9911796707
TMI Blog2003 (2) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... was no declaration 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 asst. yr. 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 vs. Dy. CIT in IT(SS)A No. 198/Pn/1997 which was decided by this Tribunal vide order dt. 18th Aug., 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written objections with evidence to him with a copy to this office on or before 25th Sept., 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 dt. 26th Sept., 1997. Copies of these evidences and submissions have been placed in paper book No. 1. From the various letters addressed by the AO 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 AO dt. 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 assessee that getting the data from the various assessees' books could be started only in the month of May, 1997 when all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates. As per para 9 in that order, we have held that filing of the belated return was valid in law and the AO 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 cornputed by the AO. 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. 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 that: a. The AO ought to have granted depreciation on actual cost of truck declared by the appellant. It may further be held that not accepting such actual cost of truck declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 1st April, 1996 to 12th Sept., 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 will apply mutatis mutandis. For the detailed reasons given in our aforesaid order, we direct the AO 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 AO 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 the appellant along with the returns and details submitted from time to time in that respect. It may further be held that disallowing part of such expenses and or allowing such expenses on percentage basis is arbitrary, unjust and improper. The appellant be granted just and proper relief in this respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the said period is to be adjusted and to be set off in terms of provisions of s. 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 AO 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 Sept., 1996, as undisclosed income and not granting relief in terms of provisions of s. 158BB(1)(d) of the Act. It is further contended in this ground that the entire income so computed for the said period is to be adjusted and to be set off in terms of the provisions of s. 158BB(1)(d) of the Act and tax imposable on such income will be regular tax leviable under the general provisions of the Act. We find that this ground is the same as in the case of G.C. Associates and it has been dealt with in para 45 of the order in that case. The learned Departmental Representative, however, submitted that the AO is justified in treating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds 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 the cash found has relevance to the entire Bafna group and the addition has to be seen in the context of entire Bafna group. This issue has been dealt with in para 1 on p. 2 of the assessment order. Out of the total cash of Rs. 3,84,569 at the time of search, cash in possession in the room of Shri G.C. Bafna was of Rs. 55,054. Other cash was found in the room of Smt Kundanbai C. Bafna. The AO considered the cash of Rs. 50,054 only in the case of the assessee, while rest of the cash was considered in the block asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystem 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 concerns for the purpose of business or advances, but which has remained to be accounted for. 25. The learned Departmental Representative relied upon the order of the AO. 26. We have considered the rival submissions and perused the facts on record. We find considerable force in the submissions of the learned counsel, but the facts and figures given by the learned counsel need verification at the end of the AO. We accordingly direct the AO to verify the cash balances of various Bafna group members as have been brought on p. 2 of paper book No. 2 and if it is fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 seniormost 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 extent of 5146 gms. is fully explained by way of jewellery declared by the four ladies in the house in their wealth-tax returns amounting to 3100 gms. and purchase of jewellery of 2046,15 gms. The details of purchase of jewellery are given on p. 21 of the paper book No. 1. The items of purchase are supported by bills and their sources also have been explained on p. 21. In addition to this gold, credit for three daughters-in-law whose marriages have taken place during the year to the extent of 1500 gms. can be given. These three daughters-in-law are wives of Rajendra and Sanjay (two sons of the assessee) and Hemant, son of Satish Bafna. It was further submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n their wealth-tax returns filed for the asst. yr. 1982-83. This fact was not before the AO. 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 counsel with facts and figures were not before the AO and accordingly, we restore this issue to the file of the AO to readjudicate upon the same after giving an opportunity of being heard to the assessee. Same is the position with silver. The issue of gold jewellery and silver has to be considered in the context of different members of the family as a whole and accordingly we restore both the issues to the file of the AO with direction that he should go through the details furnished before us in the paper book and referred to supra and readjudicate upon the issue after giving an opportunity of being heard to the assessee. 33. Ground No. 4(b) reads as under: "Addition of share profit from M/s Bafna Automobiles (ASD), Bafna Motor Transport Co., Bafna Auto Carriers, Bafna Translines, Bafna Transport India for asst. yrs. 1987-88 to 1992 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of the assessee for the asst. yrs. 1987-88 to 1992-93. 