Commissioner Of Income-Tax Cent.ii,Chennai v. A.n.dyaneswaran

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 03.09.2007 CORAM : THE HONOURABLE MR.JUSTICE D.MURUGESAN AND THE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA Tax Case (Appeal) No.150 of 2004 Commissioner of Income-tax Cent.II,Chennai. Vs. .. Appellant A.N.Dyaneswaran Chennai .. Respondent Appeal under Section 260A of the Income-tax Act, 1961 againstthe order of the Income-tax Appellate Tribunal, Madras 'A' Bench,Chennai in I.T.(S&S) A.No.54/Mds/1997 dated 29.10.2003, for theblock assessment years 1986-87 to 1996-97 against the order of theAssistant Commissioner of Income Tax, Central Circle II (4)Chennai 34 dated 31.1.1997 in GIR.No.24701-D. For Appellant :Mrs.Pushya Sitaraman, Sr.Standing Counsel forIncome-tax Department For Respondent : Mr.V.Ramachandran, Senior Counsel forMrs.Anitha Sumanth JUDGMENT P.P.S.JANARTHANA RAJA, J. This appeal is filed under Section 260A of the Income TaxAct, 1961 by the Revenue, against the order of the Income-taxAppellate Tribunal, Madras 'A' Bench, Chennai dated 29.10.2003. On22.03.2004, this Court admitted the appeal and formulated thefollowing substantial questions of law:- "1. Whether in the facts and circumstances ofthe case, the Tribunal had enough material tohold, and was right in deleting the additionsmade on account of money received by the https://hcservices.ecourts.gov.in/hcservices/ assessee from persons seeking granite mininglicenses from TAMIN? 2. Whether in the facts and circumstances ofthe case, the Tribunal was right in holdingthat the cash found in the assessee's officeand residential premises was amounts given tothe Tamil Nadu Basket Ball Association? 3. Whether in the facts and circumstances ofthe case, the Tribunal was right in treatingthe huge investments made in the names of theassessee's mother and son as not that of theassessee on the ground that since the motherhad filed a declaration under KVSS and sincethe son is a bank officer who has anindependent source of income? 4. Whether in the facts and circumstances ofthe case, the Tribunal was right in holdingthat the amounts in deposits in the name ofDr.Dharmambal Namasivayam Trust cannot beincluded in the hands of the assessee underChapter XIV-B in the absence of clear evidencefound as a result of search? 5. Whether in the facts and circumstances ofthe case, the Tribunal had enough material tohold, and was right in accepting theassessee's explanation that the costly sareesworth Rs.10.20 lakhs found during the searchwere received as gifts at the time ofmarriage? 6. Whether in the facts and circumstances ofthe case, the Tribunal was right in deletingthe addition on account of estimated marriageexpenses of the assessee's son? 7. Whether in the facts and circumstances ofthe case, the Tribunal had enough material tohold and was right in holding that the advancegiven to the Tamil Nadu Basket BallAssociation by the assessee came out ofcollections made for the association? 8. Whether in the facts and circumstances ofthe case, the Tribunal was right in deletingthe addition on account of secret commissionreceived by the assessee from foreigncompanies for sale of granite, on the ground that the revenue had not placed on record howthe amount was received by the assessee? 9. Whether in the facts and circumstances ofthe case, the Tribunal was right in holdingthat the foreign currency found in theassessee's house belonged to Seethalakshmi onthe basis of a mere statement? 10. Whether in the facts and circumstances ofthe case, the Tribunal was right in holdingthat the addition in respect of fixed depositsin the name of Narayanan should be deletedfrom the hands of the assessee as the saidNarayanan had filed KVSS declarations? 11. Whether in the facts and circumstances ofthe case, the Tribunal was hyper technical ininsisting only on direct evidence to proveeach addition, and in not acceptingcircumstantial evidence?" that the revenue had not placed on record howthe amount was received by the assessee? 9. Whether in the facts and circumstances ofthe case, the Tribunal was right in holdingthat the foreign currency found in theassessee's house belonged to Seethalakshmi onthe basis of a mere statement? 10. Whether in the facts and circumstances ofthe case, the Tribunal was right in holdingthat the addition in respect of fixed depositsin the name of Narayanan should be deletedfrom the hands of the assessee as the saidNarayanan had filed KVSS declarations? 11. Whether in the facts and circumstances ofthe case, the Tribunal was hyper technical ininsisting only on direct evidence to proveeach addition, and in not acceptingcircumstantial evidence?" 2.The facts leading to the above substantial questions oflaw are as under:- i)The assessee is an officer of the Indian AdministrativeService. At the time of search and seizure, the assessee was theChairman Cum Managing Director of Tamil Nadu Minerals Limited("TAMIN" in short), a Tamil Nadu Government Undertaking, which isengaged in mining and export of granites. Earlier to his postingin TAMIN, he had been Additional Collector of Salem District,District Collector of Periyar District, Managing Director ofSIPCOT and Additional Secretary to Government of Tamil Nadu. Itis stated that the assessee had been a basket-ball player ofconsiderable repute and he represented the Indian Team. Also he isthe Chief Patron Chairman of Tamil Nadu Basket Ball Association. ii)The assessee's mother, late Dr.Dharmambal Namasivayamwas the first woman graduate