TaxTMI 
TaxTMI 
2011 (5) TMI 332
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....m Income Tax as per Sikkim Income Laws, is liable to tax under the Income Tax Act, 1961 in respect of income accruing/arising to it in Sikkim? 2. Whether the Tribunal could proceed on the basis of unamended provision of S.158BB of Income Tax Act, 1967, when the said section had been retrospectively amended by Finance Act of 2002 with effect from 01.07.1995? 3. Whether and in any event, on a true and proper interpretation of the retrospectively amended section 158BB of the Income Tax Act, 1961 requiring computation of undisclosed income on the basis of evidence found as a result of search and any other material or information relatable to such evidence, the Tribunal was justified in law in sustaining an aggregate addition of Rs.16,75,29,688/- when there was no such evidence, material or information found as a result of such search and its purported findings in that behalf are arbitrary, unreasonable and perverse? 4. Whether the Tribunal could have relied upon the judgment of single Judge of this Hon'ble Court when the same has been expressly reversed in appeal by Division Bench of this Hon'ble Court? 5. Whether and in any event, the addition o....
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....follows:- The assessee is a private limited company incorporated under the Companies Act, Sikkim, 1961 on 12th March, 1975. The contention of the assessee is that ever since its incorporation it has been regularly filing returns and as such being assessed to income tax under the provisions of Income Tax Manual, Government of Sikkim which is still in force, though Income Tax 1961 extendes to the State of Sikkim on 1st April, 1989, as the same has not yet been implemented. Government of India and Government of Sikkim have recently constituted a high power committee to resolve the differences between the Government of India and the Government of Sikkim on implementation of the Direct Tax Laws in the State of Sikkim. The nature of business of the assessee is of interest on bonds, FDR etc. and truck operation. The Assessing Officer concerned in this case on receipt of information resulted in a search on 8th October, 1996 in the case of M/s. Feena Petro Products Limited having its place of business at 622, Mount Road, Chennai and notice to the assessee company under Section 158BD of the Income Tax Act, 1961 hereinafter referred to the said Act required the assessee-company to s....
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....udgment and order rejecting all the contentions raised by the assessee except the contention that addition of sum of Rs.10,08,265/- being the amount of loss claimed on account of the leased cylinders and amount of Rs.1,00,23,000/- which was included as being the amount paid for purchase from one M/s. Dessma Engineering Company Limited and the same was also related to the lease of cylinders by the assessee to M/s. Feena Enterprise. The addition by the Assessing Officer of the aforesaid amounts was not accepted hence on limited purpose the learned Tribunal remanded the matter for reconsideration. The Revenue has preferred above appeal against the aforesaid order of remand after deletion of the addition of the aforesaid two amounts. Mr. Khaitan, learned Senior Advocate has raised various interesting legal points in this matter. He firstly submits the learned Tribunal has committed error in law while holding that the Income Tax Act, 1961 at the relevant point of time was not applicable to Sikkim relying on the judgment of the learned Single Judge in case of Anjan Banerjee vs. Union of India reported in 1994 (207) ITR 130 (Cal) and also the order of withdrawal of sub....
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....dings. Thus by the award followed by the orders in execution by the Hon'ble Madras High Court it has clearly been established the fact that there has been a lease and the assessee owns the said cylinders and thereby the findings of the Assessing Officer who conducted search and seizure at the place of lessee, of non-existence of lease and paper transactions is unacceptable under law. Thus factual basis for initiation of block assessment under the said aforesaid Section 158BD is absolutely non est. Even the learned Tribunal failed to notice that assumption of jurisdiction under Section 158BD made without examining the satisfaction recorded as required in the said section. Hence there was no need to remand the said matter for fresh hearing. He urges thereafter that while computing the alleged undisclosed income Assessing Officer as well as the learned Tribunal have taken into consideration of the extraneous material as in view of the amended provision of Section 158 BB which came into force retrospectively from July 1, 1995 though amended by the Finance Act 2002 does not permit other materials or information other than which has been found as a result of such search. In oth....
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....pplicability of the decisions of the Supreme Court reported in 297 ITR 322 and 310 ITR 105 have been referred by decision of the Supreme Court reported in 314 ITR 338 (SC) to the Larger Bench. Learned Counsel for the Revenue while contesting the appeal filed by the assessee Himal and while supporting the appeal of the Revenue contends that in view of the judgment of the learned Single Judge of this Hon'ble Court in the case of Ajan Banerjee vs. Union of India (1994) 2007 ITR 130 (Cal) the said fact has full application, even though the said judgment has been upset by the Division Bench of this Court but the ratio and reasoning has got full force. Hence it is incorrect to say that Income Tax has no application in this matter. He contends that the Assessing Officer of Feena arrived at his satisfaction with regard to the undisclosed income of the appellant-assessee and as such satisfaction has been recorded in his letter dated October 7, 1997 addressed to the Assessing Officer of the assessee. On receipt of the said communication proceedings for block assessment was initiated by the Assessing Officer of the appellant-assessee at a time when present provision of Section 158BB was not i....
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....part of lessee, Feena at Chennai. Indisputably assessment for the block period has been initiated pursuant to the said notice for the assessment years 1987-88, till 1997-98. It is contended by the learned counsel for the appellant in assessee's appeal that the various legal issues were urged before the learned Tribunal, and though noted the same were not discussed nor any reason has been given. On reading of the judgment of the learned Tribunal we find what the learned counsel for the appellant-assessee contends. First point is whether initiation of block assessment under Section 158BD is lawful exercise of jurisdiction or not. We therefore set out the text of the provision of Section 158BD. Undisclosed income of any other person. "Section 158BD - Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other perso....
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....orce in the argument of Mr. Khaitan learned Senior Advocate that claim of depreciation going by definition of undisclosed income in Section 158B(b) of the Act cannot be said to be allowable or deductable expense as it is really written down value of the assets hence it cannot be said to be an income. It would appear from the said notice no satisfaction required under Section 158BD has been recorded nor could be recorded. It is now well-settled as has been correctly argued by the learned counsel for the respondent that the satisfaction of the Assessing Officer is pre-condition for assumption of jurisdiction. This proposition has been laid down by the Supreme Court in Its decision reported in 289 ITR 341. Therefore, we are of the view initiation of the block assessment based on the said communication of the Chennai Assessing Officer is without jurisdiction. Besides assumption of jurisdiction by the Assessing Officer at Madras on fact is also legally incompetent in view of the award published on the reference of dispute to Arbitration between appellant-assessee and the said Feena/lessee followed by order passed by the Hon'ble High Court at Madras in execution proceedings for....