1999 (11) TMI 105

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....IT Act, 1961 was issued to the assessee on 21st Jan., 1997. In response to this notice, the assessee-firm filed a return declaring undisclosed income at Rs. 24,23,231 on 30th April, 1997. The assessee was a proprietary concern of Mrs. Mary Jose till 30th Sept., 1994, and it was converted into a partnership firm w.e.f. 1st Oct., 1994 by deed executed on 1st Oct., 1994. The assessee-firm did not maintain any books of account. 3. The assessee was asked to file the cash flow statement and wealth statement of various partners. It was submitted by the assessee that all the investments were made out of the income derived from the partnership as partners. The learned representative of the assessee submitted that the assessee is not disputing the a....

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.... also to be allowed. However, the assessee's representative submitted that since some other items have been allowed by the AO himself, while computing the undisclosed income, he is pressing the claim only with regard to Kuri loss and depreciation. The learned Departmental Representative supported the order of the AO. 7. Chapter XIV-B is a special procedure for assessment of search cases. The definition of "undisclosed income" under s. 158B of the IT Act, 1961, includes "any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or tr....

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....rward losses or unabsorbed depreciation under sub-s. (2) of s. 32 are not to be allowed. 8. The assessee's representative submitted that he is not claiming brought forward depreciation but only current depreciation. 9. There is nothing on record to link the Kuri loss to the undisclosed income of the assessee. In the absence of any such evidence, the claim can only be considered in the regular assessment. In the light of the above facts, we remand the matter back to the file of the AO to verify whether any investments were made out of the undisclosed income available with the assessee in furniture, machinery, car, etc. Otherwise, the disallowances are to be considered only in the regular assessment. With the above direction, the matter is ....

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....isclosed income of the block period, the provisions of ss. 68, 69, 69A, 69B and 69C shall, so far as may be, apply and references to 'financial year' in those sections shall be construed as references to the relevant previous year falling in the block period including the previous year ending with the date of search or of the requisition." The above section makes it clear that the provisions of ss. 68, 69, 69A, 69B and 69C are also applicable even in search cases. Under s. 69, if the assessee's explanation with regard to the investments is not found satisfactory, the value of the investments should be deemed to be the income of the assessee of such financial year. Sec. 69B states that if the assessee is found to have made any investment or....