in Medicine and Surgery in Trichy.She served in many capacities at various stations of Tamil Naduand retired as a Civil Surgeon. The assessee's father, lateNamasivayam, passed away in the year 1991 and subsequently hismother also passed away in July 1996. The assessee has two sons,A.D.Senthureswaran and A.D.Sugavaneswaran. Sri.Senthureswaran isa bank officer and married. Sri.Sugavaneswaran, at the relevantpoint of time, was a student. The assessee is the karta of hisHUF with his two sons as co-parceners and claims to possessagricultural lands received on family partition. The assessee'sfather, late Namasivayam, had two wives, and the other wife,namely, Mrs.Ariapoo Ammal had six children. iii) There was a search under Section 132 of the Income-taxAct ("Act" in short) in the case of the assessee, on 19[th] and 20[th]January 1996. As a result of search, substantial quantity of cash,jewellery and various other documents evidencing investment inmovable and immovable properties and bank deposits in the name ofthe assessee, his mother, his children and some of his associatesand also documents indicating his earnings from certainundisclosed sources, were found and seized. The search was spreadover to different places where the assessee had interest, but themain places were:- b) Assessee's Official Chamber in TAMIN at No.31, Kamarajar Salai, Chepauk, Madras-5. iii) There was a search under Section 132 of the Income-taxAct ("Act" in short) in the case of the assessee, on 19[th] and 20[th]January 1996. As a result of search, substantial quantity of cash,jewellery and various other documents evidencing investment inmovable and immovable properties and bank deposits in the name ofthe assessee, his mother, his children and some of his associatesand also documents indicating his earnings from certainundisclosed sources, were found and seized. The search was spreadover to different places where the assessee had interest, but themain places were:- b) Assessee's Official Chamber in TAMIN at No.31, Kamarajar Salai, Chepauk, Madras-5. Subsequently, notice under Section 158BC of the Act was issued tothe assessee on 26.06.1996. Since the assessee was in the CentralPrison, notice under Section 158BC was served on him on 29.06.1996through the Superintendent of Central Prison, Madras. As per thisnotice, the assessee ought to have filed in the prescribed FormNo.2-B his Return of undisclosed income duly verified, within 16days of the service of the notice. While receiving the notice, theassessee stated that his remand has been extended upto 11.07.1996and while in remand, it is not possible for him to prepare andsubmit the Return. Therefore, he requested for 15 days time forfiling the Return after his coming out of the prison on bail. Hecame out of the prison on 13.08.1996 and he finally filed hisReturn only on 29.11.1996 admitting "NIL" undisclosed income. Anotice under Section 143(2) of the Act was issued to the assesseeon 13.12.1996. The Assessing Officer completed the assessmentunder Section 143(3) r/w Section 158BC of the Act on 31.01.1997for the block period from 1986-87 to 1996-97 up to 20.01.1996,determining the undisclosed income at Rs.41,98,79,090/- anddetails regarding the same are as under:- "The total undisclosed income of the assessee for the block periodis computed as under:- 1996-97 -- 28,39,93,480 28,39,93,480 --------------------- ----------------------- -------------------- While determining the undisclosed income, the Assessing Officermade a number of additions. Aggrieved by the order, the assesseefiled an appeal to the Income-tax Appellate Tribunal ("Tribunal"in short). The Tribunal deleted most of the additions made by theAssessing Officer and allowed the appeal partly. The disputeinvolved in the present appeal is related to the followingadditions. They are as under:- Addition No.1 relating to Question No.1:Addition of Rs.38,95,74,550/- made in respect of collections fromapplicants for granting mining licence. Addition No.2 relating to Question Nos.2 and 7:Addition of the amount of Rs.1,64,24,550/- being cash found in theresidence and office of the assessee accepting the assessee'scontention that out of this money, Rs.152 lakhs belonged to TamilNadu Basket Ball Association and Rs.12 lakhs belonged to theassessee's son. Addition No.3 relating to Question No.3:-Addition made in respect of investments made by the assessee'smother and sons amounting to Rs.2,60,45,591/- on the ground thatthe assessee's mother had filed a declaration under KVSS and thesonis a bank officer who has an independent source ofincome. Addition No.4 relating to Question No.4:-Addition of Rs.1,69,19,621/- being donations received byDr.Dharmambal Namasivayam Trust and interest on donation ofRs.2,91,958/- on the ground that the Trust is an independententity. Addition No.5 relating to Question Nos.5 and 6:-Addition made in respect of investment in costly sarees amountingto Rs.10.12 lakhs and also deletion of addition of Rs.7,50,000/-made towards estimated marriage expenses of the assessee's son. Addition No.6 relating to Question No.8:-Addition of Rs.1,34,46,588/- being secret commission received fromforeign companies for sale of granite. https://hcservices.ecourts.gov.in/hcservices/ Addition No.4 relating to Question No.4:-Addition of Rs.1,69,19,621/- being donations received byDr.Dharmambal Namasivayam Trust and interest on donation ofRs.2,91,958/- on the ground that the Trust is an independententity. Addition No.5 relating to Question Nos.5 and 6:-Addition made in