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TMI Blog2025 (4) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst an order of assessment under Section158BC read with Section 143 of the Income Tax Act for the block period 01.04.1989 to 23.12.1999. 2. The brief facts necessary for the disposal of these Income Tax Appeals are as follows: Consequent to a search and seizure action under Section 132 of the Income Tax Act at the business and residential premises of the respondent assessee on 23.12.1999, an assessment for the block period from 01.04.1989 to 23.12.1999 was completed against the respondent assessee under Section 158BC read with Section 143(3) of the Income Tax Act on 31.12.2001. The Assessing Authority had by the said order rejected the books of accounts maintained by the assessee during the aforementioned block period and had proceeded to estimate the income of the assessee for the entire block period on the basis of the average running stock of the assessee for the various years covered by the block period. The rejection of the books of accounts was based on material that was unearthed during the search on 23.12.1999 and statements recorded from various persons including the assessee's son, who was in charge of the business of the assessee, and certain customers, who had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. The Tribunal also proceeded to restore the gross profit that was taken by the Assessing Authority at the rate of 18.59% for all the assessment years in which suppression was detected. On the aspect of disallowance under Section 40A(3) of the Income Tax Act, the Tribunal found that a disallowance under Section 40A(3) could not be considered while completing a block assessment since the said disallowance would ordinarily be considered by an Assessing Authority at the time of regular assessment for each of the assessment years covered by the block period. In arriving at the said conclusion, the Tribunal relied on its own earlier judgment in the case of Eastern Retreads (I) Limited [66 TTJ 695] where it had held that the disallowance in a regular assessment under Section 40A(3) cannot be considered again while framing a block assessment. In effect, therefore, the Tribunal modified the order of the First Appellate Authority granting substantial relief to the respondent assessee. 5. The effect of the Tribunal order has been captured in the proceedings dated 30.04.2004 of the Deputy Commissioner of Income Tax, Central Circle, Thiruvananthapuram, who was required to pass consequentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 40A(3) of the I.T. Act? b) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that disallowance under section 40A(3) cannot be made in block assessments and accordingly deleting the entire disallowance? c) Whether, on the facts and in the circumstances of the case and also for the reasons given. in the appeal memorandum and grounds raised, the Tribunal is right in law and fact in holding that the disallowance under Section 40A(3) cannot be made in block assessments because these are reflected in the accounts as revealed from seized records? And is not the finding, wrong, baseless, against facts and unsupported by materials? 5. Whether, on the facts and in the circumstances of the case and also in the light of the reasons given in the appeal Memorandum and the grounds raised, the Tribunal is justified in confirming the deletion of a sum of Rs.2,71,689/- relating to assessment year 1994-03 by the Commissioner of Income tax (Appeals) on the ground that a higher disallowance of Rs.6,34,087/- was made in the regular assessment and are not the finding and the deletion against facts highlighted in the memorandum of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not covered by the specific provision of law or binding precedents and involves a debatable legal issue. iii. A substantial question of law will also arise if the legal position is clear, either on account of express provisions of law or binding precedents but the court below has decided the matter, either ignoring or acting contrary to such legal principles. vi. Findings of facts arrived at by the court below will not ordinarily be interfered with unless (a) the court below has ignored material evidence or acted on no evidence, (b) the court had drawn wrong inferences from true facts by applying the law erroneously or (c) the court has wrongly cast the burden of proof. v. For a substantial question of law to arise from the order of the Tribunal, it must have been raised before or decided by the Tribunal. (See: Chandrabhan (Deceased) Through Lrs. And Others v. Saraswati and Others [2022 SCC Online SC 1273], Chunilal v Mehta & Sons v Century Spg. & Wvg. Mills - [AIR 1962 SC 1314], Santhosh Hazari v. Purushottam Tiwari (Deceased) by Lrs. [(2001) 3 SCC 179], Vijay Kumar Talwar v. Commissioner of Income Tax, Delhi [(2011) 1 SCC 673], Meenakshi Mills Ltd v CIT - [AIR 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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