35. In this behalf, Shri K.A. Sathe submitted that since the Bombay firm was not with the AO, separate information was given but in regard to other firms assessed in Pune the fact that these firms were regularly filing their returns and the details of share profit from the firms was already on record of the Department much before the date of search and there was thus no justification for treating share profit as undisclosed income, Shri Sathe submitted that the decision of the Bombay High Court in the case of Shamlal Balram Gurbani squarely applied to the facts of the case. 36. The learned Departmental Representative objected both in regard to the amendment of the ground as well as the applicability of the decision of the Bombay High Court. According to him, the ground as amended was not a mere amendment, but seeks deletion of the entire share income as undisclosed income and it is in that sense a new ground of appeal. He urged that this ground required to be rejected. He further submitted that the decision of the Bombay High Court referred to asst. yrs. 1993-94 to 1995-96 and could not be an authority as far as the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Annex. 22 enclosed with this order." 40. Shri Sathe, the learned counsel for the assessee, submitted that though the AO had proposed the addition on account of household expenses, there was absolutely no material found during the search warranting any conclusion that any undisclosed income is involved on account of inadequate household expenses. In fact, the AO had no material at all as to the total expenditure incurred by the assessee or his family members during the block period. During the course of assessment, details regarding household expenses could not be furnished. However, reply to the query raised was given before the learned CIT during the course of his approval in the letter dt. 26th Sept., 1997. This is dealt with at point No. 3 on pp. 5 and 6 of the paper book No. 1. 41. The details of household expenses and the addition made on that account are given by the AO in Annex. 22 to the assessment order. In making the estimate of household expenses, the AO has estimated the same at Rs. 75,000 in asst. yr. 1987-88 which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the figures and subject to the verification, the addition as proposed may be deleted. 44. Ground No. 4(d) reads as under: "Addition of Rs. 12,751, Rs. 30,000, Rs. 1,78,650, Rs. 5,41,800, Rs. 4,85,360 and Rs. 1,55,395 for asst. yrs. 1987-88, 1988-89, 1989-90, 1990-91, 1991-92 and 1992-93, respectively, being credits appearing in capital account of the appellant in various firms is unjust and improper. The entire addition so made be deleted. Just and proper relief be granted to the appellant in this respect." 45. In this ground, various additions made by the AO in respect of credits appearing in the capital account of the assessee in various firms has been challenged. This ground has to be read with ground No. 4(b) under which it was firstly contended that the details of capital account were already available to the Department in the assessment of the firms before the date of search. The firms were filing their returns regularly before the date of the raid and in any case for the asst. yrs. 1987-88 to 1992-93 for which additions have been made. Shri Sathe submitted that though it is true that details regarding credits in the capital account could not be filed before the AO, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le these details, all such credits in the bank account were considered by the AO as undisclosed income of the respective assessment years in the block. 50. Shri Sathe submitted that the details were, however, before the CIT in the letter dt. 22nd Sept., 1997. These details and summary of the savings bank account are to be found on pp. 387 to 543 of the paper book No. 1. He submitted that from these details it will be seen that most of the amounts appearing in the deposit side of the account are by way of dividend received from companies or refund of share application money or maturity of LIC policy. To the extent the credits represent refund of share application money, they do not represent any income and such credits will have to be excluded from consideration. He further submitted that to the extent these credits represent dividend, interest or capital gain and to the extent these are not reflected in any regular returns filed by the assessee, these have been returned by the assessee as undisclosed income. He drew our attention to the details given in para 4 of the assessment order and submitted that the AO has taxed the share profit and credits to the capital account together f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed. Reply was also filed before the CIT by letter dt. 26th Sept., 1997, relevant portion is on p. 767 of the paper book. The submissions before the CIT were filed in reply to addition which was proposed by the AO in the draft assessment order. According to the assessee, the assessee and his family members purchased wooden logs for construction at Suparshwanath bungalow from Shree Mahavir Saw Mills, Parathwada R.S. Pendhari. Payments were made from drawings made from the business from time to time. The payment of Rs. 2,75,000 was made from Bafna Roadlines in the year 1995-96 and was debited in the name of Suparshwanath Constructions on behalf of family members. Further payment of Rs. 4,00,000 was paid 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. According to the learned counsel, the amount paid towards purchase of wooden logs is reflected in the books of account and in this connection, he drew our attention to the relevant extract of account at pp. 66 to 76 of paper book No. 2. The learned counsel furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at pp. 79 to 80 of paper book No. 2. The AO has made addition by giving reference as "above explanation of the assessee does not clearly explain the source of investment in shares of BIFSPL." 