            Section 139(1) of the Act, every person who is
            assessable under the Act, must file a return declaring
            his or her total income during the previous year on or
            before the due date, for assessment under Section 143
            of the Act. Hence, the disclosure of income is the
            disclosure of the total income in a valid return under
            Section 139, subject to assessment and chargeable to
            tax under the provisions of the Act. It is important to
            bear in mind that total income is distinct from
            the estimated income, upon the basis of which,
            advance tax is paid by an assessee. Advance tax is
            based on estimated income, and hence, it cannot result
            in the disclosure of the total income assessable and
            chargeable to tax.

            xxxx

            38. Thus, for the purposes of computation of
            undisclosed income under Chapter XIV-B, an assessee
            can rebut the assessing officer's finding of undisclosed
            income by showing that such income was disclosed in
            the return of income filed by him before the
            commencement of search or the requisition. In other
            words, when Section 158-BB(3) is read with Section
            158-B(b), which defines undisclosed income, we reach
            the conclusion that for income to be considered as


ITA No. 169/2005+connected appeal                                 Page 56 of 77
            disclosed income, the same should have been disclosed
            in the return filed by the assessee before the search or
            requisition. In our opinion, on failure to file return of
            income by the due date under Section 139 of the Act,
            payment of advance tax per se cannot indicate the
            intention of an assessee to disclose his income."


       Undisclosed income in the second category, i.e. where the income
would not have been disclosed, contemplates likelihood of non-disclosure.
It refers to the intention of the assessee.       Relevance of the aforesaid
observations in the context of the present case is that the respondent/assessee
had certainly received Rs.50,00,000/- by way of cheques from Mr. Rama
Pati Singhania, allegedly as a gift, with an intent to claim exemption. It is
not the case of the respondent / assessee that he wanted to ever disclose Rs.
50,00,000/- as taxable income and indeed in the block assessment return he
had not disclosed this amount as taxable income. It is not the case of the
respondent/assessee that this amount was to be disclosed or was disclosed as
taxable income in the regular return under Section 139 of the Act.

38.    Interpreting the aforesaid provisions of Chapter XIV-B in
Commissioner of Income Tax versus Shailendra Mahto, [2015] 372 ITR
257 (Del), it was held as under:-

           "8. Section 158B(b) is a definition provision for the
           purpose of the said Chapter, which defines the term
           undisclosed income. It is an inclusive definition and
           is subject to the context otherwise requiring a different
           interpretation. Undisclosed income for the purpose of
           the Chapter could include any money, bullion,
           jewellery or other article, valuable article or thing or
           even income based on entry in the books of account and
           other documents of transactions, which had not been or
           would not have been disclosed for the purposes of this
           Act. By retrospective amendment inserted by the


ITA No. 169/2005+connected appeal                                  Page 57 of 77
           Finance Act, 2002, with effect from July 1, 1995, any
           expense, deduction or disallowance claimed under the
           Act, which was found to be false was also treated as
           undisclosed income. An inclusive definition is to be
           read broadly and in a wide manner and should not be
           given a restrictive meaning. The expression
           undisclosed income with effect from July 1, 1995,
           therefore, would mean and include any false
           expenditure, deduction or allowance claimed under the
           Act but was found to be false, or any money, bullion,
           jewellery, valuable article or thing, that had not been or
           would not have been disclosed and also included any
           income based on entry in the books of account or other
           documents, which had not been disclosed or would not
           have been disclosed for the purposes of this Act. The
           crucial and singularly pre-eminent expression used in
           the said clause is has not been or would not have been
           disclosed for the purposes of this Act. We shall be
           subsequently referring to, in detail, the judgment of the
           Supreme Court in Asst. CIT v. A.R. Enterprises, [2013]
           350 ITR 489 (SC); (2013) 3 SCC 196, but suffice at
           this stage, it is to notice and reproduce the following
           paragraph from A.R. Enterprises (supra) (page 500 of
           350 ITR):

               The genesis of the issue before us lies within
               the folds of this section. Sections 158BD and
               158BC, along with the rest of Chapter XIV-B,
               find application only in the event of discovery of
               undisclosed income` of an assessee.
               Undisclosed income` is defined by section
               158B as that income which has not been or
               would not have been disclosed for the purposes
               of this Act`. The Legislature has chosen to
               define undisclosed income` in terms of income
               not disclosed, without providing any definition
               of disclosure` of income in the first place. We
               are of the view that the only way of disclosing
               income, on the part of an assessee, is through
               filing of a return, as stipulated in the Act, and
               therefore an undisclosed income` signifies


