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TMI Blog2003 (4) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... s per requirement of law. Each of the assessees filed return and after that AO completed the assessments in cases of all the assessees, making different additions against which each of the assessees preferred appeals before CIT(A) who had decided appeals of each of the assessees by separate orders passed on 22nd April, 2001, and in some cases the assessees are in appeal and Department is also in appeal in cases of Rakesh Kumar Jain, Subhash Chand Jain and Pawan Kumar Jain. 3. First of all we are taking up the appeal of Smt. Astha Jain. While completing the assessment under s. 158BC r/w s. 158BD of the Act the AO noted that assessee had filed return for the block period containing asst. yr. 1989-90 to 1998-99 and up to 22nd Feb., 1999, the date of search, in Form No. 2 and it revealed from the return so filed that assessee had filed return of income for asst. yr. 1992-93 only and stands assessed but for remaining asst. yrs. 1989-90 to 1991-92 and 1993-94 to 1998-99 no return was filed. The contention of the assessee was that the income of the assessee was below taxable limit that is why she had not filed the return. This contention of the assessee was rejected by the AO on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(c) of the Act were found applicable. Aggrieved, the assessee is in appeal before the Tribunal. 6. The first plea of the learned counsel for the assessee is that no search was carried out on the assessee as she was residing at 127, Mahavir Ji Nagar, Meerut, and no warrant of authorization was in the name of present assessee Subhash Chand Jain was occupying that house and warrant of authorization was in the name of that man as is evident from pp. 16 to 24 of paper book II (copy of Panchnama), and once there is no search at the assessee then no assessment could be completed under s. 158BC of the Act. 7. Second point argued by the learned counsel is that even if the assessment is taken as it stands to be under s. 158BC r/w s. 158BD, the AO has not issued any notice under s. 158BD of the Act. Copy of notice dt.1st July, 1999, issued to the assessee is appearing at p. 7 of paper book-II which is under s. 158BC only. This notice was corrected by another notice dt.26th July, 1999, copy appearing at p. 26 of paper book-II and in that also the AO has referred to the earlier notice under s. 158BC and amendment the relevant assessment order and nothing more. The contention is that no n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 2,48,710 was made in respect of income for asst. yrs. 1989-90 to 1991-92 and 1993-94 to asst. yr. 1998-99 treating the returned income of the assessee as undisclosed. The contention is that whatever income returned by the assessee was below taxable limit and there is no dispute about the same. Once income was below taxable limit, the assessee was not under obligation to file the return and AO cannot treat such income as undisclosed income merely because the assessee had not filed return of income. For this the learned counsel for the assessee placed reliance on the decision of Smt. Sita Devi Daga vs. Asstt. CIT (1999) 63 TTJ (Ind) 72 : (1998) 67 ITD 151 (Ind) in which Indore Bench of the Tribunal had concluded that income below taxable limit in asst. yrs. 1987-88 to 1991-92 would not form part of undisclosed income and, therefore, addition on this count was unwarranted and uncalled for. Same is the view taken in the case of Satpal Singh vs. Asstt. CIT (2000) 67 TTJ (Chd) 602, in which Bench concluded that if income for year in block period is below taxable limit it cannot be treated as undisclosed income but if after additions, disallowances, it goes above taxable limit, the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s below. Reliance was placed on the decision of Hon ble Kerala High Court in the case of CIT vs. M.M. George (2002) 173 CTR (Ker) 357 : (2002) 254 ITR 45 (Ker) in which Their Lordships have taken into consideration the decision of Hon ble Gujarat High Court in the case of Khandubhai Vasanji Desai vs. Dy. CIT (1998) 150 CTR (Guj) 577 : (1999) 236 ITR 73 (Guj). Learned Departmental Representative also placed reliance on the decision of Hon ble Gujarat High Court in the case of Rushil Industries Ltd. vs. Harsh Prakash (2001) 168 CTR (Guj) 300 : (2001) 251 ITR 608 (Guj) to canvas the preposition that even if the assessee was having income below taxable limit that is to be included in the undisclosed income for the block period. 12. We have considered the rival submissions and perused the record carefully. At the very outset it is to be pointed out that admittedly there is no warrant of authorization for search in the name of the assessee nor any Panchnama was prepared in her name. In view of this, no block assessment under s. 158BC of the Act could be completed in the name of the assessee and for this we draw support from Tribunal, Delhi 'C' Bench order dt.29th Nov., 2000in ITA No. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the AO had not issued any notice under s. 158BD and he was under s. 158BC which was not the correct provision under which was undisclosed income of the assessee was to be assessed and thus matter cannot be restored back to the file of AO as it is serious matter of jurisdiction as AO did not issue notice under s. 158BD and that too without recording any satisfaction. 