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TMI Blog2010 (4) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee in the books, after making the addition on the basis of estimated GP rate at 22 per cent of sales - all other additions are uncalled for and unwarranted, other additions made by the AO deleted and confirm the addition made by the AO by estimating the gross profit @ 22 per cent. In favour of assessee. - ITA(SS) NO. 119 (MAD.) OF 2005 - - - Dated:- 9-4-2010 - SHRI ABRAHAM P. GEORGE, SHRI VIJAY PAL RAO, JJ. Appearances: Omkareshwar Chidra for the Appellant. K. Raghu for the Respondent. Vijay Pal Rao, Judicial Member. IT(SS)A No. 138/Mad/2005 and IT(SS)A No. 119/Mad/2005 are cross-appeals directed against the order dt. 10th May, 2005 of the C1T(A)-I, Coimbatore, arising from the block assessment under s. 158BC r/w s. 143(3) of the IT Act, for the block assessment period from 5th April, 1995 to 29th July, 1999. IT(SS)A No. 138/Mad/2005 2. The grounds of appeal raised by the assessee in this appeal are as under : "(1) The learned CIT(A) has grossly erred in rejecting the stand of the appellant, that the block assessment was invalid in law, as no notice under s. 158BC was served on the appellant in the facts and the circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee is regarding the validity of the block assessment as no notice under s. 158BC was served upon the assessee. 4. The assessee is a firm and there was a search under s. 132 of the IT Act conducted on 29th July, 1999. The block assessment was completed on 18th July, 2001. The assessee challenged the block assessment on various grounds including the validity of the block assessment as no notice under s. 158BC was served upon the assessee before the CIT(A). The CIT(A) has rejected the issue raised by the assessee on validity of the block assessment. 5. Before us, the learned Authorised Representative of the assessee has submitted that the AO has lacked the jurisdiction for framing the block assessment because no notice was served upon the assessee under s. 158BC. He has further contended that the assessee vide its letter dt. 7th March, 2000 has clearly stated that the assessee has not received any notice under s. 158BC though the assessee filed the block return on 13th March, 2001. He has relied upon the decision of Hon'ble Delhi High Court in the case of CIT v. Eqbal Singh Sindhana [2008] 304 ITR and the decision of the Supreme Court in the case of Asstt. CIT v. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment. Except a copy of the alleged notice under s. 158BC there is no other material or recordings of proceedings to show that the said notice was actually dispatched by the Revenue to the assessee. Even no proof of dispatching of notice or sending it by any means is available on record and produced before us. Therefore, from the record, it is evident that the Revenue has no material or evidence to prima facie show that the notice was actually sent to the assessee. In these circumstances, it cannot be presumed that even in the absence of acknowledgement of the said notice, the notice might have been served upon the assessee. We further note that a letter dt. 7th March, 2000 written by the assessee is on the assessment record wherein the assessee has categorically stated that the assessee has not received any notice under s. 158BC. Despite the said letter of the assessee, the AO has not taken any step for issuing any further notice. The assessee finally filed the block return on 13th March, 2001. It is again clear that on the date when the assessee filed the return, the time for issuing the notice under s. 158BC had expired. Therefore, the Revenue cannot even take a plea that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. It is clear that notice is the very foundation for jurisdiction of the AO to initiate proceedings under s. 158BC. In the case of Eqbal Singh Sindhana (supra), the Hon'ble Delhi High Court has held in paras 14 to 16 as under : "14. As per case of the Revenue, notice under s. 143(2) was sent by registered post which was received back undelivered with the endorsement 'No Plot No. 226 exists'. Thus, admittedly, notice under s. 143(2) of the Act was not served upon the assessee. It may be pertinent to point out that alphabet 'B' is missing in the endorsement made by the postal authorities. Thus, it stands established that the postman had not gone to 'Plot No. B-226, Vivek Vihar, Delhi' because, his endorsement does not say that 'Plot No. B-226, Vivek Vihar, Delhi' does not exist. On the other hand, it states that 'No Plot No. 226 exists'. Further, there is interpolation on the address of the assessee mentioned on the registered envelope, i.e., over the alphabet 'B'. 15. Even otherwise, as per Order V, r. 19A of the CPC, the notice sent by registered post ought to have been sent along with acknowledgement due but admittedly, the registered envelope was not sent along with acknow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sarily the unaccounted purchase should have come out of the unaccounted income and therefore provision of s. 69C is attracted. The CIT(A) ought to have confirmed the entire addition made by the AO. 3(a) The CIT(A) erred in directing that no surcharge is leviable in this case for the reason that the proviso to levy surcharge took effect only from 1st June, 2002. The CIT(A) failed to take into account the Finance Act, 1999 which unequivocally stated : '..... income-tax computed in accordance with the provisions of ss. 112 and 113 of the IT Act shall be increased by a surcharge ' (b) The charging sections can either be incorporated in the Act or by way of Finance Act which comes into effect immediately. The CIT(A) erred in holding that the charging provisions come into effect only after its incorporation in the Act." 13. Since in the appeal of the assessee, we have decided the legal issue regarding the validity of the block assessment and held that the block assessment is nullity, therefore, the appeal of the Revenue is dismissed. ITA No. 1267/Mad/2005 14. This appeal by the assessee is directed against the order dt. 15th Feb., 2005 of the CIT(A)-I, Coimbatore, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made by the partners in the firm, as clearly unwarranted and unsustainable in the circumstances of the case." 15. Ground No. 1 is general in nature and needs no specific adjudication as the same is depending upon the outcome of the other issues raised by the assessee. 16. Ground No. 2. At the time of hearing, the learned Authorised Representative of the assessee has stated that the assessee does not press ground No. 2. He has also made an endorsement in this respect against the ground No. 2 of grounds of appeal and prayed that ground No. 2 may be dismissed as not pressed. The learned Departmental Representative has no objection in dismissing ground No. 2 being not pressed. Accordingly, we dismiss ground No. 2 as not pressed. 17. Ground Nos. 3 to 9 are relating to the rejection of books by the AO and making the addition by estimating the gross profit at 22 per cent and at the same time disallowing the various expenditure on account of interest, household expenditure met by drawings of the firm, telephone expenses, motor car expenses, car depreciation and unexplained credits in partners' accounts. 18. We have heard the learned Authorised Representative as well as the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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