ITA No. 169/2005+connected appeal                                   Page 58 of 77
               income not stated in the return filed. Keeping
               that in mind, it seems that the Legislature has
               clearly carved out two scenarios for income to
               be deemed as undisclosed : (i) where the income
               has clearly not been disclosed, and (ii) where the
               income would not have been disclosed. If a
               situation is covered by any one of the two,
               income would be undisclosed in the eyes of the
               Act and, hence, subject to the machinery
               provisions of Chapter XIV-B. The second
               category, viz., where income would not have
               been disclosed, contemplates the likelihood of
               disclosure; it is a presumption of the intention of
               the assessee since in concluding that an assessee
               would or would not have disclosed income, one
               is ipso facto making a statement with respect to
               whether or not the assessee possessed the
               intention to do the same. To gauge this,
               however, reliance must be placed on the
               surrounding facts and circumstances of the
               case.

           9. The aforementioned paragraph, interprets section
           158B(b) of the Act and lays core and primary
           emphasis/stress on the phrase, has not been and would
           not have been disclosed. This part of the definition
           effectuates and underlines the object of the block
           assessment proceedings is to bring to tax what was not
           taxed or would not have been taxed including wrong
           deduction or disallowance claimed and allowed earlier.
           The retrospective amendment is an indication that even
           the entries recorded in the books of account or other
           documents of transaction could become the subject
           matter of undisclosed income if found to be false and,
           accordingly, deduction or disallowance should not have
           been allowed or claimed.

           10. Section 158BA(1) of the Act begins as a non
           obstante provision giving primacy to the procedure
           prescribed under Chapter XIV-B of the Act to the
           exclusion of other provisions of the Act where search


ITA No. 169/2005+connected appeal                                    Page 59 of 77
           was conducted after June 30, 1995, up to May 31, 2003
           (see section 158BI of the Act), or books of account or
           other documents of the assessee had been requisitioned
           in the aforesaid period. Sub-section (2) stipulates that
           the rate of tax as specified in section 113 shall apply to
           income calculated for the block period irrespective of
           the previous years to which the income relates and
           irrespective of the fact whether regular assessment for
           any one or more assessment years was pending or
           not. Explanation which was inserted by the Finance
           (No. 2) Act, 1998, with retrospective effect from July 1,
           1995, is a cause of some debate, as do the subsequent
           amendments by the Finance Act, 2002, again with
           retrospective effect from July 1, 1995. The amendments
           incorporated by the Finance Act, 2002, reflect the
           position that there was a greater clarity and
           understanding, regarding block assessment proceedings
           when the Finance Act, 2002, was enacted. It reflects the
           march of law, as there was greater and better
           appreciation and the amendments negate the ill effects
           and problems noticed in practice (This aspect has been
           also examined below with reference to the decision
           in N.R. Paper and Board Ltd. v. Deputy CIT, [1998]
           234     ITR      733     (Guj).    Coming      back     to
           the Explanation inserted by the Finance (No. 2) Act,
           1998, with retrospective effect from July 1, 1995, it
           declares for removal of doubt that assessment under
           Chapter XIV-B shall be in addition to regular
           assessment for each of the previous year in the block
           period; total undisclosed income in the block period
           would not include income included in regular
           assessment; and income assessed under Chapter XIV-B
           shall not be included in the regular assessment of the
           previous years. The aforesaid Explanation supports in
           view that there would be two assessments in the cases
           of search or when section 132A is invoked, i.e.,
           normal/regular assessments under section 143(1) or
           section 143(3) of the Act; and Chapter XIV-B or block
           assessment. Further, income included in the block
           assessment would not be included in the normal
           assessment and similarly income included in the normal


ITA No. 169/2005+connected appeal                                  Page 60 of 77
           assessment would not be included in the block
           assessment. We shall be referring to several judgments
           relied upon by the counsel for the respondent-assessee
           which have decided the controversy whether income
           should be assessed in the normal assessment or block
           assessment by primarily relying upon the
           said Explanation. This indeed is the correct
           interpretation accepted by the courts. Thus, there can be
           regular and block assessments for the same period. The
           next question is what could be included or the scope
           and ambit of block assessment and regular assessment.
           The answer lies in conjoint and harmonious reading of
           the sections 158B(b) and 158BB of the Act.

