9911796707
TMI Blog2010 (5) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... urn under sec- tion 158BC of the Income-tax Act. In response to the notice, a return was filed on January 4, 2002 as Sl. No. 866. Subsequently, a modified return was filed on February 5, 2006. In the return a negative income of Rs. 29,770 was disclosed for the assessment year 2002-03. In respect of earlier assessment years of the block period, it was declared that there was no undisclosed income for assessment under section 158BC. 2. The Assessing Officer after perusing the return filed under section 158BC and hearing the assessee arrived at a conclusion that there was concealment of income amounting to 20 per cent. of the disclosed turnover. Accordingly, the total undisclosed income was determined at Rs.2,37,68,975. Consequently, a sum of Rs. 1,47,28,446 including surcharge at the rate of 2 per cent. along with interest at the rate of 1.25 per cent. under section 158BFA(1) of the Income-tax Act was assessed. 3. Aggrieved by the said assessment, the respondent preferred an appeal before the Commissioner of Income-tax (Appeals). Though the Commissioner of Income-tax (Appeals) concurred with the Assessing Officer that there was concealment of income, he did not agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit than that shown in the return submitted by the respondent during the relevant period. It was further revealed that on March 20, 2001, the Intelligence Squad of the Sales Tax Department of the Government of Kerala conducted an inspection and found that the respondent was not maintaining true and correct accounts. The cash balance as per the cash book was Rs. 21,31,523. On physical verification the cash available was only Rs. 34,552. The cash books were also not written up-to-date, but up to June 25, 2001. On the basis of the above materials, the Assessing Officer had arrived at a finding that the accounts are not properly maintained and that there is concealment of income. That finding was upheld by the first appellate authority as well the Appellate Tribunal. This is a finding of facts. The finding of the Appellate Tribunal on that aspect was not at all challenged by the respondent. In the above circumstance, we find that there is concealment of income and the respondent is liable to be assessed for the block period as contemplated under Chapter XIV-B of the Income-tax Act. The dispute is only regarding the mode of assessment. 6. As we mentioned earlier, the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at hence the rulings of the case are not applicable to the case on hand. 8. In the appeal memorandum, the appellant had raised as many as eight questions of law. Having gone through the questions of law raised and the dispute involved, we find that many of the questions of law raised are relating to the question of facts and that in fact, the following questions of law would arise for consideration in this appeal : "(i) Whether the statement of the partner of the respondent as well as of the employees along with the documents seized would tantamount to evidence under section 158BB of the Income-tax Act or whether the statement recorded under section 132(4) has only very limited application ? (ii) Whether the evidence found as a result of search or other such materials or information is sufficient enough to conclude that there was concealment of income for the assessment years 1996-97 to 2000-01 ? (iii) Whether the concealment of income during the search is liable to be taxed as such or 25 per cent. or any other turnover thereof as profit is liable to be taxed ; if so at what rate ? (iv) Whether the respondent is liable for surcharge ?" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 158BB of the Income-tax Act read with section 3 of the Evidence Act and section 131 of Income-tax Act. Therefore, such evidence would be admissible for the purpose of block assessment. 12. It appears that the Tribunal had arrived at a conclusion that the statements recorded by the Assessing Officer under section 132(4) of the Income-tax Act have only very limited application without applying the mind. The Explanation to section 132(4) of the Income-tax Act would make it very clear that the evidence so collected would be relevant for all purposes of any investigation connected with any proceeding under the Income-tax Act. We find that a reading of section 132(4) with Explanation would be relevant. Hence we quote the same for easy reference : "132. (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Chapter XIV-B mandates that for making block assessment there shall be evidence regarding the concealment of income for every year in the block period. It cannot be expected that the assessee would retain documents regarding the concealment of income. If documents for every concealment are insisted to be searched, practically the provision for block assessment would be defeated. We cannot shut our eyes to the legislative intent. Here, what was disclosed that for sale, no bills are issued, but paper slips are issued with the price. Though carbon copy is retained it did not contain the sale price. Sale slips are destroyed then and there. Cash books are maintained by recording the 80 per cent. of the price of liquor at a later date. When such practices are adopted, nobody can expect evidence forevery year in a block period. What is possible is only to have a best judgment assessment on the basis of the evidence collected during search. The Assessing Officer is authorised and empowered to make block assessment in a judicious manner on the basis of the materials disclosed during the search under section 132 of the Income-tax Act. 15. No person other than the partner of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any year during the block period at a lesser rate than that was assessed for the assessment year during which search was conducted. The Appellate Tribunal was not justified in arriving at a conclusion that there is no evidence regarding concealment of the income for the assessment years 1996-97 to 2000-01. The procedure adopted by the first appellate authority in calculating the concealment of income at different rates is also without any supporting materials and against the intention of the Legislature expressed in Chapter XIV-B of the Income-tax Act. Hence, we answer the question in favour of the appellant and find that the respondent is liable to be assessed during the block period at a uniform rate. 16. Question No. (iii) : The Assessing Officer had made assessment under section 158BC, as if the suppressed sale out turn is the income concealed. The first appellate authority had found that in the hotel run by the respondent, in addition to the liquor sale there is sale of soft drinks, food items, snacks etc. The statement of the partner as well as that of the person in-charge of the bar and the documents seized would reveal that concealment of income was only in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
