9911796707
TMI Blog2002 (12) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... laration of any undisclosed income made during the course of the search. Out of the group, 10 regular firms and few individuals were filing their returns regularly, but in other cases, including that of the assessee, no returns were filed and no assessments had taken place before the search action was taken. As far as the firms were concerned, the returns were filed for the assessment year 1995-96 and the assessments were also made. Apart from these partnership firms which had filed their regular returns, there were 42 AOPs, 23 partnership firms, 3 HUFs, 3 family trusts and 15 individuals out of whom the assessee is one such individual. 3. The block assessments were completed in the case of a number of AOPs and these assessments were challenged in appeal before this Tribunal. The representative case was that of G.C. Associates v. Dy. CIT [2003] 80 TTJ (Pune) 539 which was decided by this Tribunal vide order dated 19-8-2000. Some of the grounds in the present appeal have already been dealt with in the order of the Tribunal in the case of G.C. Associates, Pune, to which suitable reference will be made later on while discussing the grounds of appeal. 4. After the search, assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o say in this regard, you may, seek hearing before the CIT, Pune, and file your written objections with evidence to him with a copy to this office on or before 25th September, 1997." In view of this specific opportunity given to the assessee, the assessee filed number of papers and evidences before the CIT with his letter dated 26th September, 1997. Copies of these evidences and submissions have been placed in paper book No. 1. From the various letters addressed by the Assessing Officer seeking information from the assessee, it is clear that scrutiny of Bafna group of cases started some time in the month of June, 1997, as is clear from the letters issued by the Assessing Officer dated 24th June, 1997, 4th July, 1997, 7th July, 1997, etc. As far as the assessee is concerned, his case was taken up along with other individual assessees, viz., his brothers, his mother and his sons, etc. Thus, it is seen that in the short span of three months, compiling data for large number of assessees for a period of ten years was extremely difficult. This was mainly because the activities of the assessee and the group were on very substantial scale. It was submitted by the learned counsel of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing both the parties, we hold that this ground is identical to ground No. 1 in the case of G.C. Associates. This has been dealt with in paras 5 to 9 of the order dated 18th August, 2000, in the case of G.C. Associates. As per para 9 in that order, we have held that filing of the belated return was valid in law and the Assessing Officer is directed to take cognizance of the entire return as also its accompaniments in regard to computation of income. 10. Ground No. 2 reads as under: "On facts and circumstances prevailing in the case and as per provisions of law, it be held that the undisclosed income should have been assessed at Rs. 36,21,770 as is admitted by the appellant as against Rs. 2,93,78,183 computed by the Assessing Officer. The appellant be granted just and proper relief in this respect." This is general ground challenging various additions made to the undisclosed income returned. This ground has, therefore, to be read along with other grounds. The ground does not, therefore, call for any specific comment. 11. Ground No. 3(a) reads as under: "3. Without prejudice to ground Nos. 1 and 2, and circumstances prevailing in the case and as per provisions of law it be held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed shall be aggregated as per section 158BB for computing undisclosed income. Accordingly, this ground is allowed in part. 14. Ground No. 3(c) reads as under: "The Assessing Officer is in error in granting depreciation on pro rata basis for the period from 1st April, 1996 to 12th September, 1996. The depreciation should have been allowed in full as per provisions of law and on facts and circumstances prevailing in the case for the said period. Just and proper relief be granted to the appellant in this respect." The facts and arguments of both the sides on this ground are identical to those discussed by us in our order in the case of G.C. Associates. As such, the decision given by us in our aforesaid order (para 31) will apply mutatis mutandis. For the detailed reasons given in our aforesaid order, we direct the Assessing Officer to allow depreciation at the rate of 50 per cent of the allowable depreciation for the broken period. This ground accordingly succeeds. 15. Ground No. 3(d) reads as under: "The Assessing Officer ought to have granted claims of expenses pertaining to trips of trucks, truck expenses and administration expenses on the basis of the P&L, a/c submitted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s request for credit of advance tax. This ground accordingly fails. 