           11. Section 158BB of the Act is a procedural provision
           which deals with computation of undisclosed income
           but is also a substantive provision because it seeks to
           define what is to be included and can be made a subject
           matter of the block assessment. Sub-section (1) refers to
           the evidence found as a result of search or requisition of
           books of account or other documents and such other
           information as was available with the Assessing Officer
           and relatable to such evidence. It postulates that
           evidence found as a result of search or requisition of
           books of account or documents as well as other
           information relatable to such evidence could be taken
           into consideration for the purpose of undisclosed
           income for the block period. The income so calculated
           shall be increased or reduced by the aggregate of total
           income or loss of the previous years which have been
           determined where assessment under section
           143/144/147 of the Act had concluded prior to the date
           of commencement of search or date of requisition; but
           where returns of income have been filed under section
           139/142(1)/148 of the Act, then such increase or
           reduction shall be done on the basis of income
           disclosed in such returns. Section 158BB(2)(b) of the
           Act is indicative that the returned income, where
           assessment had not been concluded or made, the
           returned income would be treated as disclosed income
           and any other income on the basis of evidence found


ITA No. 169/2005+connected appeal                                  Page 61 of 77
           during the course of search or requisition of books of
           account or documents with other evidence relatable to
           such evidence would be treated as undisclosed income
           and, accordingly, made the subject matter of the block
           assessment. The controversy that would remain is
           whether in view of the said clause (b) where
           assessments were pending, additions in block
           assessment could still be made where no material or
           evidence was found in the search relatable to the
           disclosed income declared in the return, or the addition
           should be made in regular assessment. Preponderance
           of the judicial opinion appears to be in favour of the
           normal or regular assessment and not for additions
           under the head Undisclosed income in the block
           assessment. Of course, this would not apply where
           material has been found during the course of search or
           on further enquiry relatable to such material or in cases
           where expense, deduction or allowance claimed under
           the Act was found to be false. In such cases, additions
           could be made under sub-section (1) to section 158BB
           of the Act.

           12. At this stage, it will be relevant to also refer to
           section 158BA(3) of the Act. Sub-section (3) of section
           158BA of the Act relates to a part of the year which had
           not ended or when the date of the filing of the return
           under section 139(1) had not expired. In such cases,
           income of the transactions recorded on or before the
           date of search or requisition of the books of account or
           other documents, etc., would not be included in the
           block period. The said sub-section has to be read along
           with section 158B(b) which defines, undisclosed
           income. On harmonious construction, it follows that
           said entry in the books of account should not be false,
           otherwise they would be covered under the head
           Expense, deduction or allowance which is found to be
           false.

           13. False or falsehood is a strong word and much
           narrower than the word or term incorrect or legally
           unsustainable. False or falsehood refers to element


ITA No. 169/2005+connected appeal                                 Page 62 of 77
           of mens rea or bad mental intention and would not
           relate to claims which might be wrong because of legal
           interpretation or has to be disallowed because of
           technical defect and similar reasons. However, as
           noticed below, this question does not arise for
           consideration in the present case.

           14. Clause (c) of section 158BB(1) of the Act as
           enacted was substituted by the Finance Act, 2002, with
           retrospective effect from July 1, 1995. The substituted
           clause (c) deals with cases where due date of filing of
           returns of income had expired but no return of income,
           nad been filed, when either of the two conditions were
           satisfied. As per sub-clause (A) of clause (c), income
           for the block assessment would be computed on the
           basis of entries as recorded in the books of account and
           other documents maintained in the normal course where
           such entries result in computation of loss for any
           previous year falling in the block period. Sub-clause
           (B) would only apply in a case where the income, as a
           result of entries in the books of account and other
           documents maintained in the normal course on or
           before the date of search or requisition did not exceed
           the maximum amount not chargeable to tax. Clause (ca)
           deals with cases not covered by clause (c), i.e., when no
           return of income had been filed but income was taxable.
           Thus, where the due date of filing of return had lapsed
           but no return had been filed and computation was not at
           a loss or below the taxable limit, income as per the
           books of account shall be treated as nil, even if as per
           the books of account and other documents maintained
           in the normal course, the income disclosed was above
           the taxable limit. In such cases, irrespective of the
           figures in the books of account or documents, income
           has to be by default, taken as nil. Clause (ca) would
           apply only when the date of filing of return has expired
           and return of income has not been filed.

           15. Clause (d) would apply to cases where previous
           year has not ended or date of filing of return under
           section 139(1) has not expired. In such cases income


ITA No. 169/2005+connected appeal                                 Page 63 of 77
           has to be computed on the basis of the entries relevant
           to such income or transactions recorded in the books of
           account or other documents maintained in the normal
           course on or before the date of search.

