TaxTMI 
TaxTMI 
2010 (3) TMI 796
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....following are the substantial questions of law which are purported to raise in this appeal : "1.(a) Whether, on the facts and in the circumstances of the case and in the light of the reasons given by the Assessing Officer in the assessment order (vide last paragraph of page 8 of the assessment order), the Tribunal is right in law in interfering with the addition of Rs. 45,19,238 ? (b) Whether, on the facts and in the circumstances of the case and in the absence of any material evidence either during the assessment proceedings or during the appeal proceedings to prove that the receipt of Rs. 45,19,238 was a computer error, the Tribunal is right in law in deleting the addition of Rs. 45,19,238 ? (c) Did the assessee discharge the burden of proof ? (d) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in allowing the claim of the assessee that the receipt entry in respect of bill No. 42 for Rs. 45,19,238 reflected in the computer print out as a computer error and is not the allowance by the Commissioner of Income-tax (Appeals) and the Tribunal being not based only supporting material or evidence or proof by....
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....2 for Rs. 45,19,238, the case of the respondent was that it is an error. According to the respondent, the bill amount was Rs. 1,715. The Assessing Officer rejected the claim of the respondent while the appellate authority and the Tribunal accepted the case of the respondent that it was a case of an error. Learned counsel for the appellant would point out that in terms of the provisions relating to block assessment, the Assessing Officer was justified in relying upon this material which was unearthed in the search, namely, the computer print out which unambiguously revealed that the respondent had received Rs. 45,19,238. It is his contention that there was no evidence before the Assessing Officer to show that the correct amount is Rs. 1,715. He would submit that the bill for Rs. 1,715 was manually written up as against the other documents which were machine generated. Therefore, he would contend that the Tribunal erred in sustaining the finding of the appellate authority that the correct amount is Rs. 1,715. 6. Per contra, learned senior counsel for the respondent points out that the very fact that the amount is so colossal and that it related to a receipt in a single day ....
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....e receipt, is essentially an error. It is also not in dispute that the Assessing Officer himself did not choose to include the same in the pre-assessment notice. We cannot overlook the argument of the respondent that in the course of the proceedings, the respondent was apparently able to convince the Assessing Officer of the nature of the error. In such circumstances, we reject the contention of the appellant. We also do not think that a case is made out for remanding it back to the Assessing Officer. 9. As regards the second substantial question of law which is raised and pressed before us is concerned, the contentions of the appellant are as follows : For the assessment year 2002-03, before the search, the claim of the assessee on account of depreciation was Rs. 8,64,823. But, in the block return, the assessee made a claim for depreciation at Rs. 22,79,586 as on March 31, 2002. The contention of the appellant is that if the respondent had a claim for a higher amount as depreciation, the proper course for the respondent was to have filed a revised return and claimed what she was advised to claim therein. The appellant contends that in proceedings for block asse....
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....iving effect to set off of brought forward losses under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32 : Provided that in computing deductions under Chapter VI-A for the purposes of the said aggregation, effect shall be given to set off of brought forward losses under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32." 13. We further notice section 158BH which reads as follows : "158BH. Application of other provisions of this Act.-Save as otherwise provided in this Chapter, all other provisions of this Act shall apply to assessment made under this Chapter." 14. Thus, section 158BH makes all the other provisions applicable to the assessment under Chapter XIV-B unless it is otherwise provided for. Therefore, we would have to examine whether there is anything in Chapter XIV-B which taboos the assessee setting up a claim for depreciation as permitted under the Act, even though a lesser amount was claimed by the assessee in the regular return filed by her. The key provision appears to be section 158BB itself. It, inter alia, provides that the undisclosed income shall be the aggregate of the total ....
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....ng the income on the basis of the actual receipt for the remaining 333 days in the year. He would submit that there is no basis for the Tribunal not to have accepted the complaint of the appellant that the appellate authority erred in interfering with the amount of undisclosed income for the aforesaid period which was arrived at on a rational basis. In this regard, he would submit the following facts before us : In the course of the proceedings, a statement was given by none other than the father of the respondent who, in fact, was managing the entire affairs of the hospital. The case of the respondent was that the hospital had become fully functional only from May 1, 2001, and hence estimating the income for the period April 1, 2001, to May 2, 2001, on the basis of the actual collection details seized for the period May 3, 2001, to March 31, 2002, would be unsustainable. The Assessing Officer, however, took the view that the estimation of income for the period in question was being considered on the basis of the actual receipts for the respondent for the subsequent 333 days. He found that the estimation proposed was far less than ten per cent. of the total number of days....
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....s commenced in the year 1994. Three floors on one side of the hospital was completed in the year 1996 and the hospital started its functioning. By around 1999 three floors on the adjacent side too was completed. By March, 2001, construction of all the seven floors, on both the sides were fully completed. Each floor of the hospital building admeasures 731.24 sq. mt. Thus the total constructed area for all the 7 floors when put together is 5,118.68 sq. mt. There are 29 rooms in each of the first five floors including ground floor and each of such rooms is bath attached." 17. In fact, the Assessing Officer has noted that in regard to the question of investment in the hospital construction (which incidentally, we will be dealing as the last question of law), though the respondent stated that she did not know anything about it and all the details are known only to her husband Shri Kunhammed. Learned counsel for the appellant would submit, therefore, that the hospital was functioning since 1996 and for the period April 1, 2001, to May 2, 2001, if on the basis of the income for the remaining period in the financial year, estimation is made in the facts of this case, the Tribunal....
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..... In regard to the last substantial question of law which is purported to be raised, the learned counsel for the appellant would make the following submissions before us : The Assessing Officer estimated the cost of construction of the building at Rs. 3 crores. In this regard, it is pointed out the statement given by Shri Kunhammed under section 132(4). He has further stated apart from what we have extracted earlier, as follows : "OTIS Lift has been installed in the hospital for an approximate cost of Rs. 10 lakhs. As far as I remember, an amount of Rs. 1 crore has been approximately spent on construction of the hospital building. I do not exactly remember how much had been spent. The accounts of the construction work are lying with Shri Dinesh Babu who is keeping my accounts also." 21. The Assessing Officer found that on verification of the income-tax returned for the assessment year 2001-02, it was seen that the total expenditure shown by the assessee on the hospital building up to March 31, 2001, is Rs. 89,51,229. In the return of income for the assessment year 2002-03, which was filed before the date of search, the total construction cost is Rs. 1,....
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....for the assessee that even statement recorded under section 132(4) from Shri Kunhammed, the cost of construction was stated to be only Rs. 1 crore, which was far below the value shown in the accounts at Rs. 1,31,13,256. In this view of the matter, we find that the block assessment was made on estimate basis without any seized material. This method of assessment is not permitted under the Act. Hence, we are inclined to confirm the order of the Commissioner of Income-tax (Appeals) by rejecting this ground of appeal of the Revenue." 23. Learned counsel for the appellant would submit that having regard to the known source of income, which was gifts received by the respondent, and the nature and extent of the contributions admittedly made by the respondent, estimation by the officer on the basis of the search and the statement given ought not to have been interfered with by the appellate authority. 24. Per contra, learned counsel appearing on behalf of the respondent would impress upon us the purport of section 158BB of the Act. He cited before us the following case law : (1) CIT v. Vinod Danchand Ghodawat [2001] 247 ITR 448 (Bom) ; (2) CIT v. Ashok Khet....