18. Ground No. 3(g) reads as under: "The Assessing Officer is in error in computing the income pertaining to the previous year ended on 31st March, 1996 and for the period from 1st April, 1996 to 12th September, 1996, as undisclosed income and not granting relief in terms of provisions of section 158BB(1)(d) of the Act. It further be held that the entire, income so computed for the said period is to be adjusted and to be set off in terms of provisions of section 158BB(1)(d) of the Act and tax imposable on such income would be regular tax-leviable under the general provisions of the Act and not at the rate of 60 per cent chargeable on the basis of undisclosed income. Just and proper relief be granted to the appellant in this respect." 19. In this ground, it has been contended that the Assessing Officer was in error in computing the income pertaining to the previous year ending on 31st March, 1996, and for the period from 1st April, 1996 to 12th September, 1996, as undisclosed income and not granting relief in terms of provisions of section 158BB(1)(d) of the Act. It is further contended in this ground that the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is not, therefore, as if the income on the basis of books of account could not have been computed. Accordingly, the income so computed on the basis of books of account is directed to be deducted as per section 158BB(1)(d). In this, we stand supported by our decision in the case of G.C. Associates and also in the cases of Shradha Constructions v. Asstt. CIT [2001] 76 ITD 85 (Pune) and Sou. Vidya Madanlal Malani v. Asstt. CIT [2000] 74 ITD 341 (Pune). This ground accordingly succeeds. 23. Ground No. 4(a) reads as under: "Without prejudice to ground Nos. 1, 2 and 3, on facts and circumstances prevailing in the case and as per provisions of law it be held that: a. Addition of Rs. 50,000 out of cash found at Rs. 55,054, that of Rs. 3,35,329 on account of value of part of the jewellery found at the time of search and seizure that of Rs. 5,07,543 on account of value of silver found at the time of search and seizure is unjust and improper. The same be deleted." This ground has to be read in the context of block assessments in the case of the assessee as well as of other individual members of the Bafna family. Shri K.A. Sathe, the learned counsel for the assessee, submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 4,48,089 is much less. He, therefore, submitted that this is not a case of excess cash found, but rather a case of shortage of cash. No addition, therefore, can be made in the case of the assessee or in the case of any other assessees in Bafna group in respect of the above cash. The learned counsel further submitted that the assessee has tried to reconcile the shortage in cash, and according to the assessee, Rs. 3,31,906 represents IOUs in the name of welders, fitters, painters or staff members. According to the learned counsel, the assessee has a system of giving advances to the various staff members as also persons to whom some work like welding, painting, etc. is given. At the time when the advances are given, entries in the cash books are not made, but when the final bill is received from the concerned staff member or the concerned welder, fitter, etc. expenses are debited. He submitted that a separate record is kept of such IOUs or the advances given which on the date of raid were of Rs. 3,31,906. The balance of Rs. 1,02,674, according to the learned counsel, representing further shortage will be on account of cash withdrawn by the family members from the family concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further credit for subsequent purchases should have been granted. According to the assessee, most of the jewellery was explained. However, if any part of the jewellery was to be treated as unexplained, benefit of intangible additions, particularly on account of shortage of cash may be allowed to be set off against the unexplained part of the jewellery. Similar claim was made in respect of silver and it was pointed out that silver was also declared in the wealth-tax returns. 29. In the course of arguments before us, the learned counsel filed full details of jewellery found which are to be found on pp. 3 to 5 of paper book No. 2. These details show the entire jewellery found in the house of Bafnas and it was requested that instead of considering the jewellery in the bedroom of each member of the family, the entire jewellery should be seen as a whole for the family, particularly because Smt. K.C. Bafna who was the senior most member of the family and Shri G.C. Bafna were also having jewellery of the family. The learned counsel submitted that the total jewellery as found in the various bedrooms was 8122.24 gms. as is clear from second column on p.4. Out of this, jewellery to the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased during the period from the assessment year 1982-83 to 1986-87 may be given. If any silver is considered to be unexplained, the learned counsel submitted that this may be considered to be out of cash shortage as has been shown earlier. He, therefore, submitted that no addition on account of silver also is required. 