           16. XXX

           17. Section 158BC of the Act relates to the procedure
           for block assessment and postulates issue of notice for
           filing of return for block assessment. The first proviso
           states that in such cases, no notice under section 148
           was required. Thus, it does away with the requirement
           of notice under section 148 and recording of reasons for
           the same. The said proviso is to be read with sub-
           section (1) of section 158BA which gives an overriding
           primacy to Chapter XIV-B. The second proviso states
           that no revised return for block assessment can be filed.
           Clause (b) of section 158BC states that the Assessing
           Officer shall proceed to determine the undisclosed
           income for the block assessment period and the
           provisions of sections 142, 143(2), 143(3), 144 and 145
           shall apply and as per the mandate of clause (c), block
           assessment order has to be passed and tax payable has
           to be determined. As per clause (d), the assets seized
           under section 132 or requisitioned under section 132A
           have to be accordingly dealt with in accordance with
           section 132B."


39.     Shailendra Mahto (supra) had examined several decisions of
different High Courts on the issue and had extensively relied on the decision
of the Supreme Court in A.R. Enterprises, (supra) interpreting the term
undisclosed income and in particular the expression had not been or
would not have been disclosed for the purposes of the Act.




ITA No. 169/2005+connected appeal                                 Page 64 of 77
40.    At this stage, it would be relevant to refer to the judgments relied
upon by the counsel for the respondent/assessee. Decision of the Supreme
Court in Assistant Commissioner of Income Tax and Another versus Hotel
Blue Moon, [2010] 321 ITR 362 (SC) had answered the issue and question
whether issue of notice under Section 143(2) was mandatory after return of
income for block period was filed by the assessee, who had been subjected
to search, pursuant to notice under Section 158BC of the Act. Agreeing
with the High Court, the Supreme Court held that it was mandatory to issue
notice under Section 143(2) for the purpose of Chapter XIV-B of the Act for
determination of undisclosed income for the block period. While deciding
the said issue, the Supreme Court observed that Chapter XIV-B provides for
assessment of undisclosed income unearthed as a result of search. These
provisions were devised to operate in distinct field of undisclosed income
and were in addition to regular assessments covering the previous years,
falling in the block period. Block assessment was not intended to be a
substitute for regular assessment and was a special procedure intended to
provide mode of assessment of undisclosed income done on the basis of
evidence found as a result of search, or requisition of books of accounts, or
documents and such other material and information as were available with
the Assessing Officer. The said decision does not directly relate to the point
and question before us.             We would simultaneously now deal with the
decisions of the Delhi High Court in CIT versus Bluechip Construction
Company (P) Ltd., [2007] 213 ITR 530 (Delhi), Commissioner of Income
Tax, Delhi-VI versus Ashok Dua, [2009] 177 TAXMAN 494 (Delhi),
Commissioner of Income Tax versus Vishal Aggarwal , [2006] 283 ITR
326 (Delhi), Commissioner of Income Tax versus Ansal Buildwell Ltd.,
(2008) 304 ITR 378 (Delhi) and Commissioner of Income Tax versus DPA
Finvest Services Ltd., [2015] 376 ITR 399 (Delhi). In Vishal Aggarwal

ITA No. 169/2005+connected appeal                                 Page 65 of 77
(supra), father of the assessee was subjected to search and seizure
operations. Nevertheless, the Assessing Officer had invoked Section 158BC
of the Act in the case of the son in respect of gifts of Rs.10 lacs and another
gift of Rs.20,000/-. In this context, it was observed that resort to Section
158BC was improper and contrary to law and holds that any post search
inquiry unconnected with material or information recovered during search,
would at best enable the Assessing Officer to re-open assessment under
Section 147, albeit would not be a ground to invoke Section 158BC of the
Act. This decision is, therefore, distinguishable as was considered and
observed in Shailendra Mahto (supra). In Ansal Buildwell Ltd. (supra), the
Division Bench referred to definition of the expression undisclosed
income vide clause (b) to Section 158B and the amendment made by
Finance Act 2002 with retrospective effect from 1st July, 1995 to Section
158BB(1) of the Act relating to computation of undisclosed income for the
block period and it was observed as under:-
           10. On a reading of both these provisions of law,
           which are inserted in the Act by the same amending
           statute, that is, the Finance Act, 2002, it appears to us
           that undisclosed income should be that which is
           discovered as a result, inter alia, of a document or
           transaction which has not been or would not have been
           disclosed for the purpose of the Act. This pre-condition
           does not arise in so far as the present case is concerned
           because admittedly the document recovered during the
           search represented a disclosed transaction of sale of
           property that had taken place for which M/s. Televista
           Electronics Limited had been paid a commission. In so
           far as the falsity of the expense or deduction or
           allowance is concerned, that must be necessarily be
           relatable to the document or transaction. This is clear
           from section 158BB(1) of the Act which specifically
           requires that the material or information must be
           relatable to such evidence. Therefore, both
           requirements are necessary, namely, material showing

