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TMI Blog2013 (2) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... k assessment as it cannot be treated as undisclosed income of the assessee ?" 2. The assessee is an individual and the assessment period is the block period July 20, 1989, to July 19, 1999, in terms of the provisions clause (d) of sub-section (1) of section 158BB of the Act. The assessment block period was a sequel to a search that was conducted on July 13, 1999, at the premises of one T. Balakrishna, who, while explaining an undisclosed loan transaction of Rs. 50 lakhs said to have been borrowed from the assessee and in cash, indicated that it was a loan transaction borrowed from the assessee by the said Balakrishna for the purpose of constructing the school building, as the said Balakrishna was the whole and sole of an educational institution by name St. Ann's High School, Rajajinagar, Bangalore (Sri M. V. Seshachala, learned senior standing counsel for the Revenue submits that said Balakrishna is the "owner" of the educational institution!). 3.The bone of the contention that has landed before this court between the Revenue and the assessee for an answer posed in the form of substantial questions of law, as extracted above. 4. The statement of the said Balakr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceed against the assessee in respect of the entire undisclosed income of Rs 50 lakhs and assessed it for the block period July 20, 1989, to July 19, 1999, in terms of the provisions of section 158BC of the Act. The assessment order at annexure C to the writ petition resulted in total tax liability of Rs. 32,78,368 on the assessee. The Assessing Officer, by passing a protective assessment order for the entire sum of Rs 50 lakhs on the basis of the return filed by the assessee for the assessment year 1999-2000, nevertheless sought to enforce the block assessment order keeping in abeyance the enforcement of the assessment made on the return for the assessment year 1999-2000 as a protective measure. 9. It is in this state of affairs, the assessee appealed to the Commissioner of Income-tax (Appeals), but without success, as in terms of the order dated December 11, 2001 (copy at annexure B), the Appellate Commissioner agreed with the view taken by the Assessing Officer and dismissed the appeal. 10. The assessee carried the matter further to the Appellate Tribunal and met with success, as he found acceptance before the Tribunal for his version that the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availed of the services of counsel by name Sri K. Ravi. Sri K. S. Ravi, who are conspicuous by their absence. 14. The submission of Sri Seshachala is that the Tribunal has committed a serious error in law in not only getting confused with the factum of search conducted at the residential premises of the assessee with the survey con-ducted, albeit on the same day at the business premises of the assessee, but has also placed erroneous reliance of decisions and authorities not germane to the facts and circumstances of the case ; that the Tribunal has also com-mitted an error in law in understanding the concept of block period and the enabling provisions of sections 158B and 158BB of the Act, for the purpose assessing the undisclosed income of the assessee during the block period, even while an option was given to the assessee to file return of income of the balance period of the accounting year, i.e., on and after the date of search by filing a regular return of income earned subsequently ending with the accounting year during which search had been conducted. 15. Sri Seshachala also points out that the Tribunal has overlooked the legislative changes that have been broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod getting vitiated even assuming that some income relating to the regular assessment period has also got included in the block period as has been understood by the Tribunal. 18. The submission is that in the present case, while there is absolutely no scope on facts to indicate that the assessee had convinced the Assessing Officer to claim that the income up to the date of search and forming part of the income of the accounting period from April 1, 1999, to March 31, 2000, had been reflected in any books of account maintained in the normal course of business activity of the assessee but on the other hand the assessee had not even revealed to the Department about his business activity, leave alone maintaining any books of account or amount having been reflected, there was absolutely no scope for excluding any part of the undisclosed income of Rs. 50 lakhs from out of the scope of assess-ment for the block period. It is, therefore, urged that the order passed by the Tribunal, reversing the orders of the Assessing Officer and the Appel-late Commissioner, is not sustainable and calls for suitable correction in this appeal, answering the questions posed in this appeal in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the block period.-(1) The undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed, in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence as reduced by the aggregate of the total income or, as the case may be, as increased by the aggregate of the losses of such previous years, determined,- . . . (d) where the previous year has not ended or the date of filing the return of income under sub-section (1) of section 139 has not expired, on the basis of entries relating to such income or transactions 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 relating to such previous years ;" 24. As per the statutory provision, the exclusion of the income from assess-ment of block period, if it is attributable to the part of the accounting period of the year in which the search has been conducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of recruitment to the Tribunal is also reviewed by the authority concerned and at least henceforth it is ensured that the members of some standing, integrity and competence are put in place as members of the Tribunal and not all and sundry.
27. The Legislature, particularly the Union Parliament may also take note of such tendency on the part of the Tribunal and ensure for suit- able legislative measure so that the purpose and the object with which such Tribunals are constituted really subserve not only the interest of aggrieved assessee but also to ensure that the Revenue's interest is not simply scarified or jeopardized by errant members.
28. Registrar General of this court is directed to send copies of this judg- ment to the Law Commission of India, Secretary to Department of Reve- nue, Ministry of Finance,. Government of India, Secretary to Government, Ministry of Law and Parliamentary Affairs, Government of India and the Central Board of Direct Taxes, New Delhi.
29. Appeal is allowed and the substantial questions posed are answered in favour of the Revenue and against the assessee. X X X X Extracts X X X X X X X X Extracts X X X X
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