TaxTMI 
TaxTMI 
2003 (1) TMI 68
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....e managing director of Mayura Hotels Pvt. Ltd. and Swathi Hotels Pvt. Ltd., Bangalore. He was also a partner in Hotel Mayura in Bellary and Shanthakumar Ganeshlal Enterprises, Bangalore. He was also carrying on a proprietorship hotel business in the name and style New Prakash Bhavan at Bangalore as a karta of his Hindu undivided family. He was being regularly assessed for the income derived from these concerns as also the other sources disclosed by him. On the basis of some information that the assessee had made unaccounted investments, search under section 132 of the Act was conducted in his premises on May 27, 1998. During the search, unaccounted investments in the form of shares, cash certificate, Indira Vikas Patras and fixed deposits were found. Therefore, all such certificates and deposit receipts were seized. Photo copies of the inventory prepared at the time of seizure containing details of investments, the date of such investments and the amounts, have been placed before us. These details are not in dispute. On June 5, 1998, the statement of the assessee was recorded under section 132(4) of the Act wherein he admitted that he had made undisclosed investments durin....
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....showed cash receipts of Rs. 90 lakhs and the debit side reflected the investment of the entire Rs. 90 lakhs in the form of bank F.Ds., IVPs and other investments. This entry reads as under : Receipts Payments .............................................. .............................. 7.4 To Profit A/c. bank F. D., Bank F. D. Indira Indira Vikas Patras and other 90,00,000 Vikas Patras and other investments 90,00,000 investments  ....
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....ts." We hardly find any ground to sustain this finding because, admittedly, none of the investments detected during the search and seizure can be co-related with the entry made on April 7, 1997. Further, admittedly, undisclosed income has not been found recorded in the books of account so produced. The Tribunal, in order to cancel the block assessment has relied on the following circumstances : (i) The assessee was under tremendous mental tension after seizures were effected, therefore he had filed a wrong return for the block period showing undisclosed income of Rs. 72 lakhs ; (ii) The admission so made in the return cannot be held to be conclusive ; (iii) The assessee cannot be subjected to double taxation." In our considered opinion, none of the above circumstances can be of any avail to the assessee because even if the assessee is found to be suffering from "tremendous mental pressure", the fact remains that he had made investments worth Rs. 72 lakhs and those were not recorded in the books of account. This being the situation, the assessee clearly became liable to be assessed for the block period in question in terms of the provision contained in Chapter XIV-B w....
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....r the removal of doubts, it is hereby declared that - (a) the assessment made under this Chapter shall be in addition to the regular assessment in respect of each previous year included in the block period ; (b) the total undisclosed income relating to the block period shall not include the income assessed in any regular assessment as income of such block period ; (c) the income assessed in this Chapter shall not be included in the regular assessment of any previous year included in the block period. (3) Where the assessee proves to the satisfaction of the Assessing Officer that any part of income referred to in sub-section (1) relates to an assessment year for which the previous year has not ended or the date of filing the return of income under sub-section (1) of section 139 for any 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 in 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. In the present case, the assessee, in order to escape the liability....
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....d and has been arrived at on appreciation of evidence, then certainly this court cannot interfere with such a finding. But, here, the situation is otherwise. In this case, the Tribunal has recorded a finding contrary to the documentary evidence available on record and further by acting on surmises and conjectures. Therefore, this finding falls in the realm of perversity which certainly gives rise to a question of law. In the above context, Sri Ranjit Kumar Murarka, learned senior counsel appearing for the Department, has rightly brought to our notice a recent judgment of the Supreme Court in the case of Kulwant Kaur v. Gurdial Singh Manti, AIR 2001 SC 1273, 1282 ; [2001] 4 SCC 262, wherein in the context of section 100 of the Code of Civil Procedure, it has been held that : "... while it is true that in a second appeal a finding of fact, even if erroneous, will generally not be disturbed but where it is found that the findings stand vitiated on wrong test and on the basis of assumptions and conjectures and resultantly there is an element of perversity involved therein, the High Court in our view will be within its jurisdiction to deal with the issue. This is, however, only in....