ITA No. 169/2005+connected appeal                                 Page 66 of 77
           that the amount has not been or would not have been
           disclosed and that the expense, deduction or allowance
           should be false on the basis of the unearthed evidence.

               11. In so far as the present case is concerned, the very
               first requirement, namely, of non-disclosure of the
               material does not arise because in fact the assessee had
               disclosed the transaction in its account books and this is
               not disputed by the Revenue. Moreover, the sale appears
               to have been considered by the Assessing Officer during
               the course of regular assessment, although learned
               counsel for the parties are not in a position to tell us the
               exact facts. In any case, since the first condition itself is
               not satisfied, the falsity of the claim being relatable to
               that evidence does not arise.

       Elucidation was that for invoking the provisions of Chapter XIV-B for
block assessment procedure, two requirements must be satisfied and the
requirements were cumulative.           Firstly, there should be material or
documents showing that information had not been or would not have been
disclosed and secondly that the expense, deduction or allowance should be
false on the basis of evidence unearthed as a result of search. We would
observe that this decision has to be read in light of the ratio subsequently
expounded and explained by the Supreme Court in A.R. Enterprises (surpa)
which would now constitute the binding precedent.             A. R. Enterprises
(supra) as noticed above, had expounded on the condition precedent for
taxing undisclosed income in block assessment in search cases, and
emphasised that it could include entries in the books of accounts or other
documents or transactions which wholly or partly represent income or
property which had not been or would not have been disclosed for the
purposes of the Act. Finality and absolute certainty would not be required at
the initial stage. More importantly, the Division Bench in Ansal Buildwell
Ltd. (supra) had stated and held that the issue of commission, subject matter


ITA No. 169/2005+connected appeal                                    Page 67 of 77
of the block assessment, had been considered by the Assessing Officer
during the course of regular assessment, though counsel for the parties were
unable to state the exact facts. Thereafter, the Division Bench had referred
to the findings recorded by the Assessing Officer in the regular assessment.
Section 158BB(1) pertinently uses the expression relatable to evidence
found as a result of search or requisition of books of account or other
documents or such other material or information as available with the
Assessing Officer". Expression relatable to is wide in ambit and scope.
41.    Similarly, decision in DPA Finvest Services Ltd. (supra) is
distinguishable for in the said case, the Assessing Officer had made addition
of more than Rs.33.75 lacs as unexplained credit under Section 68 of the Act
on the basis that the said assessee had received Rs.61,933/- by way of
accommodation entry from a company subjected to search and seizure
operations. After referring to Section 158BB(1) it was observed that the
Revenue had not been able to bring on record any information or material
that the additions made were relatable to the solitary accommodation entry
which was unearthed during the search.
42.    Bluechip Construction Company (P) Ltd. (supra) follows the
reasoning given in Ansal Buildwell Ltd. (supra) while deciding the question
of addition of Rs.26,10,500/- in respect of credit appearing in the bank
account of the assessee to observe that the amount which had been disclosed
in the bank account maintained by the assessee to that extent cannot be
described as undisclosed income. It was held that the revenue`s contention
that the amount mentioned in the bank account would not have been
disclosed in the return, the due date for which was subsequent to the date of
the search cannot be answered in that manner, and that the burden and a
heavy one, was on the Revenue that they had not attempted to discharge. It
was held that to negate addition in the block assessment, it was enough if the

