TaxTMI 
TaxTMI 
2008 (6) TMI 375
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that notice issued for filing return of income for block period under section 158BC(a) granting time of 10 days instead of 15 days provided under law is a valid notice and as a consequent thereof block assessment made by the ld. Assessing Officer is a valid assessment order. 2.The ld. CIT(A) failed to appreciate that notices issued under section 158BC(a) not being in accordance with the provisions of section 158BC being invalid, the assessment made in response thereto is also an invalid assessment. 3.The ld. CIT(A), erred in confirming the order of the ld. Assessing Officer taxing income of Rs. 3,38,200 derived by the assessee by way of salary etc. for which no return of income was filed was concealed income under section 158BB in spite of the fact that such income was already disclosed to the Department or was below taxable limit. 4.The ld. CIT(A) erred in confirming the addition of Rs. 7,82,000 under the provisions of section 69 being alleged investment made by the appellant in acquisition of flat without properly considering the evidence on record. 5.The ld. CIT(A) erred in holding that addition of Rs. 7,82,000 is warranted on account of slip of paper seized during the cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowing decisions : 1.Salvi Divakar Shankar v. Asstt. CIT [2000] 72 ITD 552 (Pune), for the proposition that salary income on which TDS is deducted is not an undisclosed income within the meaning of section 158B(b) of the Income-tax Act. 2.SOU, Vidya Madanlal Malani v. Asstt. CIT [2000] 74 ITD 341 (Pune), for the proposition that if source of income is known to the Department such income could not be treated as undisclosed income having regard to section 158B(b), even if such income falls under the provisions of section 158BB. The scope of the undisclosed income has to be decided with reference to sections 158B and 158BA of the Income-tax Act. 3.P.R. Patel v. Dy. CIT [2001] 78 ITD 51 (Bom.), for proposition that advance tax is paid even if return is filed is treated as undisclosed income. 4.CIT v. Shyamlal Balram Gurbani [2001] 249 ITR 501 (Bom.), income of the appellant being from interest and salary duly recorded in audited accounts balance sheet of the firm is not undisclosed income. 5.CIT v. Ashok Taksali [2002] 257 ITR 352 (Raj.). Salary income on which TDS is deducted is not undisclosed income. 7. The ld. Departmental Representative relied upon the order of the CIT(A) an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iew of said substitution. As held by the Kerala High Court itself in a subsequent judgment in the case of CIT v. M.M. Thomas [2004] 265 ITR 327. In respect of income which is subject to TDS. We noticed that there are various decisions on the issue including the decisions cited by the ld. Authorised Representative of the assessee according to which such income is not to be treated as undisclosed income as such income was known to the department. In the light of the above discussion, we are of the view that the income in the case where it was below taxable limit and income subject to TDS and advance tax, those income are not to be treated as undisclosed income. The Assessing Officer is directed accordingly. 9. Ground Nos. 4 to 7 are pertaining to addition of Rs. 7,82,000. 10. The brief facts of these grounds are that a search took place on assessee's premises on 22-12-1998. During the block assessment proceedings, the Assessing Officer noticed that the assessee purchased a flat being flat No. 503, Siddharth Nagar, Borivali (E), Mumbai under agreement dated 1-12-1994 from Mr. Anisa Maheshwari for a declared consideration of Rs. 1,56,000. Another flat was purchased by the father of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re evidences/materials, I uphold action of the Assessing Officer." 13. The ld. Representative of the assessee submitted that a flat was purchased by Shri Anish Maheshwari on 20-3-1991 from the builder for a consideration of Rs. 1,32,500. The assessee purchased the flat being flat No. 503, Siddharth Nagar, Borivali (E), Mumbai under agreement dated 1-12-1994. The flat was constructed for the weaker sections. The ld. AR submitted that no cash payment has been made for the acquisition of said flat. He further submitted that the said flat is situated at Siddharth Nagar; where there are 15 buildings consisting of 42 flats and all the flats are being purchased for similar consideration. The Assessing Officer made addition on presumption pain money was paid. The ld. AR submitted that presumption under section 132(4A) is not available for assessment. The ld. AR in support of his contention relied on the decision in the case of P.R. Metrani v. CIT [2006] 287 ITR 209 (SC). 