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TMI Blog2008 (7) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... hat all necessary details and information were already with the department with respect to the purchase of the property and source of funds claimed by the assessee. In the case of Dang Co. (P.) Ltd.[ 2005 (1) TMI 328 - ITAT DELHI-A] , Tribunal held that the assessee having duly disclosed the amount of credit in the accounts in regular return, AO could not go into its genuineness and treat it as undisclosed income in the block assessment. An amount of cash loan taken by the assessee-company from its director which was disclosed in the regular return and shown in the balance sheet could not be treated as undisclosed income in the block assessment under Chapter XIV-B. Therefore, we are of the view that when all the necessary and relevant information and details regarding the purchase of property and source of fund claimed by the assessee was already with the department before the date of search, then the action of the AO in computing the undisclosed income and treating the credits as bogus is not warranted and the same is not permitted under law for framing the block assessment. Therefore, we find no force or merit in the appeal of the revenue and the block assessment was rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each. The Addl. CIT, Range IV, Chennai, has recorded sworn statement from Shri Dharmaseelan, managing director of the assessee-company on 30-10-2000 and 1-11-2000 as regards the advances taken from 63 individuals. 4. After the search a notice under section 158BC was issued on 7-11-2000 to the assessee-company and in response to the notice, a return of income was filed on 12-1-2001 admitting an undisclosed income of Rs. 26 lakh. During the course of assessment proceeding, the assessee-company has produced confirmation letters from individuals. The assessee also produced certain individuals before the Assessing Officer and the statements were recorded wherein they have gone back from their original statement and confirmed that they had in fact given advances. The Assessing Officer rejected these statements and passed the block assessment order on 29-11-2002 by computing a total undisclosed income of Rs. 1,60,00,000. Out of 63 individuals mentioned in Annexure A of the assessment order, the Assessing Officer accepted three credits, i.e., a sum of Rs. 20 lakh received from Narayanan at S. No. 41; Rs. 25 lakh received from Rukmangathan at S. Nos. 57 and 58 respectively on 27-8-1998 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as undisclosed income in the block assessment are not based on any material or evidence found in the search or any investigation relating to the evidence found in the search, the Commissioner (Appeals) is not supposed to give a direction to the Assessing Officer for reopening of the assessment for the year 1999-2000 because the said direction was not necessary for deciding the appeal before the Commissioner (Appeals) as the said direction amounts to enlarging the scope of appellate proceedings and on the subject-matter which was not before the Commissioner (Appeals). The learned counsel for the assessee has relied on the following judgments: CIT v. Foramer France [2003] 264 ITR 566 (SC); CIT v. Banwari Lal Sons (P.) Ltd. [2002] 257 ITR 518 (Delhi); ITO v. Muralidhar Bhagwan Das [1964] 52 ITR 335 (SC); Pt. Hazari Lal v. ITO [1960] 39 ITR 265 (All.); Raj Kishore Prasad v. ITO [1992] 195 ITR 438 (All.); Asstt. CIT v. Rajaram Bros. [2005] 274 ITR 122 (MP); Abdul Wahid Gehlot v. ITO [IT Appeal No. 722 (Jp.) of 1996, dated 21-9-2004]. On the other hand, the learned Departmental Representative has contended that once the assessee has failed to prove the genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 148 issued after a lapse of more than seven years were not saved by section 153(3)(ii) since section 153 relates to passing of an order of assessment and not to issuing of notice under section 148. Similar in the case of Banwari Lal Sons (P.) Ltd., the High Court of Delhi held: Tribunal having held that the directions made by the AAC to the effect that additional compensation for registration of assessee's property for the past period awarded by the Court was to be assessed under the head 'Income from house property' in the respective assessment years was not at all necessary for the disposal of the appeal and the same could not be treated as a direction as contemplated in section 153(3)(ii), provisions of section 150 were not applicable and, therefore, the reassessment proceedings initiated for assessing the said amount in earlier years were barred by limitation. In the case of Murlidhar Bhagwan Das, the Hon'ble Supreme Court held: A 'finding' can be only that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. The AAC may hold, on the evidence, that the income shown by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 