TaxTMI 
TaxTMI 
2005 (1) TMI 328
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....e an addition of Rs. 30,000 relating to assessment year 1991-92; Rs. 20,000 relating to assessment year 1992-93 and Rs. 55 lakhs relating to assessment year 1994-95. It was stated that amounts of Rs. 30,000 and Rs. 20,000 were taken by the company as cash loan from its directors Shri Pramod Kumar Dang and Shri Radhey Shyam Dang. It was further stated that they were duly disclosed by filing the regular returns for assessment years 1991-92 and 1992-93. The attention of the Bench was drawn on pages 36 and 45 of the paper book, where the copies of annexure to the balance-sheet as on31-3-1991and31-3-1992are placed. Therefore, it was submitted that these amounts cannot be treated as undisclosed income while completing the assessment under section 158BC of the Income-tax Act. It was also stated that no incriminating documents were found from which it can be established that this amount was not disclosed earlier. 5. Regarding remaining amount of Rs. 55 lakhs it was stated that the same was received from M/s. Concept International India Ltd. during assessment year 1994-95. It was further stated that in fact a sum of Rs. 55 lakhs were taken by cheque and Rs. 40 lakhs was returned during t....
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....ssessee. Record for assessment year 1994-95 was also produced and it was seen by the Bench that assessee has filed regular return for assessment year 1994-95 and in Schedule of balance-sheet there was an outstanding, of Rs. 15 lakhs in account of M/s. Concept International. 7. We have heard rival submissions and considered them carefully. We have also perused the order of Assessing Officer and found that the Assessing Officer has made addition of Rs. 30,000; Rs. 20,000 and Rs. 55 lakhs pertaining to assessment years 1991-92,1992-93 and 1994-95 respectively on the ground that assessee could not prove the genuineness of the loan taken by it. We further noted that the Assessing Officer has observed in his order that a confirmation was filed on behalf of M/s. Concept International Pvt. Ltd., whereby a debit was shown at Rs. 15 lakhs. However, on scrutiny of the return of income this entry was not appearing in the balance-sheet. Therefore, he treated the amount of Rs. 55 lakhs as unexplained in the books of account of the assessee and treated his amount as bogus cash credits and added under section 68 of the Income-tax Act. Likewise, the amounts of Rs. 30,000 and Rs. 20,000 were trea....
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....lear that if any amount has already been disclosed that cannot be questioned while completing the assessment under Chapter XIV-B. Therefore, in view of these facts and circumstances, we find that there was no justification on the part of Assessing Officer for making the addition of these amounts, which were already disclosed while filing the regular returns. Various case laws relied upon by the counsel of the assessee are in support of above view of ours. Accordingly, we delete the additions of Rs. 55,50,000. 8. The other grounds are consequential. Therefore, the Assessing Officer is directed to alow consequential relief to the assessee. 9. In the result, the appeal of the assessee is allowed. Per B.R. Jain, Accountant Member. - The record reveals that the assessee was incorporated as a company on6-3-1991. An action under section 132 on the appellant was taken on 14/15th September, 1995. The assessment completed under section 158BC(c) of the Act on 30-9-1996 at an undisclosed income of Rs. 2,01,58,230 stood set aside by the Tribunal in ITA No. 5591/Del./1996, dated 30th January, 2001 as the assessee did not get proper and reasonable opportunity of being heard. In the set a....
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.... of Rs. 40 lakhs was returned and the balance amount of Rs. 15 lakhs was shown as the closing balance in the balance sheet for assessment year 1995-96. No incriminating material to establish that no such amount had been received from M/s. Concept International (P.) Ltd. was found or any material detected and as such the aforesaid addition is also untenable. The copy of account of M/s. Concept International (P.) Ltd. was filed during the course of block assessment proceedings." 3. The Assessing Officer being not satisfied about the genuineness and also by relying on the Hon'ble Calcutta High Court decision in CIT v. Precision Finance (P.) Ltd. [1994] 208 ITR 465 treated the credits of Rs. 55,00,000 as unexplained and by holding the same as bogus cash credit and invoking section 68 of the Act, the whole amount of Rs. 55,00,000 was treated as undisclosed income for assessment year 1994-95 comprised in the block period. 4. Before us the Ld. counsel filed written synopsis in brief and made reference to paper book pages 21,61,27,49,51 and 57. He also filed a copy of ledger folio page 122, during the course of hearing though the same is not certified as a true copy of seized Annexur....
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....on 158BA of the Act did not have any limitation to assess the undisclosed income in accordance with the provisions of Chapter-XIV-B of the Act which is a special procedure for assessment of search cases. 8. The definition of 'undisclosed income' under section 158B(b) of the Act has also been amended by the Finance Act, 2002 with effect from 1-7-1995 by inserting or any expense deduction or allowance claimed under this Act which is found to be false so as to read as under: "Undisclosed income 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 transaction represents wholly or partly income or property which has not been or would not have been disclosed of the purpose of this Act or any expense deduction or allowance claimed under this Act which is found to be false." 9. Furthermore under section 158BB deals with the computation of undisclosed income of the block period and sub-section (2) states that in computing the undisclosed income of the block pe....
