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TMI Blog2009 (6) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... to the addition of Rs. 40,04,369 made by the Assessing Officer in a block assessment order dated November 21, 2000, under section 158BC and section 143(3) of the Income-tax Act. The block period covered the assessment years 1989-90 to 1999-2000. The said addition having been deleted by the learned Commissioner of Income-tax (Appeals) and the said order having been affirmed by the learned Tribunal by the impugned order dated July 18, 2006, the instant appeal has been filed under section 260A of the Income-tax Act, 1961, hereinafter referred to as "the Act". 2. The second issue pressed at the hearing relates to another addition made by the Assessing Officer in respect of a sum of Rs. 14,98,282 on account of disallowable travelling expenses incurred through credit cards recovered in the course of search. The said addition having met a similar fate at the hands of the appellate authority and the learned Tribunal below, the findings of the said authorities have been challenged in the instant appeal. 3. A search was conducted on April 27, 1998, and on subsequent dates in the business and residential premises of the Sarawagi group to which the assessee belongs. Admittedly, nothin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e apex court in paragraph 11 of the said judgment that the Assessing Officer is not bound by the strict rules of evidence and a report of a Valuation Officer under section 55A may be considered by the Assessing Officer as a piece of evidence if it is relevant. Shri Bhuyan has further argued that regardless of the validity of the manner in which materials have come to the knowledge of the Assessing Officer, as long as such materials are relevant, the same can form a legitimate basis of an order of the Assessing Officer. In this regard, the judgment of the apex court reported in Pooran Mal v. Director of Inspection (Investigation) [1974] 93 ITR 505 has been relied upon by Shri Bhuyan. 7. Shri Bhuyan has further submitted that the provisions of section 158BB of the Act, as prevailing on the date of the assessment order, i.e., November 21, 2000, would govern the instant matter and the amendment of section 158BB brought about by the Finance Act of 2002, though with retrospective effect from July 1, 1995, will not apply to the present case. Relying on the provisions of section 158BB, prior to its amendment by the Finance Act of 2002, Shri Bhuyan has submitted that the materials r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials or information found in the course of the search and not to any materials or information independent of the search. In this regard, Dr. Saraf has further relied on the definition of undisclosed income appearing in section 158B(b) of the Act to indicate that undisclosed income is income which had not been or would not have been disclosed for the purpose of the Act. Learned counsel has also pointed out that prior to the insertion of section 153A of the Act with effect from the year 2003, the assessment under section 158BB was in respect of undisclosed income only and the regular assessments for the years covered by the block period continued to remain. It is only after the aforesaid amendment made in the year 2003 that the earlier assessment stands abated and the Assessing Officer has been empowered to make fresh assessment of income inclusive of undisclosed income. Dr. Saraf has further pointed out that the precedents cited on behalf of the appellant are cases involving regular assessments and not assessment of undisclosed income. Dr. Saraf has also relied upon two decisions of the Delhi High Court in the case of CIT v. Manoj Jain reported in [2007] 287 ITR 285 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. In the present case, the assessment of undisclosed income in so far as the building is concerned cannot also be justified on the basis of section 158BB of the Act, as it stood prior to its amendment by the Finance Act of 2002. To make the discussion complete, the provisions of section 158BB, as it existed before and after the amendment, are reproduced below: Before amendment "158BB.(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 Chapter IV, on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the Assessing Officer. 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,-" After amendment "158BB. (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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Departmental Valuation Officer was rightly interfered with by the learned Tribunal. The said conclusion of the learned Tribunal, therefore, will not be open to interference. 14. Coming to the issue of disallowable travelling expenses, what the court finds is that though the assessee had shown the said expenditure in the books of account which was scrutinized in the course of regular assessment, in the course of search operations conducted under section 132 of the Act, it was found that some portion of such expenditure did not relate to the partners or employees of the assessee but were in respect of other persons and further that some items of expenditure though claimed by the assessee to be business expenditure were found to be personal expenditure of the concerned persons. If such materials have been found in the course of the search, naturally there was room for further scrutiny into the matter in the course of the block assessment proceedings. Such an enquiry had, in fact, been undertaken by the Assessing Officer by issuance of an appropriate notice. However, the Assessing Officer did not make any endeavour to find out or segregate the items of personal expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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