TaxTMI 
TaxTMI 
2010 (6) TMI 88
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...., 1961 (hereinafter referred to as 'the Act') on 19/20.01.1996. In connection with the said search, the residence of Mr. S. D. Rajendran, the husband of the respondent assessee was also searched. 3. According to the appellant, number of documents were seized in the course of the search evidencing the fact that the respondent assessee had 'undisclosed income' assessable to tax under Section 158BD read with Section 158BC. Proceedings were initiated under Section 158BD and notice under Section 158BC dated 07.03.1997, was issued to the respondent. The Notice was served on 18.03.1997, and the assessee filed her return of income in Form No.2D in response to the notice on 26.05.1997. She admitted an undisclosed income of Rs.2,31,098/- and paid tax of Rs.1,38,659/-. 4. Thereafter, notice under Section 143(2) dated 29.05.1997, was issued calling for details. The respondent represented through an Income Tax Practitioner and submitted the details. In the course of the assessment proceedings, after detailed hearing afforded to the respondent, the block assessment covering the period between 1986-87 to 1996-97 (upto 19.01.1996) was computed. The total undisclosed income was determined in ....
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.... of the respondent assessee since the materials were unearthed in the course of search on her brother-in-law Mr.Dyaneswaran, Section 158BD was attracted and consequently when notice under Section 158BC came to be issued, unless there had been a valid return filed by the assessee disclosing the income as per the statutory provisions, the Tribunal was not justified in relying upon the reply filed by the respondent assessee to a summon issued under Section 131 of the Act, to hold that the income was already disclosed and on that footing set aside the order of the assessing authority. 10. The learned standing counsel relied upon the decisions reported in : (i) (2005) 274 ITR 110 (Assistant Commissioner of Income Tax Vs. A.R.Enterprises) (ii) (2001) 252 ITR 712 (Lakshmi Jewellary Vs. Deputy Commissioner of Income Tax) (iii) (2001) 251 ITR 625 (Premjibhai Vs. Joint Commissioner of Income Tax) (iv) (2007) 289 ITR 341(SC) (Manish Maheswari Vs. Assistant Commissioner of Income Tax) (v) (2009) 310 ITR 64 (Karn) (Chief Commissioner of Income Tax Vs. Pampapathi) 11. As against the above submissions, Mr.C.V.Rajan, learned counsel appearing for the respondent assessee submit....
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....ar) (iii) (2009) 308 ITR 124 (Mad) (Commissioner of Income Tax Vs. P.K.Ganeshwar) (iv) (2010) 321 ITR 362 (SC) (Assistant Commissioner of Income Tax Vs. Hotel Blue Moon) (v) (2005) 274 ITR 110 (Assistant Commissioner of Income Tax Vs. A.R.Enterprises) and (vi) (2006) 282 ITR 349(MP) (Dr.Brijesh Lahoti Vs. Commissioner of Income Tax) 16. Having heard the learned standing counsel for the appellant as well as the learned counsel for the respondent, to appreciate the contention of the parties, it is worthwhile to make a detailed reference to the relevant provisions of the Income Tax Act. Sections 158B to 158BI have been set out in Chapter XIV-B of the Act. We are concerned with the definition of 'undisclosed income' under Section 158B(b), the procedure prescribed for computation of undisclosed income of the block period as set out in Section 158BB and procedure for block assessment as set out in Section 158BC. In the case on hand the block assessment came to be made based on a search held on the person other than the respondent assessee and therefore Section 158BD also gets attracted. 17. The definition of undisclosed income is defined under Section 158B(b), which rea....
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.... where such income does not exceed the maximum amount not chargeable to tax for any previous year falling in the block period; (2)..... (3) The burden of proving to the satisfaction of the Assessing Officer that any undisclosed income had already been disclosed in any return of income filed by the assessee before the commencement of search or of the requisition, as the case may be, shall be on the assessee. (4)....." ***** Procedure for block assessment:- "Section 158BC:-Where any search has been conducted under Section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person, then,-- (a) the Assessing Officer shall-- (i) in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days; (ii) in respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1997, serve a notice to such person requiring him to furnish within....