respect of investment in costly sarees amountingto Rs.10.12 lakhs and also deletion of addition of Rs.7,50,000/-made towards estimated marriage expenses of the assessee's son. Addition No.6 relating to Question No.8:-Addition of Rs.1,34,46,588/- being secret commission received fromforeign companies for sale of granite. https://hcservices.ecourts.gov.in/hcservices/ Addition No.7 relating to Question No.9:-Addition of foreign currency amounting to Rs.1,93,040 found at theresidence of the assessee at the time of search. Addition No.8 relating to Question No.10:-Addition of Rs.20,000/- in respect of fixed deposit in the name ofMr.Narayanan. Aggrieved by the order of the Tribunal, the Revenue has preferredthe present tax case. 3.Learned Senior Standing Counsel appearing for theRevenue submitted as follows:- i)In respect of addition of Rs.38,95,74,550/-, this wasworked out from the seized documents found at the assessee'sresidence. The seized documents are annexed to the assessmentorder. The details in the seized documents include names andaddresses of the persons / concerns who had sought mining lease,the site of the quarry, survey number of the land and denominationof currency. The assessee cannot say that the documents do notpertain to him. The assessee has not offered any explanation inrespect of the seized documents. The Assessing Officer examined23 mining licencees and obtained the statements from them forpayment to the assessee. Hence, the Assessing Officer correlatedthe amount mentioned in the seized documents with that of thestatements obtained from the 23 mining licencees and made thisaddition. The details regarding the same is also given inAnnexure B of the Assessment Order. The assessee also did not denyanywhere that he has not received the said amount. Further theassessee did not ask for cross-examining the persons seekingmining lease and hence the additions made by the Assessing Officeris justified. ii)In respect of the second addition, the counsel for theRevenue submitted that the Department seized Rs.15.59 lakhs fromthe assessee's bedroom and further a sum of Rs.1.49 Crores fromthe office of the assessee. The Assessing Officer rightlyrejected the explanation that the money belonged to the Tamil NaduBasket Ball Association. Actually the monies found in theassessee's residence as well as in the office room belongs to theassessee only. Hence, the Assessing Officer after makingelaborate enquiry, rightly came to the conclusion that the entirecash amounting to Rs.1,64,24,550/- found at the assessee'sresidence as well as his office room represented the assessee'sundisclosed income and is assessable under Section 69A of the Actfor the assessment year 1996-97. iii) In respect of third addition, it is submitted that theassessee's mother was a pensioner and no accumulated fundsavailable in her bank account. It is also submitted that there isno evidence that it was used for purchase of property. Hence the https://hcservices.ecourts.gov.in/hcservices/ Tribunal is wrong in deleting the addition. Further it is statedthat the declaration filed by the mother of the assessee underKVSS was accepted by the Revenue and the same has become final.Hence the benefit of KVSS will not be extended to the assessee.Coming to the other part, the assessee's son did not state how theproperties were purchased, but subsequently he stated that theproperties were purchased out of the agricultural income and thatthe money was received from his grandmother and that there is noevidence for the same. Hence the Tribunal is wrong in deletingthe addition. https://hcservices.ecourts.gov.in/hcservices/ Tribunal is wrong in deleting the addition. Further it is statedthat the declaration filed by the mother of the assessee underKVSS was accepted by the Revenue and the same has become final.Hence the benefit of KVSS will not be extended to the assessee.Coming to the other part, the assessee's son did not state how theproperties were purchased, but subsequently he stated that theproperties were purchased out of the agricultural income and thatthe money was received from his grandmother and that there is noevidence for the same. Hence the Tribunal is wrong in deletingthe addition. iv)In respect of fourth addition, the counsel for theRevenue submitted that the Tribunal failed to see that Sri SampathKumar who has arranged the donations for Dharmambal Trust hascategorically stated before the Enforcement Directorate that hehas arranged the donations by availing loans from banks on thesecurity of the Fixed Deposits in the name of the NRI Sri.NadadurVaradhan and he has received equal amounts of money pluscommission from the assessee. The documents seized from SriSampath Kumar also clearly indicate the receipt of money after thedonations are made. Also, it was found that the variouscontentions made by the Trust are bogus and the said amountbelonged to the assessee only. Hence the Tribunal is wrong indeleting the addition. v)In respect of fifth addition, there were costly sareesfound and listed at the time of search. The estimated cost of thesaree is at Rs.10,12,000/-. The assessee has not offered anyexplanation in respect of source of acquisition in respect of thesarees. In respect of wedding, the assessee's son got married on30.08.1995 and a reception in connection with the marriage washeld in Madras on 08.09.1995 in Rani Meyyammai Hall. Inconnection with the marriage reception, a music concert by GangaiAmaran & Party was organised. It is stated that more than 3000people attended