1999 (9) TMI 25 - HC - Income Tax

Seized silver valuation in search block assessment: alloy/impurity deduction and whether additions belong in regular assessment; reference dismissed

In a search-based block assessment under s.158BC, the dominant issue was whether an addition could be sustained on valuation of seized silver articles by ... Addition in the block periods - block assessment under section 158BC - Search And Seizure - Income From Undisclosed Sources - Whether, the Tribunal was justified in allowing further deduction of 10 per cent. of alloy contents although the approved valuer has finally determined net silver contents of the vessels and applied the rate, accordingly, after allowing for impurities ? - HELD THAT:- The assessee contended that if the valuation is taken after allowing deduction of 20 per cent. on account of alloy used in the manufacture of silver articles, then, there will be no addition considering the price difference. It appears that the Departmental Representative supported the order of the Assessing Officer, however, he fairly conceded that some deduction on account of use of alloy in the manufacture of silver articles/utensils should have been given by the Assessing Officer and it is in view of this that 10, per cent. deduction has been given. The actual seizure was effected on January 9, 1997, and the price as per the Government valuer's opinion was taken into consideration. Therefore, we find that when the case of the Department is accepted, it cannot be said that the Tribunal has committed any error in not referring the question to this court. The Tribunal pointed out that the addition which is sought to be made can be made only for the regular assessment or reassessment framed under Chapter XIV and not in block assessment which is required to be completed under section 158BC in Chapter XIV-B. The Tribunal was of the opinion that no referable question of law arises out of the order of the Tribunal and, accordingly, rejected the application. In view of the decision of this court and the amendment, we are of the view that the Tribunal has committed no error in rejecting the application and, therefore, this application is rejected. Issues involved: The Commissioner, Surat, aggrieved by a Tribunal order, seeks to refer questions regarding addition of income, valuation of seized items, and deduction on alloy contents.Question 1 - Addition of Income: The Tribunal considered undisclosed income for specific assessment years and disallowances made by the Assessing Officer. It was argued that only undisclosed income found during search should be taxed under section 158BC, not total income for various assessment years. The Tribunal referenced a previous court decision and concluded that undisclosed income as defined in section 158B should be assessed under Chapter XIV-B, while other income should be assessed under Chapter XIV.Question 2 - Valuation of Seized Items: The Tribunal accepted the Department's contention that the valuation of seized silver items should be based on the price as per the Government valuer's opinion at the time of seizure on January 9, 1997, rather than when the assessee was found to be the owner on November 21, 1996.Question 3 - Deduction on Alloy Contents: The Tribunal rejected further deduction of 10% on alloy contents of silver utensils, as the expert's valuation already considered the alloy used in manufacturing. The Departmental Representative acknowledged that some deduction should have been given for the alloy, hence the 10% deduction was appropriate.The court found no error in the Tribunal's decisions and rejected the application, stating that no referable question of law arose from the Tribunal's order. The application was discharged with no order as to costs.