ITA No. 169/2005+connected appeal                                Page 68 of 77
amount disclosed by the assessee was in the bank account. In Ashok Dua
(supra), the assessee had received gifts from non-residents which were
credited in the bank accounts. These bank accounts were discovered during
the course of search and gift deeds and the affidavits in support of gifts were
also found during the course of search. Referring to the case of Vishal
Aggarwal (supra), it was observed that these gifts would be outside the
purview of Chapter XIV-B of the Act. On the question of undisclosed
income we have referred to the judgment of the Supreme Court in A.R.
Enterprises (surpa), which should be considered as settling the issue and
controversy. Earlier ratio contrary to the dictum in A.R. Enterprises (supra)
should be treated as over-ruled and not binding.
43.    In Director of Income Tax (Exemption) versus All India Personality
Enhancement and Cultural Centre for Scholars Apieccs Society , [2015]
379 ITR 464 (Delhi), while interpreting Section 158B(b), which defines
undisclosed income for the purpose of Chapter XIV-B, it was observed that
it connotes assets or income which were taxable but the assessee seeks to
conceal the same from the authorities. In that case, it was observed that
surplus recorded by the assessee in the books of accounts maintained in the
normal course and which according to the assessee were not chargeable to
tax cannot be assumed to be undisclosed income as revenue believes them to
be taxable. Therefore, when the assessee subscribes to the view that a
particular amount was not taxable, and he was not required to file his return,
it would not be undisclosed income.        Reference was also made to the
decision in Shri L.R. Gupta and Others versus Union of India and Others,
[1992] 194 ITR 32 (Delhi) which had considered the expression
undisclosed income or property in the context of Section 132 of the Act.
With respect we may note that for the purpose of Chapter XIV-B, the
expression undisclosed income has been specifically defined. Section 132

ITA No. 169/2005+connected appeal                                 Page 69 of 77
relates to pre-search requirements and Chapter XIV-B incorporated a special
procedure for post search assessment in respect of "undisclosed income".
Definition ascribed to "undisclosed income" would guide and govern the
applicability of Chapter XIV-B or the block assessment proceedings.
Difference in clause (c) of Section 132 and expression undisclosed income
defined in Section 158B(b) of the Act was highlighted in Shailendra Mehto
(supra) after referring to observations made in N.R. Paper and Board
Limited and Others versus Deputy Commissioner of Income Tax, [1998]
234 ITR 733(Guj.). In this context, we may now refer to the decision of the
Rajasthan High Court in Commissioner of Income Tax versus Elegant
Homes Private Limited, [2003] 259 ITR 232 (Raj.) which with respect
reflects and resonates a compelling opposite view. The tribunal in the said
case had deleted additions of Rs.41,000/- as cash credits not proved as
genuine. Deposits of Rs. 41,000/- were recorded in the regular cash books
maintained by the assessee. Rajasthan High Court reversed the findings of
the tribunal and held that the Tribunal had committed an error by holding
that as the entries were found in the regular books of accounts, the entries
cannot be treated as undisclosed income. It was held as under:
           10. Admittedly, Rs.41,400 had never been offered for
           tax and it was never shown as income of the assessee,
           the entries of these deposits were found in the regular
           cash books maintained by the assessee. When the
           entries were found in the books of the assessee, the
           assessee could not explain the genuineness of the
           deposits, this amount was never disclosed, it is an
           undisclosed income of the assessee. The Tribunal has
           committed an error in holding that as the entries were
           found in the regular books of account, therefore, it
           cannot be treated as undisclosed income.

           11. The view is contrary to the provisions of Chapter
           XIV-B of the Income-tax-Act, 1961. In Chapter XIV-B


ITA No. 169/2005+connected appeal                                Page 70 of 77
            of the Act, special provisions for assessment in search
            cases have been given and if any amount of income has
            not been taxed and during the course of search, if some
            "undisclosed" income is found on the basis of material
            seized, that should be treated as undisclosed income as
            per the scheme of special assessment under the
            aforesaid Chapter.

44.       It has been submitted on behalf of the respondent/assessee that in the
present case no evidence was found" as a result of the search in respect of
the gift and, hence, no addition could be made in the block assessment
proceedings.       Reliance was placed upon paragraph 20 of the decision
Commissioner of Income Tax versus Harjeev Aggarwal, (2016) 229 DLT
33 and Commissioner of Income-tax versus Late Shri Raj Pal Bhatia,
(2011) 333 ITR 315 (Del). In the latter case, the High Court has observed as
under:-

            13. The Tribunal has held that this statement could not
            be treated books of accounts or other documents or
            assets which only could be the basis for invoking the
            provision of Section 158 BD of the Act. Admittedly,
            statement of Mrs. Charla is neither books of accounts`
            or assets`. The question, therefore, is as to whether this
            statement can be treated as other documents`. Prima
            facie, it is difficult to accept this proposition. Statement
            was not the document which was found during search.
            In fact this was the document which came to be created
            during the search as the statement was recorded at the
            time of search. Therefore, it cannot be said that the
            statement was seized` during the search and thus,
            would not qualify the expression document having
            been seized during the search. In such a scenario,
            proper course of action was reassessment u/s 147 read
            with section 148 of the Act.
       In Harjeev Aggarwal (supra), it was observed as under:-