the marriage reception. The marriage expensesincurred has not been explained properly by the assessee. Hence,the Tribunal is wrong in deleting the addition. vi)In respect of the sixth addition, the Assessing Officerclearly given a finding that on the basis of the seized documents,which reasonably indicate that the payments were made by theforeign companies to the Chairman of TAMIN in his personalcapacity. Also, the Revenue found from the assessee's brief case,10 documents giving details of payments made by two foreigncompanies. Further the Department also verified with TAMIN and itwas confirmed by them by letter dated 27.11.1996 that large numberof these transactions could straight away be connected to saleinvoices to those concerns. Hence the Tribunal is wrong indeleting this addition without any valid material. vii) In respect of the seventh addition, it is submitted bythe counsel appearing for the Revenue that the Tribunal is wrongin deleting the addition on the ground that the said foreigncurrencies belonged to Smt.Seethalakshmi and it is seen from therecords that the said Smt.Seethalakshmi did not respond to thesummons issued. It is also submitted that the Tribunal is wrongin merely relying on the statement of the assessee that the amountpertains to one Seethalakshmi, and the mere preliminary statementwill not absolve the assessee of his onus. vii) In respect of the seventh addition, it is submitted bythe counsel appearing for the Revenue that the Tribunal is wrongin deleting the addition on the ground that the said foreigncurrencies belonged to Smt.Seethalakshmi and it is seen from therecords that the said Smt.Seethalakshmi did not respond to thesummons issued. It is also submitted that the Tribunal is wrongin merely relying on the statement of the assessee that the amountpertains to one Seethalakshmi, and the mere preliminary statementwill not absolve the assessee of his onus. viii)In respect of the eighth addition regarding theaddition in the hands of the assessee, in respect of fixeddeposits amounting to Rs.20,000/- in the name of Narayanan, thelearned counsel for the Revenue submitted that the said Narayanandid not produce any material evidence to show that he has enoughresources available to him to make the fixed deposits. The fixeddeposit certificates relating to the fixed deposits were kept inthe personal custody of the assessee and no proper reasons weregiven by the said Narayanan as to how these fixed depositcertificates were kept in the personal custody of the assessee.Hence the said fixed deposits belong to the assessee only.Therefore, the Tribunal is wrong in disregarding the relevantmaterials and came to the conclusion that it pertains to the saidNarayanan, without basis and justification. In view of the above, it is strenously contended by the learnedSenior Standing Counsel appearing for the Revenue that all thedeletions of the additions made by the Tribunal are without basisand justification and hence the same should be set aside. 4.i)Learned Senior Counsel appearing for the assesseesubmitted that, with regard to the first addition, the Revenue hasnot established that the assessee has received an amount ofRs.38,95,74,550/- and that the Assessing Officer merely relied onthe documents seized which do not lead to any evidence regardingthe fact of collection of any money by the assessee by grantingmining licenses from various parties. Further it is submittedthat in the seized material there were no indication to show thatthe decimals or coded figures found in these papers stand forlakhs and thousands. Further he submitted that no assets in thename of the assessee or cash to the extent claimed has been foundand as such there is no material evidence in this respect. TheAssessing Officer only made these additions on presumptions andthere is no corroborative evidence. He further submitted that theadditions were made only by circumstantial evidence. It is also afact that the assessee was officially concerned with the grant ofmining licences as a Member of High Level Committee only from10.03.1995 after the issue of Government Order. A new Rule 39 wasintroduced by G.O. No.97 dated 09.03.1993 empowering the StateGovernment to grant quarry leases on terms and conditions. This https://hcservices.ecourts.gov.in/hcservices/ https://hcservices.ecourts.gov.in/hcservices/ was struck down in Madras High Court, but was upheld by SupremeCourt. After the order of the Supreme Court, a High LevelCommittee was appointed vide G.O.No.52 dated 10.03.1995. Thethree members of High Level Committee appointed by Government bythe G.O. were Additional Secretary / Joint Secretary, Commissioner/ Director of Geology and Mining and the Chairman and ManagingDirector of TAMIN. The Committee is only a recommendatory bodyand the ultimate power to grant or reject the licences is onlywith the Government. So, whatever additions made in the financialyears 1992-93, 1993-94 and 1994-95 have to be deleted andadditions concerned with financial year 1995-96 alone should beconsidered. Further it is emphasised by the counsel that theaddition made for the assessment year 1996-97, there are no datesavailable in the seized material When the dates are notavailable in the seized material, the Assessing Officer was of theview that the amount will have to be assessed in the year ofsearch, i.e., financial year 1995-96, relevant to the assessmentyear 1996-97. It is further submitted that in the TabularStatement against each addition in the last column, it is given