15. The next plea of the assessee is also to prevail that in all the assessment period of block assessment the assessee has returned income and the AO had not made any addition to the returned income for all the asst. yrs. 1989-90 to 1998-99 except asst. yr. 1992-93 for which assessee had already filed the return. The law as referred to by the learned counsel for the assessee in the cases of Smt. Sita Devi Daga vs. Asstt. CIT; Vaidya Madan Lal Malani (infra); and Satpal Singh vs. Asstt. CIT is quite clear. The income of the assessee as returned for all the assessment years of other period was below taxable limit. No addition has been made by the AO. Under these circumstances the income so treated as undisclosed was not to be included in the block assessment particularly in view of the amended cl. (c) of s. 158 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n called upon by the ADIT (Inv.). Under these circumstances the learned CIT(A) was of the view that there was substantial delay and assessee was not entitled for any benefit and provisions of s. 158BB(1)(c) were very clear and assessee could not be given benefit. 20. Learned counsel for the assessee pointed out that assessee commiitted default in filing the return for asst. yrs. 1997-98 and 1998-99 but advance tax for both the assessment years were paid on 15th Sept., 1996, for asst. yr. 1997-98 and on 15th Sept., 1997 as well as on 15th Dec., 1997 for asst. yr. 1998-99 as is evident from pp. 34 and 32 of paper book-II. Assessee got refund of Rs. 10,054 and Rs. 7,302 for both the assessment years as is evident from copies of return appearing at pp. 38 and 36 of paper book-II. On the basis of these facts the learned counsel submitted that assessee, a regular income-tax assessee, was having source of income from two firms which had already filed their returns before the due date. The assessee had also paid sufficient tax in advance to cover the total income. The return was filed after the date of search though under s. 139(4) and assessee can suffer the tax for late filing of retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x. The case law cited by the assessee is in favour of the assessee and we are of the considered view that the amount which was returned by the assessee in the belated return and accepted by the Department as income cannot be called as undisclosed income for the block period. The ground is allowed and so the appeal. ITA(SS) Nos. 181/Del/2001; 214/Del/2001; 214/Del/2001; 184/Del/2001 215/Del/2001 (Cross-appeals in the cases of R.K. Jain and Subhash Chand Jain): 23. These four appeals are taken up together as one of the common issue is involved. The main ground involved in the Revenue s appeal relates to addition of Rs. 56,14,500 under s. 69 of the Act on account of 30 per cent share of unexplained investment in purchase of property by R.K. Jain made by AO and deleted by the CIT(A). In the case of Subhash Chand the amount is Rs. 37,37,001. During search Annexure A-39, sale deed of land executed by P.P. Motors was seized from the premises of M/s Prem Chand Pawan Kumar. A perusal thereof revealed that a petrol pump in the name of P.P. Motors was found in the said land of 1611 sq. yds. which was situated at 82,H. Street,Delhi-Hapur Road,Meerut. One of the properties was purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count and the same cannot form part of block assessment proceedings in the absence of any corroborative material or evidence suggesting any undisclosed investment/payment over and above the disclosed total investment of Rs. 15 lacs. About the seized valuer report it was contended that these were highly excessive and defective as the land therein had been valued as freehold land instead of valuing the same as leasehold land and the rates applied by the registered valuer who arrived at the value at Rs. 2.22 crores of the land in question and said Mr. Y. Chandra had given the correct valuation report which was also filed before him. Another report of Mr. Karan Arora, approved Government valuer, was also filed which indicated the market value at Rs. 15.49 lacs as on15th March, 1997. Copy of that report was also filed. The next plea of the learned counsel for the assessee before the CIT(A) was that circle rate of land in old grant area at Hill Street, Meerut where the property was located was Rs. 1,000 and Rs. 500 per sq. meter for commercial and residential land, respectively, which was increased further at Rs. 1,400 and Rs. 700 w.e.f. 31st Aug., 1997. Copies of circle rates were filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K.P. Verghese vs. ITO Anr. (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597 (SC) in which Their Lordships had laid down that in case Revenue seeks to bring a case within sub-s. (2) of s. 52 then it must show not only that fair market value of the capital asset as on the date of transfer exceeded the full value of the consideration declared by the assessee by not less than 15 per cent of the value so declared, but also that the consideration had been understated and the assessee had actually received/paid more than what was declared by him. Both the conditions are to be satisfied before invoking the provisions of sub-s. (2) of s. 52 and without that Revenue cannot succeed. On the basis of this, the learned CIT(A) concluded that no material was found to show that any unaccounted money was found over and above Rs. 15 lacs, the sale consideration and he accordingly deleted the addition. Aggrieved, the Revenue is in appeal against such deletion in both the cases of the assessees. 