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TMI Blog2013 (8) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... eding and the Chapter deals exclusively with block assessment relating to search and all other proceedings are alien to it. Whether the cross-reference in the balance sheet of the assessee and M/s Aasheesh Securities Ltd., could be treated as material on the basis of which enquiries could be made and the assessee to be reassessed on the source of income for charging income to the capital gain - Held no - decided in favour of the assessee and against the revenue. - Income Tax Appeal No. - 227 of 2009 - - - Dated:- 25-7-2013 - Hon'ble Sunil Ambwani And Hon'ble Surya Prakash Kesarwani,JJ. For the Appellant : Dhananjay Awasthi For the Respondent : Nikhil Agrawal ORDER 1. We have heard Shri Dhananjay Awasthi, learned counsel for the appellant. Shri Nikhil Agrawal appears for the respondent-assessee. 2. This income tax appeal under Section 260A of the Income Tax Act, 1961 arises out of the judgment and order dated 26.9.2008 passed by the Income Tax Appellate Tribunal in IT (SS) A No.365/Del/2003 for the Block Period 1.4.1989 to 15.12.1999. 3. The appeal has been preferred by the revenue on the following question of law:- "(1) Whether on the facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Secretaries Ltd. But since company and individual are separate entities, reflection of the transaction in the books of the company cannot be treated as disclosure by the assessee, the transferor. Accordingly, this capital gain income of Rs.48,42,517/- is treated as undisclosed income of the assessee." 8. The CIT (A) held that A.O. was fully justified in making addition of undisclosed income, which he confirmed. 9. The ITAT held that allotment of shares in view of corporatisation of membership of stock exchange is not transfer of capital assets and is thus not chargeable to capital gains tax. The shares of Aasheesh Securities Ltd. allotted to assessee in lieu of corporatisation of his membership of stock exchange were not transferred for 3 years in view of the conditions laid down by the crporatisation of membership of stock exchange. When the shares so allotted became transferable, the stock market rate quotations had fallen in the range of Rs.1/- per equity share as against face value of Rs.10/- each, resulting in a loss of capital to the assessee. The transaction of corporatisation of assessee's members in Stock Exchange was within the knowledge of the department prior to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has made this addition on the basis of information already given in the balance-sheet of the company and not on the basis of any incriminating material or evidence ofund during the course of search conducted against the assessee. 11.2 It is now well settled that Chapter XIV-B deals with the procedure for making assessment in cases of search. This block assessment is distinct and separate and independent of a regular assessment for the reason that in these block assessment proceedings, the Assessing Officer is concerned only with undisclosed income and he has no power to consider material and evidence not detected as a result of some external information or a survey or some other source other than a search, it is found that some income had escaped assessment, then it is open for the Assessing Officer to resort to a regular assessment including re-opening a completed assessment but he cannot drag these items into the block assessment proceedings envisaged under Chapter XIV-B of the Act. Thus, a block assessment proceeding is distinct and different from the regular assessment proceeding and the Chapter deals exclusively with block assessment relating to search and all other procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een wrongly framed in as much as the Tribunal did not allow second appeal of the assessee on the ground that he was entitled to benefit of Section 47 (XI) on the capital gains. The Tribunal proceeded on the basis that there was no incriminating material found in the search, which could have led to an enquiry about the investment, which was also disclosed in the regular returns of the assessee. 15. Though the question has not been raised, we heard learned counsel for the parties and do not find any good ground to interfere with the order of the Tribunal on the other ground also. 16. It is not denied that no incriminating material was found during the course of search against the assessee. It was only on cross-reference with the balance sheet of the company M/s Aasheesh Security Ltd. that the A.O. made enquiries regarding the source of investment and came to conclusion that the asssessee had made capital gain by corporatisation of the membership of stock exchange, which was transfer of capital assets and was chargeable at the relevant time. 17. Section 153A as it stood relevant time did not permit reassessment of the total income of the assessee in the previous 10 years. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 and B. Noorsingh v. Union of India, (2001) 249 ITR 378 held that the special procedure under Chapter XIV-B shall be adopted in such case covered by the provisions, notwithstanding anything contained in any other provisions of the Act. Consequently the income to be included in the block assessment is only such income, which is directly evidenced by the material found during the search and does not include the income, which has been discovered on the basis of post search enquiries made during the block assessment proceedings. This position, however, has changed after the amendment made by the Finance Act of 2002, after which the assessment of undisclosed income can be based on evidence found in search and the material or information gathered in post search enquiries made on the basis of evidence found in the search. 20. This Court, thereafter, observed the effect of the 'requisition' and the use of word 'requisitioned' under Section 158BA (1) and which means the taking of actual possession. The Court held:- "Having discussed the scheme of various provisions of Chapter XIVB of the Act, we now come to the issue as to whether the provisions of the aforesaid Chapter is attracted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of Chapter XIVB of the Act would come into play only when the books of account or other documents or assets are actually received by the Assessing Officer pursuant to the requisition made under Section 132A of the Act. Looking at it from another angle also, it is the only conclusion which one can arrive. If the entire books of account and other documents which have been requisitioned under Section 132A by the Authorised Officer is not in the possession of the Department, the proceedings under Chapter XIVB of the Act would be of no consequence as it does not speak of piecemeal block assessment. The block assessment has to be made for a composite period of 10 years or 6 years, as the case may be, in which the entire evidence collected as a result of the requisition under Section 132A of the Act and all other materials or information available with the Assessing Officer relatable to such evidence has to be taken into consideration. In view of the foregoing discussions, we are of the considered opinion that the proceedings initiated under Section 148 of the Act cannot be said to be without jurisdiction. However, we make it clear that in the proceedings for re-assessment und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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