ITA No. 169/2005+connected appeal                                     Page 71 of 77
           20. In our view, a plain reading of Section 158BB(1)
           of the Act does not contemplate computing of
           undisclosed income solely on the basis of a statement
           recorded during the search. The words evidence found
           as a result of search would not take within its sweep
           statements recorded during search and seizure
           operations. However, the statements recorded would
           certainly constitute information and if such information
           is relatable to the evidence or material found during
           search, the same could certainly be used in evidence in
           any proceedings under the Act as expressly mandated
           by virtue of the explanation to Section 132(4) of the
           Act. However, such statements on a standalone basis
           without reference to any other material discovered
           during search and seizure operations would not
           empower the AO to make a block assessment merely
           because any admission was made by the Assessee
           during search operation.
45.      In paragraph 13 of Late Shri Raj Pal Bhatia (supra), the Court had
expressed prima facie view that a statement recorded at the time of search
could not be treated as another document. Late Shri Raj Pal Bhatia (supra),
was a case relating to Section 158BD of the Act which relates to initiation of
block assessment proceedings against a third person who has not been
subjected to search and seizure operations on the basis that undisclosed
income belonging to him or whose books of accounts or other document
sheets or assets had been requisitioned. In the context of the said provision,
the Division Bench observed that the oral statement would not be covered
by the expression seized during the course of search and would not qualify
the expression document. However, no final or authoritative opinion was
given by the Division Bench on the said aspect as appeal of the Revenue
was rejected for the reason of absence of any satisfaction in writing by the
Assessing Officer of the searched person, in view of decision of the
Supreme Court in Manish Maheshwari versus Assistant Commissioner of


ITA No. 169/2005+connected appeal                                Page 72 of 77
Income Tax and Others, (2007) 289 ITR 341 (SC). Thus, Late Shri Raj Pal
Bhatia (supra) had not expounded a clear ratio on the aspect as is clear from
paragraph 16 of the said judgment, which reads as under:-

            16.      However, it is not even necessary to decide
            this aspect authoritatively in these appeals, inasmuch
            as, order of the Tribunal warrants to be sustained
            because of the following reason.

46.    However, in Harjeev Aggarwal (supra) it was observed that oral
statements recorded would constitute information, but if such information
was relatable to the material or evidence found during search. Then alone
oral statement could be used as evidence as expressly mandated by virtue of
Explanation to Section 132 (4) of the Act. Explanation to Section 132(4) of
the Act, reads as under:-

            Explanation.- For the removal of doubts, it is hereby
            declared that the examination of any person under this
            sub- section may be not merely in respect of any books
            of account, other documents or assets found as a result
            of the search, but also in respect of all matters relevant
            for the purposes of any investigation connected with
            any proceeding under the Indian Income- tax Act, 1922
            (11 of 1922 ), or under this Act.]
47.    Evidence can be both - documentary or oral.            Section 3 of the
Evidence Act, 1872 states that evidence means and includes all statements
which the court permits or requires to be made before it by witnesses, in
relation to matters of the fact under enquiry, and such statements are oral
evidence.      Documents, including electronic records, produced for the
inspection of the courts, are called documentary evidence. Harjeev
Aggarwal (supra), thus confounds the confusion and does not help us
resolve conundrum and enigma of "undisclosed income". In the first portion



ITA No. 169/2005+connected appeal                                   Page 73 of 77
of the judgment it was held that the evidence found as a result of search
would not take within its sweep statements recorded during the search and
seizure operations except when it was relatable to material or documents
found during the search. In other words, oral testimonies recorded under
Section 132(4) on a standalone basis without reference to other material
discovered during the course of search and seizure operations cannot be
treated as evidence and form the basis of addition as undisclosed income in
the block assessment. Mere admission during the search on oath cannot
result in addition as undisclosed income.        This was notwithstanding
Explanation to Section 132(4) inserted by the Direct Tax Laws
(Amendment) Act, 1987 with effect from 1st April, 1989, which states that
the person could be examined not only in respect of books of accounts or
other documents found during the course of search but also in respect of
matters relevant for purposes of any investment connected with any
proceedings under the Act. In the context of Section 158BB(1) read with
Section 158B(b) of the Act, it was observed that despite the Explanation,
oral statement would be relevant and used only if incriminating document or
material was found during the search and seizure operation and not by itself
as incriminating evidence and gathered during search. Noticeably contrary
view has been taken by the Kerala High Court in Commissioner of Income
Tax versus M/s Hotel Meriya, [2011] 332 ITR 537 (Kerala) after referring
to Section 3 of the Finance Act and Section 131 of the Act. Oral evidence, it
was observed, would be admissible for the purpose of block assessment also.
Explanation to Section 132(4), it was emphasized, permits recording of
statement on oath for all purposes connected with any proceedings under the
Act.