59. Shri Sathe, the learned counsel for the assessee, submitted that the investment made by the individual is recorded in the books of account. The source of investment in BIFSPL is explained below in the statement of facts: "The assessee applied for shares in BIFSPL in the year 1995-96. The amount was paid from his proprietary concern namely, G.C.B. Goods Transport. All the money was paid by cheque only and was duly recorded in the books of accounts. Source regarding amount received in G.C.B. Goods Transport: In G.C.B. Goods Transport, the assessee received amount as refund of share application money which was paid in the earlier year. The refund received was in turn paid to BIFSPL. Bafna Auto Engg. (P) Ltd. refunded share application money to all individuals in the year 1995-96. Total share application money collected was Rs. 86 lakhs and which was refunded in the year 1995-96. Source reg. amount paid to Bafna Auto Engg. (P) Ltd. towards share application money: All the individuals applie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Bafna, son of Shri G.C. Bafna 7.12.1989 3. Mrs Swati Mehta, daughter of Shri G.C. Bafna 26.11.1992 According to the AO details like head-wise marriage expenses, jewellery gifted, etc. had not been furnished. He estimated the marriage expenditure on the marriage of the daughter, i.e., Swati K. Mehta of Rs. 4,00,000 for the asst. yr. 1993-94, marriage expenses of Sanjay G. Bafna (son of the assessee) at Rs. 2,00,000 in the asst. yr. 1990-91 and expenses on the marriage of Shri Rajendra G. Bafna other son at Rs. 1,50,000 in the asst. yr. 1989-90. 64. Shri Sathe submitted that the AO has made the addition of Rs. 4 lakhs as undisclosed income on the marriage of Swati K. Metha, whereas the withdrawals were Rs. 7,02,642. Further, the withdrawals were made by the family members from the regular concerns and duly recorded in the books of account. He drew our attention to the details and submitted that withdrawals were made by Mrs. P.G. Bafna (mother of Swati Bafna) and Mr G.C. Bafna for marriage of Swati G. Bafna. The assessee had debited these withdrawals to his capital account in the books of firms where he was a partner. As far as reference in the AO's order on p. 7, loose paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. The AO has made the estimate at Rs. 1,50,000 which, in our opinion, taking into consideration the status of the assessee, is fair and reasonable and no interference is called for. 67. Further, an addition of Rs. 1,00,000 has been made by the AO on the basis of loose paper No. 18 with the following remarks: "Loose paper No. 18 of party No. 5 Panchnama dt. 25th Sept., 1996, shows expenditure of Rs. 27,143 on 30th May, 1986, in the name of the assessee. Details of expenditure show that same has been incurred on Mandap, stage, decoration, generator, etc. It appears that some marriage/function has been performed on 30th May, 1986, for which no details have been filed by the assessee. In view of the above, expenditure of Rs. 1 lac is estimated on the above function and the same is treated as undisclosed income of the assessee for asst. yr. 1987-88 for which the year ending is 30th June, 1986." According to the learned counsel, the said loose paper reflects statement of expenditure for function held on 20th May, 1986. This amount was paid from the withdrawals made by the group from time to time. We do not find any merit in this contention of the learned counsel. From the tenor of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... logs in the year 1990-91 and out of which Rs. 2 lakhs was debited in the books of Bafna Motor Transport Co. (Poona) on behalf of family members of Bafna group. According to the learned counsel this is a vital issue and this fact has not been taken into consideration by the authorities below. Similarly, an amount of Rs. 2,75,000 was paid to Mr. Pendhari for purchase of wooden logs in the year 1995-96 and was duly recorded in the books of Bafna Roadlines, but the AO did not verify the entries from the books of Bafna Roadlines. Similarly, for L.P. No. 8, according to the learned counsel, reply was filed before the learned CIT vide letter dt. 26th Sept., 1997 and submitted that these were mere jottings in the name of B.C. Bafna, N.C. Bafna and S.C. Bafna. The figures on the loose paper do not show whether this is an income to G.C. Bafna or an expenditure for G.C. Bafna. According to the learned counsel, in all fairness the CIT ought to have gone through these submissions or ought to have referred the matter to the AO for verification, but he did not do so. In the detailed submissions in the statement of the case, the learned counsel has given details of the contents of the loose paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT. He further submitted that this chart was already filed before the AO during the course of assessment proceedings. He drew our attention to the chart showing investment in shares for the respective assessment years and submitted that it can be seen that all investment made was from regular books of account and transactions were duly recorded in the books of account. The learned counsel further submitted that in Annex. 9, the AO computed the investment in shares for the asst. yr. 1987-88 seized on 12th Sept., 1996. In the chart the date of acquisition is also written against various shares. In that certain dates were prior to block period which means that the investment in that particular share is made prior to block period. He submitted that all these explanations were ignored by the AO and CIT without bringing any material on record. 73. The learned Departmental representative relied upon the order of the AO. 74. After hearing both the sides, we are of the opinion that the matter must go back to the AO 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e file of the AO with the direction that as per our directions given in respect of the seized shares supra in para 64 (74) and to add only the dividend actually declared by the respective company in the hands of the respective persons in the group. 80. Ground No. 4(l) reads as under: "The AO is in error in not considering the relief pertaining to the interest earned on fixed deposit receipts with bank covered by s. 80L, amount paid towards life insurance premiums and other investments made from year to year eligible for the relief as per the various provisions of Chapters VI-A and VIII of the Act. The appellant be granted relief under provisions of said Chapters." The assessee claimed interest on accrual basis for the years covered in the block period and claimed deductions under Chapter VI-A of the Act (Secs. 