TaxTMI 
TaxTMI 
1997 (4) TMI 128
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....d Mohanchand on 17th Oct., 1995. In the case of the present assessee, certain gold and cash was seized. In the order passed under s. 158BC(c), the AO held that the entire cash, jewellery, etc. seized stood explained. He, however, found that the assessee had not furnished the return of income for the asst. yr. 1995-96 till the date of search though the same was due earlier. Total income for the asst. yr. 1995-96 was computed at Rs. 34,703 which was treated as undisclosed income for the block period on which tax at flat rate was charged. 4. Shri P.C. Jain, the learned counsel for the assessee, submitted that an explanatory note to the block return of income was filed which reads as follows: "As per s. 158B(b) the undisclosed income repr....
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....o be indicated against that previous year. For any year, if one return has not been furnished for the reason that the total income was not above the maximum amount not chargeable to tax, the total income is to be mentioned against that previous year." It was submitted that when there was no obligation on the part of the assessees to file the return and his total income was otherwise exempt for the asst. yr. 1995-96. The AO could not treat the same as undisclosed income under s.158BB(c) of the Act, simply because the assessee had not filed the return for that year. It was submitted that otherwise the AO had found no undisclosed income in this case and the only `undisclosed income' was the one pertaining to the asst. yr. 1995-96 for which ....
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....e to the return that his income being below the taxable limit, he was not obligated to disclose it by filing the return of income. Note No. 5 in return Form No. 2B also supports the assessee's case. At p. 2 dealing with the computation of total undisclosed income, the assessee is required to give details of returned/assessed income. There may be a case where the assessee has filed the return, but the assessment has not been completed. In such a case the returned income would be relevant. There may be another case where after the return has been filed, assessment has been made. In such a situation the assessed income may be relevant. There may be yet another case where there is no return because the due date for such return has not arrived a....
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....tention, it is clear to me that the AO was totally wrong in computing undisclosed income at Rs. 34,703 for the block period. The assets which were found or seized at the time of search were duly explained by the assessee and no addition whatsoever has been made by the AO in respect of any undisclosed income as such. The only undisclosed income, according to the AO is the income of Rs. 34,703 for the asst. yr. 1995-96 which was below the taxable limit and for which the assessee was not obligated to file the return. I, therefore, hold that the AO was wrong in computing the undisclosed income at Rs. 34,703 which is hereby deleted. I, therefore, allow the assessees appeal. 7. Now I come to appeal ITA No. 896/Nag/96 in the case of Shri Suresh....
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....d the assessee's appeal is allowed. 11. Now I come to ITA No. 899/Nag/96 in the case of Shri Kamalchand Baid. 12. Ground No. 2 is regarding the addition of Rs. 34,367 as undisclosed income for the asst. yr. 1995-96 for which the assessee had not filed the return. The assessee is an individual whose income was exempt from tax upto Rs. 35,000. For the reasons mentioned in the case of Shri Kasturchand Baid (ITA no. 895/Nag/96) above, the addition of Rs. 34,567 as undisclosed income is hereby deleted. This ground, therefore, succeeds. 13. Ground No. 1 relates to the addition of Rs. 18,333 as unexplained cash. 14. The facts shows that at the time of search from 17th Oct., 1995, to 26th Oct., 1995, besides gold and silver, cash amount....
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....ted that before the AO the assessee pleaded that his wife Smt. Yashoda Bai was a regular assessee, that her capital statement as on 31st March, 1994, showed cash and bank balance of Rs. 14,235 that she was having rental income and interest income which was coming from earlier years, that she had earned rental income of Rs. 13,200 and interest income of Rs. 3,840 for the year ending 31st March, 1995, that her rental income from 1st April, 1995, to 17th Oct., 1995, was Rs. 6,600 and interest from Kasturchand Mohanchand at Rs. 3,000 and that as per copies of the capital statement at pp. 11 and 12 of the assessee's compilation, the cash balance as on 31st March, 1995, was of the order of Rs. 22,435 and on 17th Oct., 1995, it amounted to Rs. 28,....