31. The learned Departmental Representative submitted that the facts and figures given by the learned counsel need to be verified at the end of the Assessing Officer because these were not before him at the time of framing the assessment. 32. We have considered the rival submissions and perused the facts on record. We find that vide letter dated 26th September, 1997, the assessee had brought to the notice of the learned CIT that the lady members of Bafna family had declared jewellery in their Wealth-tax returns filed for the assessment year 1982-83. This fact was not before the Assessing Officer. It was also pointed out that jewellery was purchased in subsequent period from disclosed sources of funds. There was an addition of jewellery also on account of lady members when they got married in the family. The submissions made before us now by the learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel further submitted that the various firms in which the assessee was partner were regularly filing their returns of income till the date of search and in any case the returns for the assessment years 1987-88 to 1992-93 were already filed. The Assessing Officer had also undertaken the block assessments of these firms simultaneously with the block assessment of the present assessee. In dealing with the share profit of the various firms in para 4 of his order, the Assessing Officer stated that the assessee was asked to explain why his share profit should not be taken as undisclosed income for the assessment years 1987-88 to 1992-93 and the assessee was also asked to explain the credits in the capital account. Since the information was filed only in the case of M/s. Bafna Transport India which was assessed at Bombay, in all other concerns the entire share profit as well as credits to capital account were assessed as undisclosed income of the assessee for the assessment years 1987-88 to 1992-93. 35. In this behalf, Shri K.A. Sathe submitted that since the Bombay firm was not with the Assessing Officer, separate information was given but in regard to other firms assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and is based on no evidence and arbitrary out of guesswork, conjectures. The addition so made be deleted. The appellant be granted just and proper relief in this respect." 39. This ground is also a ground common to all the individual assessees in this group. During the course of assessment, details regarding household expenses could not be furnished. The Assessing Officer made the addition with the following remarks: "(3) Household expenses: Vide this office letter dated 2nd June, 1997, the assessee was asked to file details of household expenses with their break-up. However, the assessee has not filed the details. During the course of hearing, the assessee filed details of family members, according to which, there are nine major family members including the mother of the assessee Smt. Kundanbai C. Bafna. Since the assessee has not filed the details of household expenses, same are estimated at Rs. 75,000 in assessment year 1987-88 with the increase of 10 per cent every year. Since there are three male members in his family, same are distributed in all the three male members. Addition, therefore, on account of household expenses is made as per Annexure 22 enclosed with this orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,52,000 1,32,865 1994-95 5,64,000 1,46,152 1995-96 5,64,000 1,60,767 1996-97 2,32,000 1,76,876 (broken period) -------------------------------------------------- The learned counsel further submitted that the withdrawals made by the assessee and the family members are from the firm M/s. Bafna Motor Transport, Pune, and M/s. Bafna Road Lines and subject to the verification of the above figures, it would to seen that the withdrawals shown by the assessee and family members are far in excess of what the Assessing Officer estimated by way of household expenses. He, therefore, submitted that there is no justification for the impugned addition. 42. The learned Departmental Representative relied upon the order of the Assessing Officer. 43. We have considered the rival submissions and perused the facts on record. In our opinion, addition on account of household expenses is not warranted firstly, because in the absence of any material found during the search, this item could not be subject-matter of undisclosed income and, secondly, because in fact the expenses as shown by the assessee by way of withdrawals are far in excess of estimates made by the Assessing Officer. But the fig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital accounts to the extent the credits represent the amounts introduced by the assessee and they are mostly transfers made from one firm to another and there is no element of income involved. 46. The learned Departmental Representative relied upon the order of the Assessing Officer. 47. We have considered the rival submissions and perused the facts on record. The submissions made by Shri Sathe deserve to be verified at the end of the Assessing Officer. We accordingly direct the Assessing Officer to verify details of the credits as have been filed before the CIT on pp. 237 to 383 and re-adjudicate upon the issue after giving an opportunity of being heard to the assessee. 