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TMI Blog2011 (9) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... al was justified in directing deletion under that head. Estimation of income under block assessment - held that:- When the Assessing Officer was calculating the gross sale receipts at the rate of Rs. 37/- per square feet, he forgot to take into consideration the cost of formation of layout, roads, drinking water and other expenses and other amenities. As is clear from his order, he has taken the cost of land as undisclosed and then made this calculation and reduced the cost of land and according to him the balance is the income which represents the undisclosed income. Therefore, the Tribunal was justified in setting aside the said finding. - IT Appeal Nos. 2302, 2304, 2315 & 2316 of 2005 - - - Dated:- 28-9-2011 - N. KUMAR AND RAVI MALIMATH, JJ. E.R. Indrakumar and E. Sanmathi Indrakumar for the Appellant. A. Shankar, M. Lava and V. Chandrashekar for the Respondent. JUDGMENT N. Kumar J. As common questions arise for consideration in all these four appeals, preferred by the Revenue against the order of the Tribunal, they are taken up together, disposed of by this common order. 2. The premises of Trishul Enterprises and one Sri T.S. Chandrashekar were se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committed a serious error in setting aside the said finding. In the case of land sold to the Bank Officers Co-operative Society is concerned, in the case of Smt. Annapoornamma it is admitted that there is an agreement of sale, the rate at which the land is agreed to be sold is mentioned and calculating that 58% of the total land is what is agreed to be sold at the rate of Rs. 37/- per square feet, the assessee has not shown the income from the aforesaid transaction. Therefore the assessing authority has arrived at a sum of Rs. 2,08,96,259/- as the income which was not disclosed and therefore he was justified in levying the tax on the said amount. Insofar as sale of property to Bank Officers Co-operative Housing Society is concerned the said income was not reflected in the returns filed prior to the date of search and no documents were produced to substantiate their claim. Therefore, in the absence of any such material the assessing authority was justified in holding that the said amount also represents undisclosed income. Insofar as income derived from M/s. Sripriya Developers is concerned, the same is also not disclosed and therefore the assessing authority brought it to tax. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch assessments; (b) where returns of income have been filed under section 139 (or in response to a notice issued under sub-section (1) of section 142 or section 148) hut assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such returns; (c) where the due date for filing a return of income has expired, but no return of income has been filed,- (A) on the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such entries result in computation of loss for any previous year failing in the block period; or (B) on the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such income does not exceed the maximum amount not chargeable to tax for any previous year falling in the block period; (ca) where the due date for filing a return of income has expired, but no return of income has been filed, as nil, in cases not falling under clause(c);] (d) where the previous year has not ended or the date of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch or of the requisition, as the case may be, shall be on the assessee. (4) For the purpose of the assessment under this Chapter, losses brought forward from the previous year under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32 shall not be set off against the undisclosed income determined in the block assessment under this Chapter, but may be carried forward for being set off in the regular assessments.'' Thus by Finance Act, 2002, which came into effect from 1-6-2002 the word ''under Section 158BC" is introduced, Prior to the said amendment if any assessment has to be made of undisclosed income of any other person the provisions of Chapter XIV-B was made applicable. As is clear from the wordings of the said Section that if the assessing officer seizes the books of account or other documents or of any other person other than the person whose premises is searched he shall proceed against such other person under the provisions of Chapter XIV-B. There was no provision in the said Section as such for issue of any notice to such person. Section 158BC provides for procedure for block assessment which reads as under - "158BC. Where any search has been co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed under the Act. In order to clarify the position by Finance Act, 2002, the words "under Section 158BC" is expressly provided. The said amendment is clarificatory in nature. Even though it is stated that the provisions of this Chapter shall apply and in that Chapter, Section 158BC which is the provision which prescribes the procedure for block assessment the assessment under Section 158BD has to be in terms of Section 158BC. When proceedings are initiated in terms of Section 158BC against a person who is covered under Section 158BD and the notice to be issued is prescribed under the Act and in the absence of any prescription of a notice in a prescribed manner under Section 158BD the only notice that requires to be issued both under Sections 158B and 158BD is the notice which is prescribed. It is the notice prescribed under Section 158BC. Therefore, the contention that the assessment is under Section 158BD whereas notice issued under Section 158BC and therefore the entire proceedings in pursuance of such notice is void and is untenable. 7. The assessee relies on the Judgment of the Bombay High Court in the case of CIT v. Tirupathi Oil Corporation [2001] 248 ITR 194. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to produce satisfactorily the material to show the source of the said income. Therefore according to them Section 69 is attracted and therefore it is deemed to be the income of the assessee or such financial year and constitutes unexplained investment. In support of that contention the learned counsel relies on a Judgment of the Apex Court in the case of CIT v. Mukundray K. Shah [2007] 290 ITR 433/160 Taxman 276. That was a case of deemed dividend income accruing to the assessee, admittedly during the block period. Therefore, the said judgment has no application to the facts of this case. Infact, the Tribunal on going through the records has categorically stated that the material on record clearly demonstrates that the assessees did have enough resources to substantiate opening capital as on 1-4-1995, the assessees have not paid the tax due on this opening capital. This is outside the ambit of the block period, it cannot be taxed as undisclosed income for the block period and therefore the addition of undisclosed income under the aforesaid head was ordered to be deleted. 10. In the light of the aforesaid facts we are of the view that as the said opening capital accrue to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was open to the assessing authority to call upon the assessee to substantiate the same and hand over the same by producing the documents. In fact the documents were all produced. There is no other transaction which is entered into by the assessee as found by the assessing authority. Under these circumstances merely on the ground that in the return it is not expressly provided that the said transaction pertains to M/s. Ramanashree Comforts Private Ltd., the assessing authority had no jurisdiction to include that income which is disclosed in the regular returns as undisclosed income and the Tribunal was justified in setting aside the finding recorded by, the assessing authority. Infact the assessees have offered the said capital gains for the assessment years 1996-97, 1997-98. That has been accepted by the Department in the regular assessment. 13. Insofar as the transaction with M/s. Sripriya Promoters is concerned that was a case of land purchased before 31-3-1995 and disclosed in the returns and hence it was effected immediately prior to the search and strangely they had attempted to disclose the same at the time of filing the return for which the last date had not expired. Infa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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