ITA No. 169/2005+connected appeal                               Page 74 of 77
48.    In the case of Harjeev Agarwal (supra), the question of law was
answered in favour of the Revenue and against the assessee in spite of the
ratio and observations made in the first portion after referring to A.R.
Enterprises (supra). It was observed that the requirement of addition of
Rs.74 lacs as undisclosed income was rightly made in the block assessment
proceedings as these payments in cash were not reflected in the books of
accounts, though subsequently the assessee had given an explanation as to
the source of the said money. In the said case, the transaction of sale of
immovable property was duly disclosed but part purchase consideration of
the cash element of Rs.74 lacs was clearly undeclared income.             In the
aforesaid factual background, it was held that Rs.74 lacs should be treated as
undisclosed income taxable by virtue of Section 158B(b) as explained in
A.R. Enterprises (supra).
49.       The word found is elastic and can be given varied meaning and
need not be restricted to a physical object found. The expression evidence
found could in the context of the block assessment include an incriminating
statement on oath. Statements on oath could be with reference to entries in
the statement of accounts, including bank accounts or may well refer to
acceptance or admission on utilization of unaccounted for money/income for
which physical/material and documents have been destroyed and were not
available/found, or were already in knowledge of the Revenue and,
therefore, were not found for the first time. Evidence found" could well
be oral evidence that would mandate addition as undisclosed income. The
word found is past and past participle of find, which means to discover
by chance or deliberately.          It is normally associated with discovery of
information or a fact and in the context of investigation, detection of
someone in a wrong, lie or a crime. The word found, therefore, in natural
and normal context would in the context of evidence found include oral

ITA No. 169/2005+connected appeal                                  Page 75 of 77
evidence or a statement made on oath and is not confined and restricted to
tangible material in form of documents or papers or an article. It is, in this
context, the Assessing Officer could refer to the facts or evidence as found
as a result of search and further inquiries thereupon.

50.    In the present case, Revenue would submit that papers and documents
were found, which indicated that the assessee had not disclosed income from
six benami concerns. Books of account would also include the pass-books
or statement of bank accounts. It is in this context we would have to read
and understand the questions and answers given by the respondent /assessee
in his statements under Section 132(4) of the Act. Oral statement was and
should not be read in isolation, as respondent/assessee at the first and initial
stage had accepted that the gift of Rs.50,00,000/- was not genuine, and was a
subterfuge. Oral evidence and documentary material was collected during
the course of search regarding the undisclosed income. It is relevant that the
respondent/assessee in his block return had declared undisclosed income, i.e.
unaccounted income, to the tune of Rs. 86.82 lacs.

51.    Given the aforesaid position, and in view of the aforesaid conflict and
divergence, having recorded our prima facie reservation on the view
expressed on "books of accounts" and more particularly on "oral statement "
not being evidence found, we are inclined to refer the question of
interpretation of the term undisclosed income for the purpose of block
assessment to a larger bench to resolve and iron out differences and bestow
and bring clarity. While examining the questions, the view expressed in
Harjeev Aggarwal (supra) on whether a statement recorded under Section
132(4) cannot be treated as evidence found during the course of search could
be considered and re-appraised. Larger bench could so examine the issue
and question whether it would be appropriate and proper, when addition


ITA No. 169/2005+connected appeal                                  Page 76 of 77
made in block assessment is deleted and knock down for "technical"
grounds, for the Tribunal and Court to direct that the addition should have
been made in regular/normal assessment in terms of sub-section (6) to
Section 153 of the Act.

52.    The appeals would be accordingly placed before Hon`ble the Acting
Chief Justice for being referred to a Larger Bench for deciding the issues
and questions hereinbefore noticed. The questions of law can be thereafter
answered by the Larger Bench or on the basis of opinion given and
expressed by the Larger Bench, on the appeals being listed before the roster
Bench.

                                                     -sd-
                                            SANJIV KHANNA, J.
                                                    -sd-
                                            PRATHIBA M. SINGH, J.
       APRIL 23, 2018
       SSN/VKR/NA




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