48. Ground No. 4(e) reads as under: "Addition in aggregate of Rs. 19,11,135 for assessment years 1987-88 to 1997-98 in SB Account is unjust and improper. The addition so made be deleted. Just and proper relief be granted to the appellant in this respect." 49. The Assessing Officer made an addition of Rs. 19,11,135 in all for the assessment years 1987-88 to 1997-98 representing credits in savings bank account. In the early part of the hearing the Assessing Officer had called for the details regarding the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to be verified at the end of the Assessing Officer. Further, from the submissions of the learned counsel, it is clear that double addition has been made. Under the circumstances, we deem it fit to set aside the order of the Assessing Officer on this issue and restore the issue to his file with the direction that he should go through the details and re-adjudicate upon the issue after giving an opportunity of being heard to the assessee. 53. Ground No. 4(f) reads as follows: "Addition of Rs. 4 lakhs on account of value of stock of wooden logs is for assessment year 1996-97 is unjust and improper. The additions so made be deleted. Just and proper relief be granted to the appellant in this respect." 54. During the course of search and seizure of Bafna Auto Engg. (P.) Ltd., stock of wooden logs was found at the business premises of the company. Query regarding the same was made in Bafna Auto Engg. (P.) Ltd. by the Assessing Officer. Reply was given by the assessee-company by its letter dated 23rd July, 1997. It was explained by the company that the stock belonged to the members of the Bafna family. It was further accompanied by confirmation letter by B.C. Bafna on behalf of family ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Bafna Roadlines in the year 1995-96 and was debited in the name of Suparshwanath Constructions on behalf of the family members. Further, payment of Rs. 4,00,000 was made towards purchase of wooden logs in the year 1990-91 and out of which Rs. 2,00,000 was debited in the books of Bafna Motor Transport Co. (Poona) on behalf of family members of Bafna group under Suparshwanath Constructions. This fact also needs to be verified by the Assessing Officer. Accordingly, we restore this issue to the file of the Assessing Officer and direct him to verify the facts and readjudicate upon the issue after giving an opportunity of being heard to the assessee. 57. Ground No. 4(g) reads as under: "Addition of Rs. 15,68,400 for assessment year 1996-97 on account of investment in equity shares in Bafna Investment and Financial Services (P.) Ltd. is unjust and improper. The additions so made be deleted. Just and proper relief be granted to the appellant in this respect." 58. The facts leading to this addition have been discussed by the Assessing Officer on para 7 of p.6 of the assessment order and Annexure 26. During the course of assessment proceedings of Bafna Auto Engg. (P.) Ltd., details rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer. 61. We have considered the rival submissions and perused the facts on record. It is noted that the Assessing Officer has rejected the explanation filed by the assessee without any verification. Least the Assessing Officer was expected to verify the contents of the letter dated 15th Sept., 1997, which was filed before the Assessing Officer. In our opinion, the Assessing Officer should have given adequate opportunity to the assessee and accordingly, we restore this issue to the file of the Assessing Officer. He is directed to go through the details filed by the assessee and get explanation wherever necessary from the assessee and readjudicate upon the issue after giving an opportunity of hearing to the assessee. 62. Ground No. 4(h) reads as under: "Addition of Rs. 4 lakhs for assessment year 1993-94 on account of estimated marriage expenditure of Swati G. Bafna alias Swati Mehta, that of Rs. 2 lakhs on account of estimated marriage expenses of Sanjay B. Bafna, that of Rs. 1,50,000 on account of estimated marriage expenses of Rajendra G. Bafna, that of Rs. 1 lakh on account of estimated expenses on functions and ceremonies in assessment year 1987-88 is, unjust and improper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 048052 GCB from BMT Co.,Poona 15-12-1992 Rs. 30,000 paid by cheque vide withdrawal by No. 048093 GCB from BMT Co. Poona 5-01-1993 Rs. 11,600 paid by cheque vide withdrawal by No. 048123 GCB from BMT Co., Poona 15-3-1993 Rs. 25,000 paid by cheque vide withdrawal by No. 048215 GCB from BMT Co., Poona ----------------------------------------------------------- As regards the marriage of Sanjay Bafna, the Assessing Officer has made an addition of Rs. 2,00,000 as undisclosed income, whereas the withdrawals were Rs. 1,16,521. Further, the withdrawals were made by the family members from the regular concerns and duly recorded in the books of account. As regards the marriage of Shri Rajendra G. Bafna, the learned counsel admitted that no details were readily available. However, he submitted that the Assessing Officer has made simply estimates which are not warranted in a block assessment. 