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TMI Blog2005 (1) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... sment of any previous year, included in the block period. From these provisions, it is clear that if any amount has already been disclosed that cannot be questioned while completing the assessment under Chapter XIV-B. Therefore, in view of these facts and circumstances, we find that there was no justification on the part of Assessing Officer for making the addition of these amounts, which were already disclosed while filing the regular returns. Various case laws relied upon by the counsel of the assessee are in support of above view of ours. Accordingly, we delete the additions of Rs. 55,50,000. The other grounds are consequential. Therefore, the Assessing Officer is directed to alow consequential relief to the assessee. In the result, the appeal of the assessee is allowed. Per B.R. Jain, Accountant Member - In the case in hand, the undisclosed income is on the basis of material found as a result of search. Regular assessment was also not made nor it is shown that it was to be made. The insertion by the Finance Act, 2002 with retrospective effect 1-7-1995 in the definition of section 158B(6) which permitted to find out undisclosed income from regular books of account also where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority opinion. X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that there is no dispute that returns for assessment years 1991-92 to 1994-95 were filed by the assessee-company well in time. The attention of the Bench was drawn on acknowledgement receipt of the returns filed placed at pages 29 and 37 for assessment years 1991-92 and 1992-93 respectively. Therefore, it was submitted that as there was no undisclosed amount, therefore, the same cannot be assessed while completing the assessment under Chapter XIV-B of the Act. The reliance was placed on various case laws, reported CIT v. Ravi Kant Jain [2001] 250 ITR 141 (Delhi), CIT v. Dr. M.K.E. Menon [2001] 248 ITR 310 (Bom.), CIT v. Rajendra Prasad Gupta [2001] 248 ITR 350 (Raj.) and CIT v. C.J. Shah & Co. [2000] 246 ITR 671 (Mad.). 6. On the other hand, the learned DR placed reliance on the order of the Assessing Officer. On a query from the Bench, the learned DR fairly admitted that while filing the regular returns these amounts were shown by the assessee. Record for assessment year 1994-95 was also produced and it was seen by the Bench that assessee has filed regular return for assessment year 1994-95 and in Schedule of balance-sheet there was an outstanding, of Rs. 15 lakhs in account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completing the assessments on the basis returns filed regularly or by reopening the assessments for those years. Various Benches of the Tribunal in the country have held that if the amounts have already been disclosed while filing the regular returns, that cannot be questioned while completing the assessment for the block period under Chapter XIV-B. As per Explanation to section 158BA(1) it is clearly mentioned that assessment made under this Chapter shall be in addition to the regular assessment in respect of previous year included in the block period. It is further mentioned in clause (b) that the total undisclosed income relating to the block period shall not include the income assessed in regular assessment as income of such block period. In clause (c), it is provided that the income assessed in this Chapter shall not be included in the regular assessment of any previous year, included in the block period. From these provisions, it is clear that if any amount has already been disclosed that cannot be questioned while completing the assessment under Chapter XIV-B. Therefore, in view of these facts and circumstances, we find that there was no justification on the part of Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o entry in the name of M/s. Concept International Pvt. Ltd. was found appearing in the balance sheet appended therewith and confirmation filed in the post-search enquiries was found signed by Shri Vinod Javed, who is not a Director in M/s. Concept International (P.) Ltd. This confirmation letter filed, copy placed at assessee's paper book page 61 revealed a debit balance of Rs. 15,00,000. The confirmation produced before the Assessing Officer was thus at variance from the return of income. When the assessee was required to furnish confirmation and the genuineness of the transaction, the assessee tendered the following explanation: "The addition of Rs. 55 lakhs for the assessment year 1994-95 being the alleged undisclosed receipt from M/s. Concept International (P.) Ltd., it is submitted that the entire amount is duly credited in the books of account and reflected in the regular books of account. Out of the aforesaid sum the amount of Rs. 40 lakhs was returned and the balance amount of Rs. 15 lakhs was shown as the closing balance in the balance sheet for assessment year 1995-96. No incriminating material to establish that no such amount had been received from M/s. Concept Internat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed income and a prayer was made to delete the addition. 6. On the other hand, theLd. CIT DRrelied on the findings arrived at by the Assessing Officer and while opposing the assessee's plea made a prayer to reject the grounds raised by him. 7. After hearing the parties, careful perusal of material on record and precedents referred, it is found that the amount of credits aggregating to Rs. 55,00,000 never came to be assessed as income of the appellant in any regular assessment. In fact there is no record to show that there was any order of regular assessment for assessment year 1994-95, though the appellant claims of filing of return. Mere filing of return cannot be treated as an order of assessment. This view has also been taken by the Hon'ble High Court of Judicature at Delhi in Mahanagar Telephones Nigam Ltd. v. Chairman, CBDT [2000] 246 ITR 173. Accordingly, by the explanation below sub-section (2) of section 158BA of the Act did not have any limitation to assess the undisclosed income in accordance with the provisions of Chapter-XIV-B of the Act which is a special procedure for assessment of search cases. 