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2016 (10) TMI 397 - HC - Income TaxProcedure for block assessment - time limit entitled to file the return - unexplained income - Held that - Section 158BC mandates that the Assessing Officer is to serve a notice to such person requiring him to furnish a return in the prescribed form and verified in the manner stipulated. The Assessing Officer must, therefore, serve such a notice, without which an assessee would not be liable to file a return in respect of a block assessment. The assessee is also entitled, as a matter of right, to a period not less than 15 days to file such a return. The Assessing Officer does not have the power to curtail this period. Thus, even if a notice under Section 158BC(a) specifies a period less than 15 days, it would not affect an assessee s right to file a return after a period of 15 days. The present case falls under Section 158BC(a)(ii). In such a case, an assessee would be entitled to file the return within the outer limit prescribed in Section 158BC(a)(ii) namely 45 days. Thus, while it is mandatory for the Assessing Officer to serve a notice requiring the assessee to file a return under Section 158BC and the assessee is entitled to not less than 15 days to file the return, the section does not indicate that if the notice inadvertently prescribes a period less than 15 days, it is void. Much less does the section indicate that the entire block proceedings relating to the block assessment would be void on account thereof. Validity of notice - Though the notice under Section 158 BC is mandatory errors such as those in the present case which do not cause the assessee any prejudice do not render either the notice or the block assessment proceedings void. Document found during the search - Held that - It is important to note that the Assessing Officer exercised power under Section 142(2A) directing the assessee to get the accounts audited by an accountant, as defined in the explanation to Section 288(2). The special auditor analyzed this balance sheet and the other documents, that were seized, as well. Based on the same and based on the independent analysis, the three Authorities had come to the conclusion that the said amount of ₹ 40 lacs was unexplained. The Assessing Officer added the same to the appellant s income. The assessee also disowned the documents. He stated that he had nothing to do with the documents and was unaware how they were found at his place and at his residence. The fact is that the document were admittedly found at his residence Apart from the statement that he was unaware of the documents, there is no explanation for the same. The reliance of the Authorities under Section 132 (4A) is well-founded. The Authorities, therefore, rightly drew the presumption, in these circumstances, that the documents pertained to the assessee and the contents thereof are true. In any event, this is a finding of fact which does not raise a substantial question of law.The nature of the entries in documents have been sufficiently analyzed by the Authorities. They have, in fact, given the assessee credit for the amounts found in the regular books of accounts assessed the unexplained income only thereafter.
Issues Involved:
1. Non-consideration of legal objections by ITAT. 2. Reference to special auditors under Section 142(2A) without opportunity of being heard. 3. Legality of additions based on "Dumb Document." 4. Additions based on estimation of undisclosed income from alleged land transactions. 5. Additions based on estimation of undisclosed income from alleged profit on sale of plots. 6. Additions on account of alleged loans given and loans raised based on "Dumb Document." 7. Additions on account of alleged loans based on "Dumb Document." 8. Addition presumed as cash found during the search. 9. Legality and sustainability of the Tribunal's order. Detailed Analysis: Issue 1: Non-consideration of Legal Objections by ITAT The appellant contended that the ITAT failed to consider legal objections and did not decide the grounds of appeal legally taken by the appellant, indicating non-application of mind. The court admitted the appeal only in respect of this question, stating that if the appellant succeeds on this issue, the rest of the issues must also be decided in his favor. The appellant argued that the notice under Section 158BC was void as it required the return to be filed "within 15 days," which is less than the statutory requirement of "not less than 15 days." The court found that this point was not pressed before the lower authorities and rejected the appellant's contention, holding that the notice was valid and the proceedings were not void. Issue 2: Reference to Special Auditors under Section 142(2A) Without Opportunity of Being Heard The appellant argued that the ITAT erred in concurring with the CIT(A) without considering arguments and judicial decisions, and without passing a speaking order on the legal issue of reference to special auditors under Section 142(2A) without affording an opportunity of being heard. The court did not find merit in this argument, as the appellant had not established any prejudice caused by the reference to special auditors. Issue 3: Legality of Additions Based on "Dumb Document" The appellant contended that the ITAT erred in confirming additions based on a "Dumb Document" that did not indicate any connection to the appellant. The court found that the document, titled "Chitha," referred to the appellant and contained entries showing unexplained income. The authorities had analyzed the document in detail, and the presumption under Section 132(4A) was rightly drawn. The court held that this was a finding of fact and did not raise a substantial question of law. Issue 4: Additions Based on Estimation of Undisclosed Income from Alleged Land Transactions The appellant argued that the ITAT erred in confirming additions based on the estimation of undisclosed income from alleged land transactions. The court found that the authorities had analyzed the entries in detail and that the suggested discrepancies did not raise a substantial question of law. Issue 5: Additions Based on Estimation of Undisclosed Income from Alleged Profit on Sale of Plots The appellant contended that the ITAT erred in confirming additions based on the estimation of undisclosed income from alleged profit on the sale of plots. The court held that the authorities had analyzed the entries in detail and that the suggested discrepancies did not raise a substantial question of law. Issue 6: Additions on Account of Alleged Loans Given and Loans Raised Based on "Dumb Document" The appellant argued that the ITAT erred in confirming additions based on alleged loans given and loans raised, as reflected in the "Dumb Document." The court found that the authorities had analyzed the entries in detail and that the suggested discrepancies did not raise a substantial question of law. Issue 7: Additions on Account of Alleged Loans Based on "Dumb Document" The appellant contended that the ITAT erred in confirming additions based on alleged loans reflected in the "Dumb Document." The court found that the authorities had analyzed the entries in detail and that the suggested discrepancies did not raise a substantial question of law. Issue 8: Addition Presumed as Cash Found During the Search The appellant argued that the ITAT erred in confirming the addition presumed to be cash found during the search. The court found that the authorities had granted the appellant credit by considering this amount as part of the amount reflected in the balance sheet. The court dismissed the appeal regarding this question. Issue 9: Legality and Sustainability of the Tribunal's Order The appellant contended that the Tribunal's order was legally unsustainable, bad in law, and perverse. The court found that the authorities had analyzed the entries in detail and that the suggested discrepancies did not raise a substantial question of law. The court dismissed the appeal regarding this question. Conclusion: The court answered the primary question of law in favor of the revenue-respondent and against the appellant, holding that the notice under Section 158BC was valid and the block assessment proceedings were not void. The court dismissed the appeal regarding all other questions, finding that they did not raise substantial questions of law. The appeal was dismissed in its entirety.
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