asamount D/L/P, but it was not indicated among which category thisparticular addition comes. It is also further submitted thatthere is no corroborative evidence except the slips of paperseized by the Department. Hence, the addition ofRs.38,95,74,550/- has been made without any basis andjustification. ii)In respect of the second addition, the learned SeniorCounsel submitted that the assessee had already given explanationthat the money seized from him belonged only to Tamil NaduBasketball Association ("TNBA" in short). The money found at thehome also pertains to the rest of the family. It is the fact thatthe Government of Tamil Nadu hosted the SAF Games, 1995 anInternational Event at Chennai and the assessee was nominated asone of the three Joint Secretaries in charge of fund raising forinfrastructure facilities for stadium. The Government agreed tofund through TAMIN to air-condition the Indoor Stadium of TNBAwhere the basketball event was to be held and issued two G.Os.,namely G.O.Ms.No.276, Industries MME-2 Dept, dated 13.12.1995 andG.O.Ms.(LD)No.3 dated 06.01.1996. Anticipating delay in releaseof funds, General Council of TNBA by a resolution, authorised theassessee to collect funds up to Rs.2 Crores. The said TNBAcollected Rs.170 lakhs from 9 persons. After spending Rs.18 lakhsfor works connected with face lifting and temporary air-conditioning, the balance amount earmarked for air-conditioningamounting to Rs.152 lakhs kept in the chamber of assessee's officeand in the brief case of the assessee at Anna Nagar residence,since the basketball event was advanced preventing permanent air-conditioning work to be taken up though work was entrusted toM/s.Blue Star Co. It is pertinent that this amount of Rs.152lakhs tallies with the amount sanctioned in the G.Os., i.e.,Rs.152 lakhs. The assessee discharged the primary onus by https://hcservices.ecourts.gov.in/hcservices/ establishing the identity of the party, capacity of the party andgenuineness of the transaction. The Revenue is wrong in rejectingthe explanation of the assessee. The assessee has proved thesources of the amount and it is wrong on the part of the Revenueto expect to prove the source of sources. The said TNBA has filedits Return for the year 1996-97 subsequently including the amountof Rs.1,48,65,650/- seized from TAMIN office and Rs.3.35 lakhsseized from residence and the same has been accepted by theDepartment. The assessment was also completed under Section 143(3) of the Act in the case of TNBA. So, it is wrong in makingaddition in the hands of the assessee. https://hcservices.ecourts.gov.in/hcservices/ establishing the identity of the party, capacity of the party andgenuineness of the transaction. The Revenue is wrong in rejectingthe explanation of the assessee. The assessee has proved thesources of the amount and it is wrong on the part of the Revenueto expect to prove the source of sources. The said TNBA has filedits Return for the year 1996-97 subsequently including the amountof Rs.1,48,65,650/- seized from TAMIN office and Rs.3.35 lakhsseized from residence and the same has been accepted by theDepartment. The assessment was also completed under Section 143(3) of the Act in the case of TNBA. So, it is wrong in makingaddition in the hands of the assessee. iii) In respect of third addition, it is submitted by thelearned Senior Counsel that the assessee's mother was a Doctor inthe Government Hospital for a long time. Not only the assessee'smother availed declaration under KVSS but also the assessee's sonwho is a bank officer, also availed the declaration under KVSS forthe assessment year 1992-93 to 1996-97. Hence there cannot be anylevy of tax on the very same income. Tax has already been acceptedfrom the mother under the Samadhan Scheme. Hence it is wrong onthe part of the Revenue in making addition of the same amount asundisclosed income in the hands of the assessee which amounts todouble taxation. In respect of the amount assessed in the handsof the assessee's son on protective basis, it is wrong on the partof the Revenue to make the addition in the hands of the assessee.Further the assessee's son had sent a statement at the time ofsearch that he received a cash gift of about Rs.9 to 10 lakhs.Hence the assessee as well as his son have explained the sourceand therefore the income already assessed in the hands of theassessee's son should not be assessed in the hands of theassessee. iv)In respect of the fourth addition, there is no proofseized from the residence of the assessee or from office at thetime of search, linking the assessee directly with any of theallegations made in the assessment order. There is no proof thatit is the assessee's money which was given to the Trust. OneMr.Sampathkumar has filed a sworn affidavit on 12.05.1996 inEnforcement Department clearly explaining his role. Most of thedonors who were enquired have confirmed about their donation tothe Trust. There is no direct payment by the assessee. Hisinvolvement was not at all proved by the Revenue. It is also seenthat the entire donations have gone to the Trust and have beenaccounted for in its books. The said amount cannot be treated asassessee's undisclosed income and also the Trust is a separatejuristic person and cannot be held as benami for somebody.Separate assessments have been made for the years 1994-95, 1995-96and 1996-97 for the entire amount of Rs.1.69 Crores as that of theTrust. For the assessment years 1994-95 and 1995-96 the appealwas allowed by the appellate authority, but for the