148 of the Act is made out. It was, therefore, necessary for the CIT(A) to have recorded categorical finding justifying grant of this liberty to the Assessing Officer in case, if he was so keen to do so. In the case of Abdul Wahid Gehlot, the Jodhpur Bench of the Tribunal has held in para 5 as under: We have heard both the parties and carefully considered the rival submissions. The jurisdiction of the CIT(A) is confined only to the assessment year which is the subject-matter of appeal. He cannot give directions in respect of other assessment years for reopening the assessments under section 147. On specific query from the Bench, the learned counsel submitted that the Assessing Officer has not reopened the assessments for the earlier assessment years. Thus, we hold that the learned CIT(A) was not justified in giving directions for reopening the assessments for the earlier years. Therefore, we set aside the order of CIT(A) and delete such directions. This ground of appeal is allowed. In view of the above discussion and the law laid down by the Hon'ble Supreme Court and various High Courts, we are of the view that the CIT after holding that the addition made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the evidence found at the time of search and, therefore, the addition cannot be sustained. 10. Against the order of the Commissioner (Appeals) the revenue has filed the present appeal. Before us, the learned Departmental Representative has submitted that there was a search conducted in this case and during the course of search, sworn statement was recorded under section 132(4) wherein it was admitted by the employees that they have not advanced the sum claimed as source by the assessee for the purchase of properties in question. Thus, it clearly justifies the action of the authorities based on the reason to believe that the claim of advances by the assessee for purchasing the properties is bogus in nature. He has further submitted that the addition made by the Assessing Officer in the block assessment has nexus to the statement recorded under section 132(4) of the Act and subsequent enquiries were carried out by the department in pursuance thereof. It was further pleaded by the learned Departmental Representative that addition to the extent of Rs. 58 lakh must have been sustained because the same was based on the sworn statement recorded before the conclusion of search. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 27-4-2001 found at page No. 58 of paper book wherein investment wing was requested to conduct the necessary enquiries from all the 63 persons so that assessee's contention can be verified at the earliest. At para 12 therein it is mentioned that on 6-11-2000 a message was received from DDIT(Inv.), Unit II(4) that a search and seizure operation was conducted on 3-11-2000. Thus, he submitted that the assessee had already disclosed all the information in the return filed for the assessment year 1999-2000 and the transaction was recorded in the books of account. Therefore, all the necessary information was with the department even prior to the date of search. Therefore, the block assessment is not valid in respect of the same transaction which is already with the department in regular assessment. The learned counsel for the assessee has relied upon the order of Delhi Bench of this Tribunal in the case of Dang Co. (P.) Ltd. v. Dy. CIT[2005] 94 ITD 29; judgement of the Jurisdictional High Court in the case of CIT v. G.K. Senniappan [2006] 284 ITR 220 (Mad.) and order of the Tribunal in the case of Jumbo Bag Ltd. Stanpacks (India) Ltd. v. Asstt. CIT [IT(SS) Appeal Nos. 1 (Mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee having duly disclosed the amount of credit in the accounts in regular return, the Assessing Officer could not go into its genuineness and treat it as undisclosed income in the block assessment. An amount of cash loan taken by the assessee-company from its director which was disclosed in the regular return and shown in the balance sheet could not be treated as undisclosed income in the block assessment under Chapter XIV-B. In the case of G.K. Senniappan, the Hon'ble Jurisdictional High Court has held as under: A mere reading of the above provision clearly indicates that the sentence 'such other materials or information as are available with the Assessing Officer' cannot be bisected or taken in isolation for the purpose of computation. Such other materials or information as are available with the Assessing Officer, should as per the section relatable to such evidence. The word 'such' used as a prefix to the word 'evidence' assumes much significance in this provision, as it indicates only the evidence found, as a result of search or requisition of books of account or other documents, at the time of search. Any other material cannot form basis fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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