14. The Ld. AR further submitted that the Assessing Officer made addition under section 69. He submitted that unexplained investments not necessary to be treated as income of the assessee. The requirements of section 69 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e handwriting in this paper? Ans. This is neither my handwriting nor my father's nor my other family members. I do not know whose handwritings they are? Q.No.4 As per the writing in this paper it is evident that a sum of Rs. 7,80,000 on money has been paid by my assessee, Shri Harish Imani. Do you want to say regarding this writing? Ans. I do not know to whom this payment is made and I reconfirm that neither I nor any of my family members have received such payment. Q.No.5 Your flat is admeasuring about 530 sq. ft. and the total sale price is Rs. 1.56 lakhs. Accordingly per sq. ft. works out to Rs. 295. In the year 1994 per sq. ft. value of the flat is only Rs. 295 - at Borivali, Mumbai. It appears to be very much on the lower side. Can you justify the reason why it was sold for much lower than market price? Ans. I deny that it is not market price of my flat. I have sold the flat more or less on distress sale basis as at the time of sale. I was informed that the builder has acquired the land illegally and the title deed was not clear and there could be other problems including electricity, occupation was not issued, even society was not formed. Hence I took the decision to sal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....riting of the assessee nor any of their family members. The said paper was found with other paper not related to the assessee. The learned A/R while justifying the amount paid for purchase of flats submitted that the land on which said building and flats are situated was excess land and Smt. Jaylaxmi N. Jhaveri applied to hold the said land in excess of the ceiling limit for construction of houses for weaker sections of the society. The scheme was approved by the Additional Collector and Competent Authority, Urban Land Ceiling, Greater Bombay. The land on which building was constructed was in litigation and hence project was delayed. As project was delayed, rate for construction of tenements were revised. The Government has approved the rate of Rs. 310 per sq.ft. The builders M/s. S.V. Builder sold the flats in the same buildings during the period January 1994 to December 1999 were in the range of Rs. 1,64,300 to Rs. 1,85,500 (details and copies of some agreements furnished are at pages 17 to 69 of assessee's paper book. [ITA No. It(ss)170/M/04)]. The permission to occupy the completed building was issued by the "Municipal Corporation of Greater Mumbai on 20-12-2001. The Ld. AR fur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the possession or control of any person in the course of a search, the following presumptions shall be made: (i)That such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii)That the contents of such books of account and other documents are true; and (iii)That the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. 23. Section 132(4) empowers "The authorised office may, during the course of the search and seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any procee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the section 69 of IT Act and held as under (head note):- "In the corresponding clause in the bill which was introduced in Parliament, while inserting section 69 in the Income-tax Act, 1961, the word "shall" had been used but during the course of consideration of the bill and on the recommendation of the Select Committee, the said word was substituted by the word 'may'. This clearly indicates that the intention of Parliament in enacting section 69 was to confer a discretion on the Income-tax Officer in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the Income-tax Officer is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under section 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the ITO under section 69 to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... time of block assessment, the Assessing Officer examined the selling party by issuing summons under section 131 of the IT Act. The seller has also categorically denied receiving any on-money in the transaction. (See Para 16 of this order). After examination under section 132(4) and under section 131 the evidentiary value of presumption under section 132(4A) is to be taken accordingly. It is important to note that both Revenue authorities, the Assessing Officer and the CIT(A) conveniently ignored the later part of examination by saying that those statements were not used against the assessee (as said by the Assessing Officer in remand report). They heavily relied upon the paper found at the time of search. Such action of revenue authorities is not appreciable as same is not in accordance with law. Therefore, their action in the matter cannot be approved. The department cannot convert a good proof or evidence in the form of statements of assessee recorded at the time of search under section 132(4) and statement of seller under section 131 of IT Act recorded at the time of assessment proceedings in to no proof or evidence. In the light of above discussion, we are of the considered vi....