assessmentyear 1996-97, the appeal is pending before the Tribunal. Hence, https://hcservices.ecourts.gov.in/hcservices/ when already similar amount was assessed in the hands of thePublic Trust, it is wrong on the part of the assessee to includethe same amount as undisclosed income in the hands of theassessee. The addition was made in the absence of valid materialsand the same is without basis and justification. https://hcservices.ecourts.gov.in/hcservices/ when already similar amount was assessed in the hands of thePublic Trust, it is wrong on the part of the assessee to includethe same amount as undisclosed income in the hands of theassessee. The addition was made in the absence of valid materialsand the same is without basis and justification. v)In respect of the fifth addition, it is submitted by thelearned Senior Counsel that most of the sarees found were giftspresented during the marriage of the son performed in August 1995and also the assessee's mother, assessee's wife as well as theassessee's daughter-in-law are living in the same house and theyare the owners of the sarees which were acquired from time totime. It is also submitted that the value of the sarees weredetermined at exorbitant cost without any basis and justification.Hence the addition has been made only on the presumption. Hence,the addition made is without basis and justification. Also, it iswrong on the part of the officer to make addition of Rs.7,50,000/-towards marriage expenses of the assessee's son and the trip toSingapore, as the same are purely on estimation. The assessee'smother has filed an affidavit admitting that she incurred theexpenditure of her grandson in respect of the marriage expenses.Hence the addition made by the Revenue is without basis andjustification. vi)In respect of the sixth addition made in connection withthe secret commission received from foreign companies, it has beenmade without basis and justification and the Revenue failed toproduce any evidence to show the assessee's own involvement in thetransaction. There is no corroborative evidence to show thatthese secret commissions were made directly or indirectly to theassessee. There is also no evidence as to how and to whom thepayments were made. Hence the Assessing Officer is wrong inmaking addition on account of the secret commission received fromforeign companies for sale of granite and the Tribunal is right inrejecting the Revenue's stand. Hence the addition has been madewithout application of mind and the same cannot be sustained.Hence the Tribunal has rightly deleted the addition. vii) In respect of the seventh addition made with regard tothe foreign currency found in the assessee's house belonged to oneSeethalakshmi, the assessee had given a detailed explanation tothe Enforcement Officer on 27.03.1996 and also the saidSeethalakshmi appeared before the Enforcement Directorate inperson and recorded her statement confirming the whole issue.When the confirmation letter was filed, the source is explainedwithout doubt. Hence the Tribunal is right in deleting theaddition made by the Assessing Officer. viii)In respect of the eighth addition, the learnedSenior Counsel appearing for the assessee submitted that the saidNarayanan has explained before the authorities that he made the https://hcservices.ecourts.gov.in/hcservices/ fixed deposit out of the agricultural income and the fixed depositcertificates were kept in the safe custody of the assessee.Further, the said Narayanan has also availed the benefit underKVSS. Hence it is not open to the Revenue to reject theexplanation offered by the said Narayanan on the ground that theassessments were made on protective basis. Also the Revenue iswrong in ignoring the declaration made by the said Narayanan underKVSS and including the said Narayanan's fixed deposit amounts inthe hands of the assessee. viii)In respect of the eighth addition, the learnedSenior Counsel appearing for the assessee submitted that the saidNarayanan has explained before the authorities that he made the https://hcservices.ecourts.gov.in/hcservices/ fixed deposit out of the agricultural income and the fixed depositcertificates were kept in the safe custody of the assessee.Further, the said Narayanan has also availed the benefit underKVSS. Hence it is not open to the Revenue to reject theexplanation offered by the said Narayanan on the ground that theassessments were made on protective basis. Also the Revenue iswrong in ignoring the declaration made by the said Narayanan underKVSS and including the said Narayanan's fixed deposit amounts inthe hands of the assessee. 5.Heard the counsel.Question No.1 - Additions made on account of money received by theassessee from persons seeking mining licences from TAMIN.The most important set of documents seized from the brief cases ofthe assessee during the search are those numbered NGN/B&D/LS-1 to18 from the Anna Nagar residence. The documents referred to abovewere kept in three brief cases and the same is related to grant ofmining licences. They contain the names and address of variouspersons who had sought allotment of mining lease, the place(s) ofthe quarry, survey number of the lands where the quarry wassituated, denominations of some currency etc. The documentsseized from the brief cases of the assessee, can by and large, beclassified into three categories of source material: "a) The first category is the slips of paper from theapplicants and / or their representatives in thehandwriting of either the applicant or a representativecontaining