65. The learned Departmental Representative relied upon the order of the Assessing Officer. 66. We have considered the rival submissions and perused the facts on record. For the marriage expenses of Swati Bafna, the Assessing Officer has made an estimate of Rs. 4 lakhs while accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has to be restricted to Rs. 27,143, i.e., details of expenditure given in the loose paper and there is no scope for any estimation at Rs. 1,00,000. Accordingly, we retain an addition of Rs. 27,143 and the assessee will be entitled to a relief of Rs. 72,857. 68. Ground No. 4(i) reads as follows: "Additions made as under is unjust and improper. The additions so made by deleted. Just and proper relief be granted to the appellant in this respect. ------------------------------------------------------------ Amount of Asst. yr. Loose paper Bundle No. Party No. addition No. ------------------------------------------------------------ 4,17,895 1991-92 4 10 5 4,25,229 1997-98 8 5 1 5,000 1997-98 34 6 1 5,000 1996-97 33 6 1 2,500 1992-93 28 6 1 10,000 1995-96 13 8 1 13,500 1989-90 18-26 8 1 1,26,000 1995-96 33&34 2 1 13,416 1987-88 3&4 2 2 6,989 1988-89 3&4 2 2 900 1989-90 3&4 2 2 4,00,000 1991-92 3 10 5 2,43,274 1995-96 29-31 1 5 25,845 1995-96 53 4 1 25,200 1997-98 8-10 1 2 2,16,000 1996-97 25 210 3 13,85,760 1997-98 Various 3, 13 & 6 1 1,65,000 1992-93 Various 3, 13 & 6 1 4,90,236 1987-88 Various 3, 13 & 6 1 69,288 1997-98 Various 3, 13 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel has given details of the contents of the loose papers and explanations and submitted that most of the figures given in the loose papers were accounted for in the books of account. Neither the Assessing Officer nor the CIT had perhaps time to go through the exact nature of the loose papers. 70. The learned Departmental Representative relied upon the order of the Assessing Officer. 71. We have considered the rival submissions. We find that the draft assessment order was completed and forwarded to the CIT before the assessee could file the return of income. Queries made by the Assessing Officer were responded to and detailed submissions were filed before the CIT at the time for approval of the draft order. In our opinion, neither the Assessing Officer nor the learned CIT had time enough to go through each and every seized paper in the light of submissions made by the assessee. For example, if the contents of some of the seized papers are recorded in the books of account, no addition will be called for after verification. After taking into consideration the facts and circumstances of the case, we restore this issue to the file of the Assessing Officer. He will go through the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the matter must go back to the Assessing Officer for verification of the charts filed before him and before the learned CIT. The submission of the assessee that all the investment made was from regular books of account and transactions were duly recorded in the books of account need to be verified at the end of the Assessing Officer. Accordingly, we restore this issue to the file of the Assessing Officer for fresh adjudication after giving an opportunity of being heard to the assessee. 75. Ground No. 4(k) reads as under: "Addition of Rs. 48,129, Rs. 48,129, Rs. 49,404, Rs. 50,529, Rs. 66,729, Rs. 96,531, Rs. 1,05,690, Rs. 1,09,176, Rs. 1,25,205, Rs. 1,30,095 and Rs. 1,30,095 in assessment years 1987-88 to 1997-98, respectively, estimating the dividend at 30 per cent of the investment in shares in place of dividend declared and admitted by the appellant in the return of income filed and not granting the deduction under section 80L is unjust and improper and is not in accordance with the provisions of law. The amount of dividend be considered on the basis of the declaration and admission made by the appellant and relief under section 80L be granted to the appellant in all concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act (Sections 80C, 80L, etc.). The assessee also paid premium towards LIC and investments eligible under Chapter VII of the Act and claimed rebate in respective years covered in the block period under Chapter VII of the Act. 81. From the order of the Assessing Officer, it is noted that deduction under Chapters VIA and VII has not been considered and allowed by him while passing the order. Shri Sathe, the learned counsel for the assessee, submitted that the Assessing Officer is in error in not considering the relief pertaining to interest on FD with banks covered by section 80L, amount paid towards LIC and other investments from year to year eligible for relief under Chapters VIA and VII of the Act. 82. The learned Departmental Representative relied upon the order of the Assessing Officer. 