2003 (3) TMI 335 - AT - Income Tax

Tribunal Upholds Assessment, Dismisses Appeal on Unexplained Expenditure

VIJAY KAPOOR. Versus DEPUTY COMMISSIONER OF INCOME TAX.

VIJAY KAPOOR. Versus DEPUTY COMMISSIONER OF INCOME TAX. - TTJ 086, 1079, Issues Involved:1. Validity of the assessment under section 158BC(c) due to the alleged invalid notice issued under section 158BC(b) read with section 143(2).2. Legality of the assessment framed based on a time-barred notice.3. Justification of additions of Rs. 3,632 and Rs. 40,105 as unexplained expenditure under section 69C.Detailed Analysis:Issue 1: Validity of the assessment under section 158BC(c) due to the alleged invalid notice issued under section 158BC(b) read with section 143(2):The appellant argued that the assessment under section 158BC(c) was invalid as the notice under section 158BC(b) read with section 143(2) was issued after more than a year from the date of filing the return. The appellant contended that the provisions of section 143(2) are applicable in the course of framing an assessment under section 158BC(c), and as per the proviso to section 143(2), no notice can be issued beyond one year from the filing of the return. Therefore, the assessment framed on the basis of a time-barred notice should be declared invalid.Issue 2: Legality of the assessment framed based on a time-barred notice:The appellant's counsel argued that the assessment under section 158BC(c) was bad in law as it was made pursuant to an invalid notice issued beyond the stipulated time frame. Various judicial precedents and circulars were cited to support this argument, emphasizing that the notice under section 143(2) must be issued within one year from the filing of the return. The learned Departmental Representative countered this by arguing that the provisions of section 143(2) and the time limit mentioned therein are not fully applicable to block assessments under section 158BC. The block assessment procedure is distinct and only the opportunity of hearing as per section 143(2) is applicable, not the time limit for issuing the notice.Issue 3: Justification of additions of Rs. 3,632 and Rs. 40,105 as unexplained expenditure under section 69C:The appellant contested the additions of Rs. 3,632 and Rs. 40,105 made by the Assessing Officer (AO) as unexplained expenditure under section 69C. The appellant argued that the expenditure on stamp duty and registration charges should be considered explained out of withdrawals for household expenses and the disclosed income of the firm where the appellant was a partner. The learned CIT(A) upheld the AO's additions, stating that the withdrawals were insufficient to explain the expenditure and the disclosure of Rs. 8 lakhs in the firm did not cover the unexplained investment of Rs. 40,105.Judgment:The Tribunal examined the applicability of the provisions of section 143(2) to block assessments under section 158BC. It was concluded that the phrase 'so far as may be, apply' means that the provisions of section 143(2) are applicable to the extent necessary and practical. The Tribunal held that the time limit for issuing notice under section 143(2) is not fully applicable to block assessments under section 158BC. The Tribunal relied on various judicial precedents and the interpretation of the phrase 'so far as may be' to support this conclusion.On the merits of the additions, the Tribunal found no new material or evidence presented by the appellant to challenge the findings of the learned CIT(A). The Tribunal agreed with the CIT(A) that the withdrawals were insufficient to explain the expenditure and the disclosed income of the firm did not cover the unexplained investment. Therefore, the Tribunal upheld the additions of Rs. 3,632 and Rs. 40,105 as unexplained expenditure under section 69C.Conclusion:The appeal was dismissed, and the assessment under section 158BC(c) and the additions of Rs. 3,632 and Rs. 40,105 were upheld. The Tribunal concluded that the provisions of section 143(2) are applicable to block assessments only to the extent necessary and practical, and the time limit for issuing notice under section 143(2) is not fully applicable to block assessments under section 158BC.