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TMI Blog2013 (1) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... ess held that there was no scope to add any amount purely on the basis of estimate and thus directed the deletion of the amount of Rs.30 lacs, as also Rs.2 lacs. Whether deduction under Chapter VIA are to be given, if the entire income for all the years under the block period - any deduction under Chapter VIA due to the assessee in any previous year including in the block period will not form part of the undisclosed income for the block period. While computing income for the purposes of block assessment the assessee will be entitled for deduction and adjustment under Chapter IV and VIA of the Act - A.O. was accordingly directed to modify the order giving rise ot this appeal. Applying the ratio of the judgment in Chandra Prakash Agrawal (2006 (8) TMI 139 - ALLAHABAD HIGH COURT) to the present case, it is found that the Tribunal did not commit any error in recording findings that since nothing was found in the search operations on 26.10.1995 and that though the warrant of authorisation under section 132A was issued on the following day on 27.10.1995, the amount requisitioned was actually received after the permission of the Addl. District & Sessions Judge, Agra in Criminal Misc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and Sh. Dabi Sarin as per information of the S.H.O. Thana Rakabganj, Agra was illegal and bad in law as the same was beyond the scope of the block assessment made in the case? 3. Whether the Hon'ble Tribunal is legally correct in law and on facts in deleting the addition made u/s 69A of the IT Act, 1961 being undisclosed income admitted by the Assessee during the course of the statement recorded u/s 132 (4) of the IT Act, 1961? 4. Whether the Hon'ble Tribunal is legally correct in observing that the notice u/s 158BC of the IT Act was bad in law?" 4. The ITA No.50 of 2012 was admitted on 16.7.2007 on the following questions of law:- "(1) Whether on the fact and in the circumstances of the case, the Tribunal is legally correct in observing that Notice U/s 158 BC of I.T. Act, 1961 was bad in law and that warrant of authorisation U/s 132-A of I.T. Act, 1961 remained unexecuted? (2) Whether in the circumstances of the case, the Tribunal is legally correct in holding that two separate assessments should have been made in the instant case for the block period upto date of search U/s 132 (1) concluded on 14.1.1995 and the order for the block period ending on requis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in the said car. As per F.I.R. 415/95 under section 394 of IPC dated on 08.10.1995 recorded at Thana Itmad-ud-daula in Book No. 30534, It was claimed by the assesee that a sum of Rs.2.00 Lakh was looted from them. On 31.10.1995 both assessee and Shri Dabi Sarin addressed communications to S.O. Itmad-daula, wherein, it was pointed out that on 08.10.1995 actually the amount looted was about Rs.1.00 Crore, out of which Rs.30.00 Lakh was claimed to be owned by the assessee and Rs.70.00 Lakhs was claimed by Dabi Sarin to be his property. On the basis of the F.I.R. lodged by Shri Mittal and information supplied to S.H.O. Itmad-daula, police authorities took action and recovered the amount aggregating to Rs.72.60 Lakh from the alleged looters including Ashok Tyagi, Devendra Tyagi and Mukesh Tyagi. However, in the meantime the Income-tax Department took search and seizure operation at the premises of the assessee on 26.10.1995 and thereafter on the following day i.e. 27.10.1995 warrant of authorisation under section 132A was also issued in favour of the police authorities to hand over the recovered amount of looting to the I.T. Department Meanwhile the Department also moved a petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la that a sum of Rs.2.00 Lakh was looted from him and his Companies Shri Dabi Sarin on 08.10.1995 while travelling in a car but later on vide letter dated 31.10.1995 addressed to SHO Itmad-daula communicated that on 08.10.1995 actual amount looted was about Rs.1.00 crore out of which Rs.30.00 Lakh claimed to be owned by the assessee and balance amount of Rs.70 Lakh owned by Shri Dabi Sarin. This claim of Rs.30.00 Lakh owned by the assessee was repeatedly made in entire proceedings initiated under the I.T. Act 1961 i.e. either in his statement recorded u/s 132(4) or u/s. 131 or in his various communication made to different authorities or in return of income filed in compliance to notice issued u/s. 158 BC of the Act. 2.5 It is also worthful to mention that looted amount of Rs.72,6,000 in the aggregate was recovered by the police authorities from the possession of different persons. The assessee has filed two paper books during course of hearing before us wherein at page 52 of the paper book there is details of such recovered amount which is as under:- Name of person Amount recovered Amount claimed Ashok Kumar Tyagi 