8. The definition of 'undisclosed income' under section 158B(b) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s taken by the appellant and recorded as loan payable for Rs. 50,00,000 and advance payment received for Rs. 5,00,000 were not disclosed in the balance sheet filed with return. He, therefore, had a valid jurisdiction to initiate action under section 68 of the Act, requiring appellant to establish genuineness of the credits. 13. I have myself perused the material in shape of ledger accounts and the confirmation. The confirmation had been signed by one Shri Vinod Javed in his capacity as authorized signatory by giving copy of supplier ledger account. This confirmation does not speak of any loan given to the appellant. There is no mention of any bank with the place of its branch for showing any payment to the appellant. It has also not been shown that this company is assessed to tax. Bank account of this company was also not produced nor Shri Vinod Javed and the books of account to substantiate the nature of transactions which were at variance with the ledger account seized during the course of search. Balance sheet for the year ended 31-3-1994 sought to be relied by the assessee's counsel shows amount of sundry creditors of Rs. 2,19,06,704 under the head 'current liability'. When a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of income de hors the material under section 158BB of the Act. This judgment also does not advance the case of the appellant. 16. In C.J. Shah & Co.'s case there was no material to justify any figure to be included for a period earlier to the period of three months from September 3, 1996 to December 4, 1996 and estimation of undisclosed income by arbitrary method for such period was not approved by the Hon'ble Bombay High Court. 17. The appellant has also placed strong reliance on the judgment of the jurisdictional High Court in the case of Ravi Kant Jain. This was a case when the assessee has returned income under the head 'capital gains' in regular assessment but the Assessing Officer without any basis or evidence found as a result of search sought to assess, the same under a different head i.e. as income from business. The Tribunal had already held that this was a case of mere change of opinion. In this background, theHon'ble Courtheld that the special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected at a result of search. As the statutory provision goes to show, it is not intended to be a substitute fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as envisaged under section 255(4): "Whether on the facts and in the circumstances of the present case, the amount of Rs. 55 lakhs credited in the account of Concept International in the regular books of account maintained by assessee, can be assessed as undisclosed income for the purpose of Chapter XIV-B while completing assessment under section 158BC/254 of the Act, or not?" THIRD MEMBER ORDER Per Pradeep Parikh, Accountant Member. - There being a difference of opinion between the two members, the Hon'ble President was pleased to appoint me as a third member under section 255(4) of the Income-tax Act, 1961 ('the Act'). The point of difference as referred to the Third Member is as follows:- "Whether on the facts and in the circumstances of the present case, the amount of Rs. 55 lakhs credited in the account of Concept International in the regular books of account maintained by the assessee, can be assessed as undisclosed income for the purpose of Chapter XIV-B while completing assessment under section 158BC/254 of the Act or not?" The facts stated by the two members in their respective orders are not in dispute. However, it would be advantageous to briefly recapitulate the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a result of search reflected the credits of Rs. 55 lakhs were not disclosed in the balance sheet, the Assessing Officer had a valid jurisdiction to initiate action under section 68 requiring the assessee to establish the genuineness of the credits. The learned Accountant Member then proceeded to consider the genuineness of the transaction and to analyse the various case laws relied on behalf of the assessee to conclude that the action of the Assessing Officer was in accordance with law and thus he sustained the addition of Rs. 55 lakhs. 4. After reading out the relevant portions from the orders of the two learned members, the learned counsel directed his efforts to show as to how the entries were reflected in the balance sheet filed along with the regular return. The thrust of his argument was that when the amount was duly disclosed in the balance sheet, it cannot be said that it was detected only as a result of search. In fact, according to him, the detection was not at all as a result of search and hence no addition was justifiable in the block assessment proceedings. 5. The learned DR contended that the definition of the term 'undisclosed income' had a wide connotation to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... major, is whether Concept International and Concept International Pvt. Ltd. are one and the same entity or are they different entities. However, nothing turns on this as the Assessing Officer has treated it as one entity only. He has not raised any doubts about it. It has only somewhat weighed with the learned Accountant Member to draw adverse inference about the genuineness of the transaction. Therefore, I am ignoring this confusion. Anyway, amidst the confusion, I have to make my way to agree with one of the learned members and hence I proceed further. 7. Let us assume that it is a loan received by the assessee. It is not in dispute that the assessee had filed its regular return of income for assessment year 1994-95 disclosing the impugned amount in the balance sheet. In fact, as per the observation of the learned Judicial Member, the leaned DR himself had placed on record a copy of the return for assessment year 1994-95. This fact is not disputed by any one including the learned Accountant Member. However, what the learned Accountant Member mentions is that mere filing of return cannot be treated as an order of assessment and for this proposition, he has relied on the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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