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....e assessee in the prescribed format for any of the years of the block period. (e) By virtue of the search made on Mr.Dyaneswaran and the premises of the assessee's husband and based on the seizure of number of documents Section 158BD was invoked based on which a notice under Section 158BC came to be issued on 07.03.1997, to the respondent assessee which was served on her on 18.03.1997. (f) In response to the notice under Section 158BC, the respondent assessee submitted the return of income in Form No.2B on 26.05.1997, admitting an undisclosed income of Rs.2,31,098/- and paid tax of Rs.1,38,659/-. 19. In the above stated background, when we analyse the contentions of the parties, in the foremost, it was contended on behalf of the respondent assessee that the appellant was not legally justified in invoking the provisions contained in Chapter XIV-B of the Act in the premise that there was undisclosed income on the part of the respondent assessee. 20. The sole basis for the said contention was that in response to the summons issued under Section 131, when the respondent submitted a detailed reply dated 15.05.1995, which contained all her transactions, the said conduct of th....
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....t should be on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence. The main thrust is the evidence found as a result of search which should form the basis and all other situations should be relatable to such evidence. Therefore, the main ingredient while computing the 'undisclosed income' of any block period to be satisfied is the evidence found as a result of a search which should form the basis. 25. Further under Section 158BB(1)(c), such determination of undisclosed income for the block period can be made where the due date for filing the return of income has expired, but no return of income has been filed. 26. Under Section 158BB(1)(ca), such determination can also be made even in respect of cases not falling under Section 158BB(1)(c) and where the due date for filing the return of income has expired, but no 'nil' return has been filed. 27. A conjoint reading of the substantial part of Section 158BB(1) and the other sub-clauses in the said Section, in particular sub-clause (c) and (ca), makes it clear th....
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....sessee before the commencement of search or of the requisition, as the case may be, shall be on the assessee. Such a stringent stipulation by way of casting the onus on the assessee to discharge the burden makes it amply clear that one cannot claim the disclosure of any income, much less, 'undisclosed income' based on any other material other than the return filed before the expiry of the due date and where after any search takes place. 30. A reading of Section 158BC(b), further makes it clear that the determination of undisclosed income for the block period can be made by the assessing officer only in the manner laid down under Section 158BB. Once the sub-clause 158BC, reinforces the fact that Chapter XIV-B will have to be treated as a separate code by itself for the purpose of making a determination of the undisclosed income of the block period, in as much as, the said sub-clause 'c' makes it clear that the Assessing Officer, on determination of the undisclosed income for the block period in the said Chapter, pass an order of assessment and determine the tax payable based on such assessment. 31. Therefore, a conjoint reading of Sections 158B(b), 158BB(1) & (3), 158BC, secon....
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....ama dated 20.03.1996, as stated in paragraph 2.4.2, in no part of the order of the Assessing Authority, there was any reference to any contentions raised on behalf of the respondent assessee that nothing was seized in the course of search. 34. The various reference to different transactions of the respondent assessee in the block period makes no reference to the respondent assessee's replies dated 11.03.1995 and 15.05.1995, claimed to have been submitted to the summons issued under Section 131 of the Act. In fact the respondent was represented by its Income Tax Practitioner and several of the contentions made on behalf of the respondent assessee have been specifically referred by the assessing authority in the order while recording his conclusions. Even while preferring the appeal before the Tribunal while there was no specific allegation to the effect that there was no incriminating materials seized in the course of the search. 35. The contentions recorded in the order of the Tribunal makes it clear that the assessment was solely based on the materials seized and the reply of the respondent assessee had no role to play. In paragraph 19 of the order of the Tribunal, the Tribu....
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....erials or information other than those documents, materials or information furnished to the Asstt.Director of Investigation, Madurai on 15.05.1995, have been recovered. Therefore, there is no "undisclosure" as far as the case of the assessee is concerned and therefore the impugned assessment is void ab initio." In which the specific contention raised was that all the information where already disclosed in the reply dated 15.05.1995, itself and that in the course of search no document or materials was recovered or information gathered other than what was disclosed in the reply dated 15.05.1995. 38. Therefore, it was for the first time that too by way of an additional ground, the contentions based on the letter dated 15.05.1995, came to be made. Having regard to the fact that prior to the raising of the said additional ground, the respondent assessee never raised the contention viz., about the absence of any materials seized in the course of search and the fact that while on the other hand a specific reference to the seizure of materials based on the Panchanama dated 20.03.1996, as well as the reference to various contentions made on behalf of the assessee in the order of the T....