83. We have considered the rival submissions and perused the facts on record. In our view, the issue stands covered by the order of this Tribunal in the case Control Touch Electronics (Pune) (P.) Ltd. v. Asstt. CIT [2001] 77 ITD 522 (Pune) and accordingly, the Assessing Officer is directed to give relief under Chapters VIA and VII after verification. 84. Ground No. 4(m) reads as follows: "Add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been brought to tax. The learned counsel submitted that the Assessing Officer may be directed to verify these aspects also and accept the figure of profit shown by the assessee on sale of shares as per the block return. 86. The learned Departmental Representative had no objection if the matter is restored back to the Assessing Officer. 87. After hearing both the parties, we restore this issue to the file of the Assessing Officer with the direction that the matter may be examined in the light of the submissions of the learned counsel reproduced supra. 88. Ground No. 4(n) reads as follows: "Addition of Rs. 3,000 and Rs. 48,000 each for the assessment years 1992-93, 1993-94 and 1994-95, respectively, on account of investment in shares by Swati G. Bafna alias Swati Mehta is unjust and improper and contrary to the provisions of law. The addition so made be deleted. The appellant be granted just and proper relief in this respect." 89. The addition relates to investment in shares seized during the course of search. These are some of the shares seized by the Department on 12th Sept., 1996. Shri Sathe, the learned counsel for the assessee, submitted that reply was filed before the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings, the assessee filed details of share transactions made through Kalpataru Holdings/Parag Parakh. On that basis, the Assessing Officer computed purchase of shares as investment in shares as undisclosed income for the assessment years. This ground is consequential and identical to grounds 4(j) and 4(k). Accordingly, for the detailed reasons given in paras 64 and 69 of our order, we restore this issue to the file of the Assessing Officer to readjudicate upon the issue in accordance with the directions given in paras 64 and 69 supra. 93. Ground No. 4(q) reads as under: "Addition of Rs. 99,50,000 in assessment year 1996-97 on account of so-called investment in shares pledged with Citibank is unjust and improper and perverse. The addition so made be deleted. Just and proper relief be granted to the appellant in this respect." The facts leading to the impugned addition have been discussed by the Assessing Officer on pp. 14 and 15 of the assessment order under the head "Shares secured with Citibank". The Assessing Officer noted that the assessee had pledged certain shares with Citibank, Mumbai. He obtained details from the Citibank and supplied the same to the assessee vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased at the rate of Rs. 40 per sq.ft. on 9th Sept., 1996, i.e., after 19 months of the first purchase. In the absence of explanation coming from the assessee, the Assessing Officer concluded that since the first property was purchased at the rate of Rs. 50 per sq.ft. the second property also must have been purchased by the assessee at the rate of Rs. 50 per sq.ft. and the third property also must have been purchased at the rate of Rs. 60 per sq.ft. since it was purchased by the assessee after 19 months. On the basis of these hypothetical investments, the Assessing Officer concluded that excess amount to be taxed was Rs. 7,29,000 for the second property and Rs. 1 lakh in respect of the third property. Since the property was purchased in the names of 8 male members of the family, Rs. 91,125 was taxed in assessment year 1995-96 and Rs. 1,25,000 was taxed in assessment year 1997-98 in the hands of the assessee. 97. Shri Sathe, the learned counsel for the assessee, submitted that the whole basis of the addition is based on suspicion and surmises. All the three investments in the properties have been duly supported by the purchase deeds, copies of which have been given in the paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of lack of access to the main road and because the assessee had already succeeded in entering into transaction in respect of Hissa No. 16, the owners of Hissa No. 7 had to offer the land at much lesser price because they had no other independent buyer for their property. The assessee, having already acquired the property at Hissa No. 16 which was adjacent to Hissa No. 7, had all the advantages and could thus succeed in negotiating the purchase of the property at much lesser price. According to the learned counsel, there was no question of doubting this transaction, particularly because there was total absence of material in this behalf. The learned counsel also relied on the decision of the Hon'ble Supreme Court in the case of K.P. Varghese v. ITO [1981] 131 ITR 597. 100. As far as the third property was concerned, the learned counsel submitted that this was a transaction admitted after 19 months from the first transaction. Here also there was no basis for presuming that any extra price over and above the price stated in the agreement was paid. The Assessing Officer, therefore, was not justified in holding that this property was purchased by the assessee at the rate of Rs. 60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we have held that filing of the belated return was valid in law and the Assessing Officer is directed to take cognizance of the entire return as also its accompaniments in regard to the computation of income." 