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 AO, it is noted that deduction under Chapters VI-A and VII has not been considered and allowed by him while passing the order. Shri Sathe, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit on sale of shares and an amount of Rs. 4,90,236 is added as investment in shares. Details of Rs. 4,90,236 are to be found on p. 224 of paper book No. 2. This is copy of the statement considered by the AO. In this chart, it has been clearly written by him that these shareholdings are as on 12th Oct., 1985, and 28th Aug., 1985, and, therefore, value of this investment has been taken for the asst. yr. 1987-88. According to the learned counsel, actually this investment of Rs. 4,90,236 is made prior to the block period and could not have been considered as investment to be taxed in asst. yr. 1987-88 nor profits therefrom should have been brought to tax. The learned counsel submitted that the AO 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 AO. 87. After hearing both the parties, we restore this issue to the file of the AO 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: "Addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round No. 4(k). For the detailed reasons given in para 69 (79) supra, we restore this issue to the file of the AO with similar directions. 92. Ground No. 4(p) reads as under: "Addition of Rs. 5,000, Rs. 12,328, Rs. 12,328, Rs. 4,195, Rs. 14,917, Rs. 3,024, Rs. 42,250, Rs. 67,500 and Rs. 5,000 in asst. yrs. 1987-88 to 1994-95, respectively, is unjust and improper. The additions so made be deleted. The appellant be granted just and proper relief in this respect." During the course of assessment proceedings, the assessee filed details of share transactions made through Kalpataru Holdings/Parag Parakh. On that basis, the AO 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 (74) and 69 (79) of our order, we restore this issue to the file of the AO to reajudicate upon the issue in accordance with the directions given in paras 64 (74) a 69 (79) supra. 93. Ground No. 4(q) reads as under: "Addition of Rs, 99,50,000 in asst. yr. 1996-97 on account of so-called investment in shares pledged with Citibank is unjust an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased three pieces of land at Ambegaon. On perusal of rates, it was found by him that one property had been purchased at the rate of Rs. 50 per sq. ft. on 9th Feb., 1995, while other property has been purchased at the rate of Rs. 23 per sq. ft. on the same date at the same place and again a further property was 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 AO 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 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 AO 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 asst. yr. 1995-96 and Rs. 1,25,000 was taxed in asst. yr. 1997-98 in the hands of the assessee. 97. Shri S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was adjacent to Hissa No. 16 which was covered in the first agreement. In fact, Hissa No. 7 which was purchased in the second transaction had a smaller internal access common with other plot-holders on the inside. Because 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 vs. ITO & Anr. (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597 (SC). 100. As far as the third property was concerned, the learned counsel submitted that this was a transaction admittedly after 19 months from the first transaction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground is identical to ground No. 1 in the case of G.C. Associates referred to supra. This has been dealt with in paras 5 to 9 of the order dt. 18th Aug., 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 AO is directed to take cognizance of the entire return as also its accompaniments in regard to computation of income." 106. Notice under s. 158BC, dt. 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 s. 158BC. However, the same came to be filed on 23rd Sept., 1997, when the AO had already prepared the draft of the assessment order for the block period on 18th Sept., 1997. So, the AO 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be irregular but not null and void. Therefore, seeking of cancellation of 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 AO 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 AO 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 AO 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 vs. ITO (1999) 64 TTJ (Nag)(SB) 200 : (1999) 69 ITD 1 (Nag)(SB). 111. Therefore, appeal of the assessee gets acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. 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 AO 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 AO 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 AO. The assessment order passed by the AO 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 directed AO to take cognizance of entire return and also its accompaniments in regard to computation of income. Learned JM concu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 962, makes it clear that the AAC should not take into account any evidence produced under sub-r. (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, non-existent and the position is that as if no return has been furnished. In such a case, a notice under s. 143(2) cannot be issued because that section pre-supposes a valid return having been filed. Even where notice under s. 143(2) is issued and the assessee complies therewith, the resultant assessment under s. 143(3) will also be void ab initio. Such an assessment cannot be treated or conducted as one made under s. 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 enforcement thereof. Where the return is filed it is incumbent on the AO to proceed on the basis of the return filed. It is the bedrock qua the assessment proceedings. Assessment de horse return and assessment qua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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