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TMI Blog2014 (11) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... rimary books of accounts - assessee could not show that amount of ₹ 17 Lakh was reflected in the balance sheet dated 31.3.1997 - it was not shown that amounts were not shown as repaid by M/s Astro Beer during relevant previous year - it has been rightly treated as unexplained investment in terms of Section 69B of the Income Tax Act - Finding that this payment & its nature was learnt due to search is also not perverse - No arguments have been advanced to show why or how these findings are erroneous or then Section 69B does not get attracted – the order of the Tribunal is upheld – Decided against the assessee. Inclusion of income of new industrial unit - Whether the Tribunal was right in concluding that the income of the new industrial until, the receipts of which were found recorded in books could be included in the income taxable in block assessment in the light of the provisions of Section 158BB(1)(d) which excludes from the scope of block assessment such income assessable for assessment year for which the time for filing the return of income has not expired as on the date of search – Held that:- Section 158-BB is about the computation of undisclosed income of the block p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 on the substantial questions of law as raised in ground No. VII(a), (d) and (e) of the appeal memo. Those questions read as under:- (a) Whether on facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the sum of ₹ 17,00,000/- advanced by the appellant to their sister concern by cheques drawn in favour of the said sister concern out of disclosed bank account and duly recorded in the bank account and cash book of the appellant as unexplained investment ? (d) Whether on facts and circumstances of the case, the Income Tax Appellate Tribunal was right in concluding that the income of the new industrial until, the receipts of which were admittedly found recorded in books could be included in the income taxable in block assessment in the light of the provisions of Section 158BB(1)(d) which excludes from the scope of block assessment such income assessable for assessment year for which the time for filing the return of income has not expired as on the date of search ? (e) Whether on facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the new industrial unit cannot claim to have empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the search was completed on 02.11.1999 and last date of filing of the said return was 30.11.1999. Hence, following mandate of Section 158BB(1)(d) of the Income Tax Act, the said income could not have been taken into account for the purpose of block assessment. 4. Lastly it is urged that 10 workers contemplated for grant of exemption, are held not to be working in the undertaking and not involved in manufacturing process. It is in this background, that we have heard the arguments of Shri D.E. Robinson, the learned Counsel for the appellant and Ms. Asha Desai, learned Counsel for the Department. 5. Shri Robinson, the learned Counsel for the appellant points out that the assessment for the Assessment Year 1997-98 was completed under Section 143 after scrutiny, particularly of the debtors balance. The amount of ₹ 17,00,000/- was already reflected in the books of account of the appellant, and hence, it cannot be treated as undisclosed income for the purpose of Section 158(B)(b) of the Income Tax Act and also cannot be viewed against the assessee in the light of Section 69 thereof. He submits that the I.T.A.T. has not properly appreciated this position in law, though it m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of a new unit needed to be maintained, he relies upon a judgment of Andhra Pradesh High Court reported at (1996) 220 ITR 0084 (Commissioner of Income Tax .vs. Abhirami Cotton Mills (P) Ltd.). He contends that thus the approach of the I.T.A.T. in the matter has been erroneous and the present appeal needs to be allowed. 9. Ms. Desai, the learned Counsel appearing for the Revenue submits that no substantial questions of law arise in this appeal. Facts essential to raise such questions have been answered against the assessee by the I.T.A.T. and those facts are not in dispute before this Court. After search on Austro Beer, the sister concern of the assessee, transactions were discovered. She points out that the assessee initially came up with a defence that the amount of ₹ 17,00,000/- disclosed investment and later on pointed out that it was a loan extended by the assessee to its sister concern. The name of the said sister concern M/s. Austro Beer does not figure in the list of sundry debtors. The Assessing Officer in this situation has correctly appreciated the factual position, and the said finding of fact has been upheld thereafter by two superior forums. Material ess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee did not show Austro Beer as a debtor in the balance sheet as on 31.03.1997 and in subsequent balance sheets. The investment account of Austro Beer reflected opening debit balance of ₹ 7,50,000/- as on 01.04.1996. Appellant was given opportunity to explain this position. Explanation furnished was that the financing banker did not approve the diversion of borrowed funds, hence payments to Austro Beer could not be shown as advances and hence, it was included under the head of sundry debtors. This contention has also been looked into and the I.T.A.T. has found it un-acceptable because of the inconsistencies emerging therefrom. All these are findings on facts recorded by the I.T.A.T. 14. Contention, that the assessment of the appellant for the year 1997-98 was completed after scrutiny of the debtors balance and A.O. had verified the bank account and audited books of accounts produced before it therefore, does not hold any water. Section 69-B of the Act is on treatment to be accorded to amount of investments, etc., not fully disclosed in books of account. Where in any financial year the assessee has made investments and the Assessing Officer finds that the amount expended o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions relating to such income are recorded on or before the date of the search or requisition in the books of account or other documents maintained in the normal course relating to such previous years. If this requirement is met with, the said income can not be included in the block period. Appellant assessee has failed to demonstrate this fact. Section 158-BB is about the computation of undisclosed income of the block period. Its subsection(1)(d) lays down that 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; the undisclosed income can be computed. Provisions of both these Sections are very clear. Thus, the bar prescribed is not absolute. But then the appellant assessee ought to have pointed out how the said income was disclosed in books before the date of raid in its regular return. The I.T.A.T. has observed in paragraph no.11 of its order that no clarificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a liberal interpretation of such a provision is necessary. Judgments in case of Commissioner of Income Tax .vrs. Jyoti Plastic Works Pvt. Ltd. (supra), and (Commissioner of Income Tax .vrs. Nanda Mint and Pine Chemicals Ltd. (supra), are also relied upon to buttress this submission. 19. We find that the issue is considered by the I.T.A.T. in paragraph no.12 of its judgment. The Hon'ble Apex Court in its judgment in case of Commissioner of Income Tax .vrs. South Arcot Dist. Co.op Marketing Society Ltd. (supra), has considered the provisions of Section 14(3)(v) of the Indian Income Tax Act, 1922. The exemption provided for, was found to be with a view to encourage the Cooperative Societies to construct Warehouses which were likely to be useful in the development of rural economy, therefore, the Hon'ble Apex Court held that liberal interpretation was necessary. 20. Other two judgments cited by Shri Robinson, the learned counsel for the appellant are by the Division Bench of this Court and by the Division Bench of the Delhi High Court respectively. Therein the question was Whether employees hired through contractor for carrying on manufacturing activity the casu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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