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....ure of transactions which were at variance with the ledger account seized during the course of search. Balance sheet for the year ended 31-3-1994 sought to be relied by the assessee's counsel shows amount of sundry creditors of Rs. 2,19,06,704 under the head 'current liability'. When a reference is made to Schedule-I at assessee's paper book page 51, a credit is found made in the name of M/s. Concept International. The assessee did not show at any stage of hearing before the Assessing Officer nor before us that this creditor and M/s. Concept International India Pvt. Ltd. are the same person. There is no legal document on record to enable me to accept the nature of transaction as genuine. The assessee has not tendered any explanation to the satisfaction of the Assessing Officer about the nature of such sum aggregating to Rs. 55,00,000 found credited in the books of account maintained by him. The onus that lay upon the assessee has not been discharged. The Assessing Officer, therefore, was justified in treating this amount as unexplained and undisclosed income of the block period. 14. Now I proceed to examine the applicability of various case laws referred by Ld. counsel of the as....
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....ge of opinion. In this background, theHon'ble Courtheld that the special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected at a result of search. As the statutory provision goes to show, it is not intended to be a substitute for regular assessment. Its scope and ambit is limited in that sense to the materials unearthed during search. It is in addition to the regular assessment already done or to be done. 18. In the case in hand, the undisclosed income is on the basis of material found as a result of search. Regular assessment was also not made nor it is shown that it was to be made. The insertion by the Finance Act, 2002 with retrospective effect 1-7-1995 in the definition of section 158B(6) which permitted to find out undisclosed income from regular books of account also where the assessee has been found to have claimed false expenses, deduction or allowance under the Income-tax Act, did not come for consideration of the Hon'ble Court while it took decision in the case of Ravi Kant Jain. Thus if there was material which was found as a result of search to indicate undisclosed income, merely because the entries w....
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....ned by the assessee, can be assessed as undisclosed income for the purpose of Chapter XIV-B while completing assessment under section 158BC/254 of the Act or not?" The facts stated by the two members in their respective orders are not in dispute. However, it would be advantageous to briefly recapitulate the reasons advanced by them for deleting/sustaining the addition. 2. The learned Judicial Member has given a finding that the balance standing to the credit of Concept International was shown in the balance sheet filed by the assessee alongwith the regular return of income for assessment year 1994-95. It has also been recorded by the learned Judicial Member that the records for assessment year 1994-95 were produced and seen by the Bench and that the learned DR fairly admitted this fact. The learned Judicial Member has further observed that if the department wanted to question the genuineness of this amount, it could have been questioned while completing the regular assessments or by reopening the assessments. According to him, if the amounts have already been disclosed while filing regular returns, the same cannot be questioned while completing the block assessment under Chap....
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.... be said that it was detected only as a result of search. In fact, according to him, the detection was not at all as a result of search and hence no addition was justifiable in the block assessment proceedings. 5. The learned DR contended that the definition of the term 'undisclosed income' had a wide connotation to include income based on any entry in the books of account or other documents. He contended that if an entry represented wholly or partly an income, and if such an entry has been shown as a loan or a liability, but not as income, then it would come within the ambit of the definition of 'undisclosed income'. It was also contended that merely because a particular transaction has been recorded in the books of account, it does not by itself get excluded from being treated as undisclosed income. Finally, he strongly supported the order of the learned Accountant Member. 6. The differing orders and the rival contentions have been duly considered by me. Two confusions, which neither of the learned members has tried to remove, have given rise to the present controversy. One is a major confusion and the other is not so major a confusion. The major confusion first. Neither of....
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....laced on record a copy of the return for assessment year 1994-95. This fact is not disputed by any one including the learned Accountant Member. However, what the learned Accountant Member mentions is that mere filing of return cannot be treated as an order of assessment and for this proposition, he has relied on the judgment of the Delhi High Court in the case of Mahanagar Telephone Nigam Ltd. With due respect to the learned member, this judgment is cited totally out of context. In that case, there was an intimation passed under section 143(1)(a) of the Act and thereafter the assessment was reopened under section 147 of the Act. The assessee challenged the reopening on the ground that it was a change of opinion on the part of the Assessing Officer. The High Court held that since intimation under section 143(1)(a) is not a regular assessment, the Assessing Officer cannot be said to have applied his mind and hence there is no question of any change of opinion. Nowhere the High Court has said that mere filing of return cannot be treated as an order of assessment. In fact, it is not the case of the assessee also in the present appeal. The assessee's only contention is that the amount h....