the name and at times, the addresses of theapplicant, the location of the land for which mininglicenses is requested (details such as the name of thevillage, taluk, district, survey number and extent ofland). Some slips contain the quality of granite suchas black, paradiso, kashmiri etc. and some slips containcertain denominations of money. b) The second category of data is hand written notes,primafacie, in the handwriting of Shri Dyaneswaran onhis own letter heads and the letter heads of the TAMIN(confirmed to be his hand writing by the Govt. Examinerof Questioned Documents). Each of the entries containdetails such as Sl.No., name of the applicant, name ofthe place, survey number and extent and the amount.Generally, this amount is shown in a coded form that toodecimal places. Apparently, the whole number stood forlakhs and the decimals stood for thousands. Some of theentries have been rounded off and / or tick-marked. Inrespect of some others, another coded number is writtenbelow that, probably indicating the amount received orreceivable. c) The third set of documents are typed sheets withdetails of the name and brief address of the applicant,the details of the mine, viz., the village, taluk andsurvey number, the nature of granite and extent. These c) The third set of documents are typed sheets withdetails of the name and brief address of the applicant,the details of the mine, viz., the village, taluk andsurvey number, the nature of granite and extent. These were probably prepared by the staff who prepared papersfor consideration of the High Level Committee or thosewho prepared the minutes of the meetings of the HighLevel Committee. Against most of the times, in a codedform some handwritten numbers with two decimal placeshave been recorded. These handwritten numbers areprimafacie in the handwriting of Shri.Dyaneswaran. Infact, on some of the typed sheets where some columns areleft blank, they are seen to have been filled up by himin his hand. The coded numbers in the last column intheir list and the list referred to above at (b) cannotbe just wished away as inconsequential or meaninglessnumbers as they have been totalled and certaincalculations have also been made based on such numbers."The Assessing Officer made the addition in respect of thecollection from the applicants for mining licences which has beenclassified into three categories:-1.Those in Mr.Dyaneswaran letter head and in the letter headof TAMIN - marked as 'D'.2. Those appearing in the typed lists which apparently weremade for / by the High Level Committee - marked as 'L'.3.Slips in the handwriting of the applicants / their representatives - marked as 'P'.The year-wise total collection is arrived at based on the datesfound in the materials seized. Where date is not available, suchamounts are totalled and shown separately. For the purpose oftaxation, the amount for which dates are not available are beingconsidered in the year of search, i.e., the assessment year 1996-97. Details of additions made are as under:- Financial year Asst. year Amount No. of (Rs.) licences The Assessing Officer, when he made the assessment, he was of theview that the complete one-to-one matching of the entire dates isnot possible and further stated as under:-Thus, a complete one-to-one matching of theentire data is not possible. But it could beseen as per the list enclosed that in a numberof cases, the data is traced in all the threelists and in some cases, the data is traced intwo lists. Of the documents seized, 164documents are of the type referred to in thefirst category described in (a) above. Of https://hcservices.ecourts.gov.in/hcservices/ The Assessing Officer, when he made the assessment, he was of theview that the complete one-to-one matching of the entire dates isnot possible and further stated as under:-Thus, a complete one-to-one matching of theentire data is not possible. But it could beseen as per the list enclosed that in a numberof cases, the data is traced in all the threelists and in some cases, the data is traced intwo lists. Of the documents seized, 164documents are of the type referred to in thefirst category described in (a) above. Of https://hcservices.ecourts.gov.in/hcservices/ these details relating to the mines mentionedin 125 records have corresponding matchingentries in one or both of the other twocategories described above and detailsrelating to mines mentioned in 70 recordsappear in all the three categories listed. Ofthe total data available in respect of mines(995) for which licences were applied, detailsrelating to 359 mines appear in more than onelist. The internal consistency of thematerials seized from the assessee also showsthat the papers relate to grant of mininglicences only and unless they had somesignificance the assessee would not haveretained them. The amounts mentioned in codeddecimal form is in lakhs and thousands as inmany cases, the decoded amounts tally with theamounts mentioned in the slips in thehandwriting of the parties and / or theirrepresentatives and in some of the cases eventhe denomination for the amount was recorded.The results of random verification carried outwith the applicants who parted with money infavour of Shri Dyaneswaran for grant oflicenses is given below. But one thing thatneeds to be pointed out here is that it isneither humanly possible nor is it requiredunder the law that in respect of each andevery person money has been paid and receivedas per details noted in the seized documents.All that one can and has to establish