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Case Law Details

Case Name : Kirti Chandulal Oswal Vs. DCIT (ITAT Pune 'A' Bench)
Appeal Number : ITA No. 1700/PN/07
Date of Judgement/Order : 03/10/2008
Related Assessment Year :
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RELEVANT PARAGRAPH

9. The perusal of the provisions (prior to the amendment) shows that additions could be made in respect of unaccounted income on the basis of evidence found as a result of search as well as such other material or information as were available with the Assessing Officer. Such provisions were considered by this Bench in the case of Parakh Foods Ltd. 64 ITD 396 wherein it was held that the additions could also be made by the Assessing Officer on the basis of material gathered by the Assessing Officer from the extraneous source even after the search. This Bench was of the view that the words `such other materials or information’ may not necessarily refer to the word or words proceeding to it. Considering the obeject of the legislature it was held that the words’ such other materials or information’ should be understood as `any other material’. However, after the amendment, the said decision has no relevance since the other materials or information to be used must relate to the evidence found in the course of search at the premises of the assessee. Word `relatable’ is a word of significance. Since the amendment has been made with retrospective effect from 1-7-1995. We are required to adjudicate the issue with reference to the amended provisions.

10. The word `relation’ as per the various dictionary meanings means connections or association between two or more things. Further, the expression `in relation to’ has been judicially interpreted by the Constitution Bench of the Hon’ble Supreme Court in the case of H. H. Maharajadhiraja Madhav Rao Scindia Bahadur of Gwalior & Others v. Union of India (1971) 1 SCC 85 as dominant and immediate connection. It is the mandate of the amended provisions that the materials or information available with the Assessing Officer must relate to such evidence. The words `such evidence’ refers only to the evidence found in the course of search at the assessee’s premises. Therefore, in our opinion, such other material must be relatable to evidence found in the course of search at the premises of the assessee itself. In other words, it means that there must be a direct nexus between the material found in the course of search at the assessee’s premises as well as other material gathered by the Assessing Officer from extraneous source. If there is no such nexus than the addition would not be justified.

11. In the present case, admittedly, no incriminating material was found relating to the alleged unaccounted sales of jewellery by the assessee to M/s. Ranka Jewelers in the course of search carried out at the premises of the assessee. The material relied upon by the Assessing Officer was found during the search at the premises of the third party namely Prakash Salunkhe. Therefore, the question of existence of such nexus as mentioned in the preceeding paragraph simply does not arise. Consequently, no addition could be made solely on the basis of material found from the position of the third party.

NF

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