9911796707
TMI Blog1999 (12) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... zed documents, or any information discovered as a result of search, but all of them are taken from the returns filed by the assessee regularly. 3. The learned Assistant Commissioner of Income-tax ought to have appreciated that income and information disclosed in the return of income furnished by the assessee cannot be turned as source of assessment of undisclosed income. 4. The learned Assistant Commissioner of Income-tax has erred in completing the block assessments under section 158BA which is without basis and merits. The assessee relies on the decision of Sunder Agencies v. Deputy CIT of ITAT, 'B' Bench, Mumbai, reported in [1997] 63 ITD 245. 5. The assessee wish to state that they are group of 18 persons against all of whom the proceedings under section 158BD was initiated, but in seven cases of identical nature the authorities were pleased to appreciate the submission and dropped the proceedings, which clearly shows that proceedings initiated by learned Assistant Commissioner of Income-tax against the assessee is illegal and not maintainable. 6. The learned Assistant Commissioner of Income-tax ought to have appreciated that even in main case of A. R. Mercantile Pvt. Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the return of income for 1995-96 and as at the time of search, bank pass book and share certificates belonging to the assessee were found from the premises at 26, Fagun Chambers and that taxable income for 1995-96 which had not been disclosed by filing the return of income up to the date of search, was satisfied and concluded that the assessee has undisclosed income for the assessment year 1995-96 and hence issued notice under section 158BD of the Income-tax Act. The assessee's counsel has raised the same arguments against the issue of notice under section 158BD as was raised before the Assessing Officer, and mentioned at para. 5 of the assessment order. The learned Departmental Representative supported the orders of the Assessing Officer in issue of notice under section 158BD and filed a copy of the reasons recorded by the Assessing Officer for issue of notice under section 158BD of the Income-tax Act. We have considered the facts of the case, the rival submissions and material on record. Under section 158BD notice can be issued to a person where the Assessing Officer is satisfied that any undisclosed income belongs to any person other than the person with respect to whom s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination of undisclosed income which are discussed below. Assessment year 1987-88 : The Assessing Officer determined undisclosed income at Rs. 9,000 on account of cash credit of Rs. 9,000 during the previous year. It was claimed by the assessee before the Assessing Officer that a loan of Rs. 9,000 was provided by Smt. Rita B. Sheth, sister of the assessee. The assessee's counsel furnished income-tax file No. 730-R of Smt. Rita B. Sheth and requested that the cash credit may be accepted as genuine. Since the assessee has not filed confirmatory letter from Smt. Rita B. Sheth and as the file of Smt. Rita B. Sheth was not readily located the Assessing Officer treated the cash credit of Rs. 9,000 as undisclosed income. It is stated by the assessee's counsel that the assessee is being assessed to tax from earlier years. The assessee's counsel has filed copies of the assessment orders for 1986-87 to 1993-94 and intimation under section 143(1)(a). Learned counsel stated that once the assessment is completed the Assessing Officer cannot make an addition on the basis of document which was filed along with the return of income. The assessee's counsel has furnished a xerox copy of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the cash credit of Rs. 9,000 was not genuine. Cash credit of Rs. 9,000 was already shown in the trial balance filed with the return of income for assessment year 1987-88 and therefore the Assessing Officer cannot make addition of Rs. 9,000 to the total income as undisclosed income only on the basis of document already available and in the absence of any material or information which shows that the cash credit was not genuine. Since there was no information, material or document with the Assessing Officer to show that cash credit was not genuine the Assessing Officer was not justified in treating the cash credit of Rs. 9,000 as undisclosed income. Assessment years 1988-89, 1989-90 and 1990-91 : The Assessing Officer determined the undisclosed income at Rs. 9,000 for each of the assessment years on the basis of cash credit in the name of Smt. Rita B. Sheth. It is stated by learned counsel that the cash credit of Rs. 9,000 in these assessment years was the same cash credit which appeared for 1987-88. We have considered the facts of the case, material on record and the rival submissions. For the reasons mentioned in the above para. 4 and as the cash credit of Rs. 9,000 for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer, the Assessing Officer was not justified in treating the gift of Rs. 20,000 as undisclosed income of the assessee. It may also be mentioned that the assessment for the assessment year 1993-94 was completed on March 26, 1996, but no addition of this gift was made to the total income. For the reasons mentioned in para. 4 of this order, we do not find any justification in treating the amount of Rs. 20,000 as undisclosed income. Assessment year 1994-95 : The Assessing Officer included the amount of Rs.1,40,627 as undisclosed income on account of gifts received by the assessee during the previous year relevant to the assessment year 1994-95. For the reasons mentioned in the assessment order the Assessing Officer treated the gift of Rs. 1,40,627 as undisclosed income. The information about receipt of gift was noted by the Assessing Officer from the capital account filed along with the return of income. As already mentioned in the above mentioned para. 4, the Assessing Officer can determine the undisclosed income of the block period on the basis of evidence found as a result of search or such other material or information as are available with the Assessing Officer in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed. Therefore, he invoked the provisions of Chapter XIV-B. The action of the Assessing Officer is unconceivable and not in accordance with law. The term 'undisclosed income' is defined in clause (b) of section 158B, which is as follows : 'undisclosed income' includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act. In this case the assessee maintained books of account. What was returned had not been disputed except the addition made by disallowances. The assessee had paid advance tax even before the search. Therefore, it cannot be said that the assessee would not have been disclosed this income for the purpose of the Act. But it is evident that for the purpose of the Act he had paid tax in advance in three instalments. Therefore, the Assessing Officer has committed an error and he is not justified to treat the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of normal assessments. Therefore, onus lies on the Department to prove that the addition of undisclosed income is based on material or information in possession with the Assessing Officer. Since the Assessing Officer had no such material available with him on the basis of which he estimated the marriage expenses, he was not justified in treating the income of Rs. 70,000 as undisclosed income. The Assessing Officer treated the following income as undisclosed income on the basis of inadequate drawings : Sl. No. Assessment year Addition proposed (Rs.) 1. 1991-92 68,860 2. 1992-93 73,330 3. 1993-94 52,000 4. 1994-95 30,000 5. 1995-96 35,910 As already discussed the Assessing Officer has not brought any evidence or material on record to show that the assessee has spent the above mentioned amounts for household drawings. In the absence of evidence, material or information in possession of the Assessing Officer the estimated inadequate drawings cannot be considered as undisclosed income in view of the specific provisions of section 158BB of the Income-tax Act. It is stated by the assessee's counsel that the assessee was a bachelor and, therefore, his drawings are re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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