106. Notice under section 158BC, dated 7th April, 1997, for filing of the return for the block period which was served on the assessee on the same day, but he did not file the return so demanded for the block period within the time allowed in the notice under section 158BC. However, the same came to be filed on 23rd Sept., 1997, when the Assessing Officer had already prepared the draft of the assessment order for the block period on 18th Sept., 1997. So, the Assessing Officer declined to take cognizance of the said return filed by the assessee, as per para 2 of the assessment order. 107. So far as the conclusion of the learned AM with regard to belated return is concerned, I fully agree with his conclusion that it is a valid return in law but do not agree with the latter part of the conclusion with respect to this ground. Once it is held that belated return is valid return, the consequential action has to follow as provided under section 158BC(b) of the Act which is repro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment by the assessee is not justified and I reject its plea on this count. 109. In view of the facts, circumstances and the discussions held above, I hold that the assessment made by the Assessing Officer without following proper procedure after receipt of the return, which has been held to be valid, is liable to be set aside. Therefore, while accepting second part of first ground of appeal of the assessee partly, I set aside the order of the Assessing Officer and restore the matter back on his file to be decided afresh after following due procedure as provided under the law and to pass de novo assessment order accordingly. Needless to mention that the Assessing Officer while doing so would afford necessary and due opportunity to the assessee of being heard in this behalf. 110. Since the order of assessment is being set aside on the very first ground of appeal on legal issue, therefore, it is found not necessary to go into the merits of the case in view of the Special Bench of the Tribunal decision in the case of Rahulkumar Bajaj v. ITO [1999] 69 ITD 1 (Nag.). 111. Therefore, appeal of the assessee gets accepted for statistical purposes in above terms. Order under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote of the submissions and evidence because of the time constraints. As such principle laid down in the dictum audi alteram partem was not followed. 6. Assessee raised, inter alia, the following ground before the Tribunal in that connection: "On facts and circumstances prevailing in the case and as per provisions of law it be held that the Assessing Officer ought to have considered return of income filed for the block period for the purpose of assessment. It may further be held that the return of income filed by the appellant before the completion of the assessment for the block period is valid return which ought to have been considered by the Assessing Officer for the purpose of completing the assessment. It may further be held that not taking cognizance of the return filed by the appellant and finalizing the assessment without considering such return is bad in law and vitiates the assessment order passed by the Assessing Officer. The assessment order passed by the Assessing Officer be held as null and void. Just and proper relief be granted to the appellant in this respect". While adjudicating this ground, learned AM held that filing of belated return was valid in law. He dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on but to remit matter back to Assessing Officer. 10. Hon'ble Gujarat High Court in the case of CIT v. Valimohmed Ahmedbhai [1982] 134 ITR 214 has held that rule 46A(3) of the IT Rules, 1962, makes it clear that the AAC should not take into account any evidence produced under sub-rule (1) unless the ITO is given a reasonable opportunity to examine evidence or to cross-examine witnesses whose evidence is taken on record or to produce any evidence in rebuttal. 11. In my opinion, an invalid or non est return is, in the eye of law, nonexistent and the position is that as if no return has been furnished. In such a case, a notice under section 143(2) cannot be issued because that section presupposes a valid return having been filed. Even where notice under section 143(2) is issued and the assessee complies therewith, the resultant assessment under section 143(3) will also be void ab initio. Such an assessment cannot be treated or conducted as one made under section 144. 12. The expression 'assessment' is used in a number of provisions in a comprehensive sense and it can comprehend the whole procedure for ascertaining and imposing liability on the taxpayers and the machinery for enforc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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