2003 (3) TMI 10

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....ction 158BB in respect of the book profit for the assessment years 1988-89,1989-90 and 1994-95, though no return of income has been filed under section 139(1)/139(4) of the Income-tax Act, 1961? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that disallowance under section 40A(3) of the Act was not called for once net profit rate has been applied to compute the income?" We need not state the facts in detail except mentioning that the assessee carried on the business of manufacture and sale of metallic utensils, particularly of gillate as well as trading in stainless steel utensils on a small scale. A search and seizure was conducted on the residential and business premises of ....

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.... - (A) on the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such entries result in computation of loss for any previous year falling in the block period; or (B) on the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such income does not exceed the maximum amount not chargeable to tax for any previous year falling in the block period; (ca) where the due date for filing a return of income has expired, but no return of income has been filed, as nil, in cases not falling under clause (c);" It is pertinent t....

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....en if no return is filed, the benefit would be given in respect of the period which would not come within the frame of tax liability as per the books of account but as far as the balance period is concerned, the tax liability would be treated as undisclosed income. Needless to emphasise if for some years which constitute the block period, the tax liability is not accruable on the foundation of the books of account, then the assessee would also get the benefit and it will not be treated wholly and entirely as the undisclosed income. The undisclosed income is confined to the period for which tax liability is determined on the basis of the entries in the account books or on the basis of material found in the course of search and seizure. As....

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....1995-96 82,435 1996-97 1,67,088 2,49,523 30. We have considered this aspect in detail while deciding the ground No. 5 in the case of Shri Santosh Kumar Tamrakar. The facts are similar in the case of the assessee also. In the case of the assessee also, the income on sale of utensils has been assessed on estimated basis, i.e., by applying a net profit rate. Once a net profit rate is applied, the expenses are deemed to be considered while applying the net profit rate. Therefore, no further deduction is to be allowed or to be disallowed. Accordingly, we delete the addition of Rs. 2,49,523 for the assessment years 1995-96 and 1996-97. Ground No. 5 of the assessee's appeal is allowed." It is submitted by Mr. Purohit that the Ass....