TaxTMI 
TaxTMI 
2017 (12) TMI 1169
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.... search revealed receipts of purchase of gold ornaments in the name of the assessee on different dates but the purchases were not entered in the relevant cash books of the assessee. Regarding investment in house property, it appears, though the Assessing Officer proposed addition of sum of Rs. 23,33,000/- but he did not add back the same. The Assessing Officer also added two amounts of Rs. 2,06,000/- and 3,00,580/- upon discovery in search of details of cash payments during the financial year 1995-96 of Rs. 2,06,000/- and in the period between 1st April, 1996 to 7th August, 1996 of Rs. 3,00,580/-. These payments were not found as entered in the respective cash books and were added back as undisclosed income in the block period. The next addition was aggregate sum of Rs. 1,14,062/-. A part of the said amount though related to purchase of land for hotel project but was found to be unexplained expenditure. The other part was on account of interest on loan taken for repair of vehicle but diverted for purchase of capital asset. Another addition of aggregate sum of Rs. 3,64,860/- was made as undisclosed income of the assessee for the financial year 1991-92 to 1995-96 being unexplai....
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....n on a/c of unexplained expenditure in land amounted to Rs. 1,03,729/- when the assessee himself failed to link this expenditure with any specific source of income? (e) Whether on the facts and in the circumstances of the case the I.T.A.T's direction as regards addition of Rs. 10,333/- being interest on the loan taken for land purchase is legally correct in view of the decision reported in 238 ITR 13? (f) Whether on the facts and in the circumstances of the case the I.T.A.T. was justified in deleting the addition of Rs. 35,15,299/- being the undisclosed income for the block period whereas the entire matter and/or issue should have been remitted back to the Assessing Officer for a re-examination in terms of the decision of Apex Court reported in 231 ITR 507? (g) Whether on the facts and in the circumstances of the case the I.T.A.T. was justified in deleting the addition of Rs. 48,400/- found during the course of search?" At the outset Mr. Agarwal, learned advocate appearing on behalf of Revenue submitted he was not pressing questions (b) and (e) as they related to matters of regular assessment. The said questions had been framed at the instance of Reven....
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....ings that is assessment of income under section 143(3) and assessment in the block period under Chapter XIV-B can go on simultaneously. As income assessable under Chapter XIV-B is an "undisclosed income" while the income assessable under section 143(3) is not an "undisclosed income" that has been clarified in the Explanation that the undisclosed income relating to that block period shall not include the income assessed in the regular assessment. Therefore, if any income is assessed under the regular assessment that cannot be taxed twice while making the assessment of the block period. But in the returns if some deductions have been claimed which are not permissible under the provisions of the Act of 1961, they can be assessed and taxed only in the regular assessment......" The rest of the questions are to be answered and we take them in order. Question (a) relates to the discovery of receipts, in respect of jewellery, for the sums of Rs. 31,696/-,Rs.61,176/- and Rs. 91,051/- respectively for financial years 1994-95, 1995-96 and 1996-97. These receipts are in the name of the assessee but the explanation offered was that they were partly for re-making and partly for purchase of go....
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.... failed to offer any explanation as possible under the chapter. For the explanation possible under the chapter he relied on a judgment of the Madhya Pradesh High Court in the case of Dr. Brijesh Lahoti vs. CIT reported in (2006) 282 ITR 349 (MP), to the following portion in paragraph 8: "8)......This interpretation given by us finds support in the language used in sub-section(3) of section 158BA of the Act which provides, inter alia, that where the assessee proves to the satisfaction of the Assessing Officer that any part of income referred to in subsection (1) relates to an assessment year for which the previous year has not ended or the date of filing the return of income under section 139(1) of the Act for the previous year has not expired and such income or the transactions relating to such income are recorded on or before the date of the search or requisition of the books of account or other documents maintained in the normal course relating to such previous years, the said income shall not be included in the block period......" On question (c) Mr. Agarwal submitted, the sum involved was undisclosed income since the assessee had simply said the amounts relate to bu....
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....r than the one searched. Such a provision could not have been enacted if the intention of the Legislature was that the explanation possible under the Chapter could only relate to the assessee himself. ii. Bipin Vimalchand Jain vs. Assistant Director of Income Tax(Investigation) and Others reported in (2008) 305 ITR 304 (Bom). Mr. Khaitan submitted, the facts were that during the course of search cash was found at the business premises of the assessee. The assessee explained that out of the sum found a part belonged to one Bipin Vimalchand Jain. Just because the search was carried out on 29th December, 2006 i.e., after 1st June, 2003 on and from when section 153A providing for assessment in case of search or requisition replacing the provisions of Chapter XIV-B in respect of search initiated after the 31st May, 2003 came into effect, it cannot be said that prior thereto the explanation possible under the amended section was not so under the said Chapter. He submitted, in this case the Bombay High Court was of the view that once the explanation given by the assessee, regarding the nature and source of the acquisition, was on verification found to be correct then the amount w....
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....f his client as recorded in the impugned order. Chapter XIV-B of the Act was a special provision enacted by the Legislature for the purpose of assessments in search cases. The Chapter was introduced with effect from 1st July, 1995 and subsequently made inapplicable in cases of search initiated under section 132 or section 132A after 31st May, 2003, with effect from 1st June, 2003. The said Chapter comprises of sections 158B to 158BH. Section 158B provides for the definition of, inter alia, undisclosed income. Sections 158BC and 158BD provide for the procedure for block assessment of the assessee's undisclosed income. Section 158BD provides for assessment in the case of undisclosed income of any other person. It is clear that the provisions of the Chapter were enacted for the purpose of assessing undisclosed income. It follows that when an assessee seeks to explain a discovery in search as not being his undisclosed income, he necessarily has to prove to the satisfaction of the Assessing Officer that the discovery relates to disclosed income, disclosed by way of record, on or before the date of search or requisition, in the books of accounts or other documents maintained in the....
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.... who would have been assessed to a larger amount, an assessment so made can certainly be erroneous and prejudicial to the interests of the Revenue." Mr. Agarwal had relied on Smt. Tara Devi Aggarwal (supra) to urge that mere filing of return by the wives of the assessee subsequent to the search does not or did not give sanctity to the income declared by the wives as income earned. Such returns therefore could not be relied upon to rebut the presumption, possible under the Chapter, that the receipts being in the name of the assessee, the amounts involved were his undisclosed income. The fact that the returns filed by the wives of the assessee were accepted by the Revenue was relied upon by the Tribunal. There is no doubt that such acceptance could have been set aside as erroneous and prejudicial to the interests of Revenue but such was not done. Furthermore, Mr. Agarwal, in pursuing his line of argument regarding the scope of explanation possible under the Chapter, had submitted he was not relying either on sub-section(4A) of section 132 or section 292C. As such his reliance on this decision need detain us no further. We find that the Tribunal in dealing with this issue had ac....