was thatthere was a practice of collection of moneyfor grant of licenses and infact in manycases, the rates are also fixed. [It probablydepended on the quality of the granite and inmany cases, it works out to Rs.1,50,000/- peracre. Whereas in respect of limestone, it wasa different figure and for quarries, yetanother figure etc.] and with reference to asample population that payment has actuallybeen made by the applicant for obtaining thelicence [or to be more correct forrecommending the grant of licence]. Thesehave been conclusively brought out in thestatements of the persons examined."From the above it is clear that out of the seized materials, only23 cases were examined as against 994 licencees. In this case,the Assessing Officer selected only 23 mining licencees out of 994licencees and obtained the statements from the said 23 mininglicencees. Based on the statements given by them, he came to theconclusion that the assessee received illegal money and the same is treated as undisclosed income of the assessee. In respect ofremaining 971 mining licencees, there was no further enquiry or nostatements were obtained by the Assessing Officer, and withoutfurther enquiry and investigation into the matter, the AssessingOfficer came to the conclusion that the assessee would havereceived illegal money and the same is treated as undisclosedincome. Here, it is seen that even though he obtained statementsfrom 23 persons, no opportunity was given to the assessee tocross-examine. Further in respect of others, no statement wasobtained or no cross verification was done. Also, no otherevidence were produced by the Revenue. When the assessee askedfor cross-examining in respect of 23 persons, the AssessingOfficer has not given any opportunity to cross-examine. Besides,no opportunity is given by the Revenue to cross-examine theremaining persons. The papers seized from the brief cases hadbeen divided into three, one prepared by the applicants or theirrepresentatives in their handwriting with their address, location,etc. in which there is no mention of any of the assessee's allegedhandwriting. The second category are written notes, whichaccording to the Revenue, prima facie, by the assessee in hisletter head or that of TAMIN, which is in the handwriting of theassessee, which fact had been confirmed by the handwriting expert.These papers contain coded numbers with two decimals whichapparently stand for lakhs and thousands, according to theRevenue. In the same papers, another coded number is written belowthe first coded figures which, according to the Revenue, probablyindicate the amount received or receivable and the third set ofpapers is said to be prepared by the staff who prepare such papersfor the High Level Committee for its meeting. Again, in thesepapers there were coded hand-written number with decimals whichagain prima facie, according to the Revenue, is in the handwritingof the assessee. From the above, it is clear that that regardingthe first set of papers, there is no claim even by the Revenuethat it is written in the assessee's handwriting and only in somepapers there is mention of some denominations of money. It is notclear how the Assessing Officer arrived at the conclusion that thecoded figures are standing for lakhs and thousands. It is againnot certain whether it is a receipt or payment. The Revenue was ofthe view that it stands for receipt. There is no corroborativeevidence to hold that it is actually receipt. But in this case,the Assessing Officer, in the Assessment Order, gave illustrationsthat the slips for the summary of the statements recorded from 23applicants were seized from the assessee. But no opportunity wasgiven to the assessee to confront the person concerned by way ofcross-examining the applicants. There is no dispute that noopportunity was given to the assessee, even though there was aspecific request made by the assessee. Hence, the statementstaken are only from persons said to have made the payments andthey do not establish that the figures mentioned in the seizedpapers are speaking nothing, nor was the assessee given anopportunity to cross-examine these deponents. It is seen from the https://hcservices.ecourts.gov.in/hcservices/ statements that most of the persons claim that they have not madedirect payment, but it was made through some of their employees.Their statements are not brought on record. The Tribunal hadgiven a finding at Paragraph 78 that the assessee was not given anopportunity to contradict the statements of such persons. If theassessee specifically makes such a request, it is imperative thatan opportunity should be extended to the assessee which has notbeen complied with. Therefore, we are of the view that thestatements cannot be acted upon. In Paragraph 81 of theTribunal's order, it is stated as follows:- https://hcservices.ecourts.gov.in/hcservices/ statements that most of the persons claim that they have not madedirect payment, but it was made through some of their employees.Their statements are not brought on record. The Tribunal hadgiven a finding at Paragraph 78 that the assessee was not given anopportunity to contradict the statements of such persons. If theassessee specifically makes such a request, it is imperative thatan opportunity should be extended to the assessee which has notbeen complied with. Therefore, we are of the view that thestatements cannot be acted upon. In Paragraph 81 of theTribunal's order, it is stated as follows:- "Another statement recorded is from one ShriP.Rajasundar Si