26. The learned Departmental Representative pointed out that paper Nos. 63 to 70 are the report of valuer, seized at the time of search, valuing the property at Rs. 2.12 crores. The contention of the learned De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invested the amount as shown in the sale deed and burden was on the Revenue to rebut the said presumption. It was submitted by the learned counsel that property in question was old grant leasehold land and to substantiate this the learned counsel pointed out that even copy of sale deed appearing at p. 54 onwards is indicative of the said thing. Page No. 55 is relevant for that purpose in which it was mentioned that land was old grant leasehold and owned by Government of India. The next plea was that pp. 94 and 95 of the paper book is the extract from general land register and the land belonged to Government of India and being managed by Defence Estate Officer. The nature of land is "old grant". Landlord is shown in column No. 8 as Government of India. Further, pp. 96 and 97 are the copies of circle rates available in theHill Streetarea in the year under consideration and as amended subsequently. The contention is that valuation report obtained by the assessee and seized during the search was for other purposes but it did not really prove that assessee had invested the amount. Valuation report cannot be made basis for making addition on account of undisclosed income. The report was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was able to give out the reasons why the valuer reports seized at the time of search were obtained and that was with specific purpose to get benefit from Indian Oil Corporation but Department except from these two valuer s reports, was not in possession of any material to indicate that any amount over and above the amount shown in the sale deed was paid by the assessee or received by the seller nor any addition had been said to have been made in the case of seller. 30. Lastly, it is to be noted that circle rate, copy of which is on record, also indicated that rate of land was in conformity with the rate shown in the sale deed. Under these circumstances there was no basis for making addition and learned CIT(A) was justified in deleting the addition and we agree with the reasoning given by the leaned CIT(A) for deleting the addition in addition to the reasoning noted above. Accordingly, the ground of the Department fails. 31. In the case of Rakesh Kumar Jain another plea is also relevant to be taken note of. Admittedly, there was no search conducted in the case of Rakesh Kumar Jain. The learned counsel pointed out that no Panchnama was drawn in the name of the assessee and thus n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R (Bom) 432. Learned CIT(A) considered all the facts and agreed with the contention of the assessee. According to learned CIT(A) the assessee had not raised any construction but only purchased a ready-built flat on first floor of G-1415, Chitranjan Park, New Delhi, for Rs. 4.5 lacs and during search no adverse material whatsoever was found to suggest any payment out of books. The AVO had quoted a comparable case of Kalkaji which had freehold land whereas the land of assessee was leasehold and hence two were not comparable. The case law cited by the assessee was in favour of the assessee. Accordingly, the CIT(A) deleted the addition. 34. Learned Departmental Representative placed reliance on the order of AO and learned counsel for the assessee reiterated the same submissions and reliance was placed on the case law reproduced in the order of CIT(A). 35. We have considered the rival submissions and perused the case law referred before the CIT(A) as reproduced in preceding paragraph. It is well-settled that no addition can be made on the basis of mere report of AVO in block assessment year unless any incriminating document suggesting any investment except what is shown in the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceiving income, filed return prior to the date of search. All the assessees have paid necessary advance tax much before the date of search and necessary evidence of all these facts was referred to by the learned counsel by way of chart filed in the case of Prem Chand Jain, Rakesh Kumar Jain, Subhash Chand Jain and Pawan Kumar Jain and thus the view taken by us in the case of Prem Chand Jain will be fully applicable and each of the grounds is decided in favour of the assessee. 41. Next common ground in case of Subhash Chand Jain and Pawan Kumar Jain is relating to the addition on account of unexplained investment in the purchase of property No. 82, Hill Street, Meerut, along with Rakesh Kumar Jain and AO made the addition which stands deleted by the learned CIT(A) after following his order in the case of Rakesh Kumar Jain. In the case of Rakesh Kumar Jain we have already confirmed the finding of learned CIT(A) and in view of same, we confirm the finding of the CIT(A) in the cases of Pawan Kumar Jain and Subhash Chand Jain. 42. In the result all the appeals preferred by the assessees and the Department are disposed of in the manner as stated in the body of order. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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