6,90,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service of notice. The assessee objected to the notice under section 158BC for the reason that, when the requisition has not been made by issuing warrant of authorisation under section 132A to take possession of cash, the proceedings were premature. The A.O. vide his letter dated 14.5.1996 informed the assessee that the proceedings have been initiated on the basis of warrant of authorisation issued under section 132 (1) of the Act. The A.O. advised the assessee to file the return of income. The A.O. in his letter dated 14.5.1996 clarified that notice under section 158BC was issued on the basis of warrant of authorisation under section 132 (1) dated 26.10.1995. The assessee approached the CIT, Agra reiterating that the notice dated 18.4.1996 under section 158BC is premature as the amount has not been so far requisitioned by the department. The Commissioner informed the assessee by his letter dated 24.5.1996 that there was no infirmity in the notice under section 158BC issued by A.O. nor the notice is premature. The assessee relying upon Circular No.717 dated 14.8.1995 issued by the Central Board of Direct Taxes, clarifying the meaning of block period, again requested the CIT, Agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence except the statement unsupported by evidence of the assessee that the amount of Rs.30 lacs represents income from speculation in shares, there was no material about the nature and source of the income and therefore keeping in view the provisions of Section 132 (4) of the Act, he added Rs.30 lacs under section 69A of the Act to the income of the assessee. 13. In appeal the Tribunal relying upon the discussions made Davi Sarin v. Asstt. CIT (Inv.) [2003] 84 ITD 391 (Agra), held that in this case also two separate assessments should have been made, one for the block period upto the date of search under section 132 concluded on 26.10.1995, and another for the block period ending on requisition of the amount of Rs.30 lacs from the custody of the police authorities on 16.7.1996. 14. The Tribunal held that the assessment for the block period ending 31.10.1996 covers the block period from 25.8.1984 to 26.10.1995. The amount of Rs.30 lacs was requisitioned under section 132A of the Act from the police authorities on 16.7.1996 and therefore the addition of Rs.30 lacs was outside the scope of block period. 15. The Tribunal having regard to the fact that though search and seizur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt, no findings regarding ownership of seized cash is given in the assessment order. Substantive addition was made in the hands of Shri Devendra Tyagi, Ashok Tyagi and Mukesh Tyagi on the ground that they claimed before the Court that Rs.37 lacs; Rs.10 lacs and Rs.17 lacs respectively was earned by them from their independent sources. 18. The warrant of authorisation to search the premise of the assessee was issued on 26.10.1995. On the following date on 27.10.1995 the warrant of authorisation for requisition of cash of looted money was issued to SHO P.S. Etmad-ud-daula, Agra requiring him to hand over money to income tax department. On 23rd November, 1995 the Asstt. Director of Income Tax (Inv.) II, Agra made an application to the Addl. District Judge, Anti Dacoity Affected Area, Agra requesting him to issue necessary directions to hand over the recovered cash of looted money to Income Tax Department, to save interest of revenue in view of the provisions under section 132A of the Act. Meanwhile notice under section 158BC of the Act was issued on 18.8.1996 by the Assessing Officer requiring the assessee to furnish return of income within 16 days. The assessee by his letter date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stt. CIT (Inv.) [2012] 344 ITR 60. In this case relating to the undisclosed income assessed to tax by A.O. under the provision of Section 158 (B) of the Act represented by his wife, after his death, relating to block assessment, in respect of her undisclosed income, the assessee had claimed that the income assessed to tax is her own income, which had gone into contribution of acquiring an asset in respect of which contributions were made by late husband and wife. The Karnataka High Court held that Section 158BE prescribed time limit for completion of block assessment, in order to clear the demand, which may arise regarding commending of the date from which limitation is to be completed, an explanation was added by Finance Act No.2 of 1998 with retrospective effect from July 1st, 1995 in which expression used is 'last panchnama' and not 'last of the panchnama' therefore there cannot be plurality of panchanama in respect of authorisation. The word 'last of the authorisation' is used in the main Section. In the explanation the word used is 'panchnama' and not 'panchnamas'. Starting point of the limitation is the end of the month in which last of the authorisations is executed as recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceedings including the assessment under Chapter XIV are not barred as is clear from Section 158BB. The special procedure provided for making assessment of undisclosed income as a result of search is confined to the undisclosed material found therein and does not in any way affect the regular assessment under Chapter XIV in respect of income not discovered or relatable to the search under section 132 or requisition of documents under section 132A. Shri Shakeel Ahmad submits that the loot or recovery of cash cannot be equated as the amount recovered during search. During the search and seizure operations nothing was recovered. The notice under section 158BC of the Act required the assessee for filing return of income for the block period. The notice under section 158BC dated 18.4.1996 did not indicate, as found by the Tribunal, that it was issued with reference to the search conducted under section 132 on 26.10.1995, or with reference to the warrant of authorisation under section 132A on 27.10.1995, for requisition of the amount. In the letter dated 14.5.1996 the A.O. clarified that notice under section 158BC was issued on the basis of warrant of authorisation under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to requisition books of accounts, documents or any assets either from the person to whom it belongs in case such authority has reason to believe that such person will produce or caused to produce such document or assets. Sub-section (2) of Section 132A mandates the authority, which has custody of books of accounts or other documents to deliver them to the requisitioning officer and after these books of accounts or other documents or assets have been delivered provisions of sub-section (4A) to (14) of Section 132 and 132B shall mutis mutandis apply. The requisition is complete only, when the seized books of accounts and other documents have been delivered to the requisitioning authority. 28. This Court further held that Chapter XIV-B inserted w.e.f. July 1st, 1995 introduced a new scheme of assessment of undisclosed income, determined as a result of search, which has assessed separately as the income of designated period consisting of 10 previous years now reduced to 6 by the Finance Act, 2001 w.e.f. June 1st, 2001. This Chapter provides for special procedure for assessment of the block period in respect of the undisclosed income, as a result of search conducted under section 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Chapter is attracted in the present case or not. The crucial words for the applicability of Chapter XIVB of the Act are contained in sub-section (1) of Section 158BA of the Act. It is applicable in cases where a search is initiated under section 132 of the Act or books of account, other documents or any assets are requisitioned under section 132A of the Act. It is not in dispute that in the present case no search under section 132 has been conducted by the Income Tax Department. The search, if any, was conducted on 7/8.6.2001 by the Central Excise Department. The Income Tax department had sent a requisition on 27.3.2002 under section 132A of the Act requisitioning the books of account and other documents seized by the Central Excise Department. The record of the proceeding dated 18.4.2002 show that the requisition was not fully executed as all the books of account and other documents had not been delivered to the Requisitioning Authority. We have already referred to the scheme of Section 132A of the Act and have come to the conclusion that it deals with the power and procedure for requisitioning the books of account etc. and would be complete only when the requisitioned books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings for re-assessment under section 148 of the Act, material or evidence which are relatable to the documents for which the requisition has been sent under section 132A cannot be taken into consideration." 30. We are in respectful agreement with the view taken by the Division Bench of this Court in Chandra Prakash Agrawal (supra). 31. Applying the ratio of the judgment in Chandra Prakash Agrawal (supra) to the present case, we find that the Tribunal did not commit any error in recording findings that since nothing was found in the search operations on 26.10.1995 and that though the warrant of authorisation under section 132A was issued on the following day on 27.10.1995, the amount requisitioned was actually received after the permission of the Addl. District Sessions Judge, Agra in Criminal Misc. Application no.54/95 under section 394/411 IPC for handing over amount of Rs.72 lacs to Income Tax Department, with certain conditions. The requisitioned amount was actually received on 16.7.1996 with the conditions imposed by the Addl. District Sessions Judge that the Income Tax Department will be duty bound to produce in the Court the amount or any part or balance thereof and w ..... 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