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.... by the assessing authority in respect of various items of 'undisclosed income' and the correctness of those evidence made by the assessing authority. 43. Having regard to our above conclusions, we are not able to countenance the plea of the learned counsel for the respondent assessee that there was no materials found in the search and that what was relied upon by the assessing authority were based on the information furnished in the letter dated 15.05.1995. We are not also able to appreciate the contention that there was no material evidence unearthed in the course of the search in order to satisfy the stipulation contained in Section 158BB(1) of the Act. We also do not find any support in the contention of the learned counsel for the respondent assessee that all information were already disclosed and that therefore there was no scope to make an assessment of undisclosed income. 44. When we examine the various decisions relied upon by the learned counsel for the respondent assessee, the decision reported in (2005) 274 ITR 110 (Assistant Commissioner of Income Tax Vs. A.R.Enterprises) was a case where the Division Bench distinguished the decision of the learned Single Judge r....
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.... Recovery of Tax. Part-C of the said Chapter speaks about the Advance Payment of Tax. Section 207 of the Act speaks about liability for payment of advance tax of the Act. Section 208 and 209 speaks about conditions of liability to pay advance tax and the consequential computation. Similarly Section 210 provides for the payment of advance tax by the assessee of his own accord or in pursuance of order of Assessing Officer and Section 234B deals with interest for defaults in payment of advance tax. A conjoint reading of the above said provisions would clearly show that an assessee can pay the advance payment tax either of his own or at the instance of the assessing officer as the case may be. An advance tax is the payment of tax. Therefore an action which involves a payment of tax indicating the source of income cannot be treated on par with any intimation given on the part of the assessee. In the former case, the action is voluntary or as per the directions of the officer whereas in the later case it is only by way of an explanation. Therefore, we are of the considered view that the judgment reported in (2005) 274 ITR 110 (ASSISTANT COMMISSIONER OF INCOME TAX v. A.R.ENTERPRISES) is n....
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....ple in law that the court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. Similar is the position for conditions stipulated in advertisements. Words and phrases are symbols that stimulate mental references to referents. The object of interpreting a statute is to ascertain the intention of the Legislature enacting it. (See Institute of Chartered Accountants of India v. Price Waterhouse (1997) 6 SCC 312). The intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. As a consequence, a construction which requires for its support, addition or substitution of words or which results in rejection of words as meaningless has to be avoided. As observed in Crawford v. Spooner (1846) 6 Moo PC 1, the courts cannot aid the legislature's defective phrasing of an Act, they cannot add or mend, and by construction make up deficiencies which are left there. (See State of Gujarat v. Dilipbhai N....
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....h is as follows: "5......Admittedly, no material was found during the course of search operation in respect of the amount said to be paid in cash over and above the cheque payment. Hence, the Tribunal correctly come to the conclusion that the information or material found during the course of survey operation at the premises of M/s.Elegant Constructions were not relatable to any material found during the course of search operation. Therefore, the Tribunal is right in its view that material or information found at the premises of M/s.Elegant Constructions, in the course of survey proceeding, could not be a basis for making any addition in the block assessment....." Having regard to the peculiar facts noted above in the said decision, it can have no application to the facts of this case. 53. In the decision reported in (2009) 308 ITR 124 (Mad) (Commissioner of Income Tax Vs. P.K.Ganeshwar) the facts disclosed that based on a search carried out on the assessee under Section 132 of the Act, certain items were seized and assessment was made for the block period. Thereafter, in an investigation, certain fixed deposits in fictitious names were found which were treated as undisclo....
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.... ITR 362 (SC) (Assistant Commissioner of Income Tax Vs. Hotel Blue Moon), where the Hon'ble Supreme Court has held as under in paragraph 12: "12. Chapter XIV-B provides for an assessment of the undisclosed income unearthed as a result of search without affecting the regular assessment made or to be made. Search is the sine qua non for the block assessment. The special provisions are devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering the previous years falling in the block period. The special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. It is not intended to be substituted for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done. The assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the Assessing Officer. Therefore, the income assess....