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2020 (10) TMI 752
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.... The Assessing Officer (AO) passed the block assessment order on 26.6.2008 determining total undisclosed income at Rs. 9,16,76,879/-. The assessee partly succeeded before the ld. CIT(A). This is how, both the sides have preferred respective appeals before the Tribunal. 3. The assessee has filed concise grounds and also an additional ground. The assessee, through the additional ground, claims that the assessment order passed u/s.143(3) r.w.s. 158BC is bad in law inasmuch as the same should have been passed u/s.144 r.w.s. 158BC because the assessee committed default as laid down in section 144. However, no argument was advanced by the ld. AR on such additional ground during the course of hearing before the Tribunal. As such, the same is dismissed. 4. Through the first three concise grounds, the assessee has challenged the block assessment order on the issue of limitation. For appreciating the contention on the question of limitation, chronology of the events in this case is required to be seen. The same has been set out by the ld. CIT(A) on pages 7 to 9 of the impugned order, which is as under:- S.No. Particulars Date 01 Search and seizure took place on 27-08-....
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....High Court 16-04-2008 20 Hon. Bombay High Court passed the order directing the AO to complete the assessment subject to the contention of the petitioner assessment barred by limitation. Petition be placed for final hearing after the assessment proceedings are completed. Liberty to the parties to move this court for a fixed date of hearing after the assessment proceedings are completed 03-06-2008 21 The assessment was completed by the AO and block assessment order served on the Appellant 26-06-2008 5. The ld. AR has made out a case that the last authorization for search u/s.132 in this case was executed on 27-08-2002 and going by the period prescribed u/s.158BE(b), the assessment ought to have been ordinarily completed by 31-08-2004. Since the assessee filed application before the Settlement Commission on 26-07-2004 during the course of assessment proceedings, which was rejected on 19-06-2006, the time limit available for completing assessment in terms of proviso to Explanation 1 to section 158BE got extended to 18-08-2006, being a period of two months from the date of rejection of application by the Settlement Commission. As against that, the assessment orde....
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.... last authorization in this case was executed on 27.8.2002. This provided a limitation for completion of assessment to the AO by 31.8.2004. Explanation 1 to section 158BE expands the limitation period in certain cases by providing that in the stipulated four situations as enumerated in clauses (i) to (iv), the limitation will be counted by excluding the period given in such four clauses. Proviso to the Explanation 1 to section 158BE, further states that where immediately after the exclusion of the period in the four clauses, the period available with the AO for completing the assessment is reduced to less than 60 days, then such remaining period shall be extended to 60 days. The relevant clauses in the extant appeal are (ii) and (iv). Clauses (iv) deals with a situation in which the assessee moves the Settlement Commission and such application is rejected or not allowed to be proceeded. In such a situation, the period commencing on the date on which such application is made and ending with the date on which the order u/s 245D(1) is received by the Principal Commissioner etc., is excluded and if after such exclusion, the time available for completion of assessment falls short of 60 ....
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....ing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-section. In such panorama, it became incumbent upon the AO to either proceed with the assessment and finalize the same by 13.3.2008 (a period of 60 days from the date of the judgment, that is, 14.1.2008) without making any reference for the further special audit; or make a reference for the special audit u/s 142(2A) by 13.3.2008. The AO issued notice u/s 142(2A) on 11.2.2008 and passed an order making reference for special audit, after giving opportunity of hearing to the assessee, on 14.2.2008 itself, that is much prior to the limitation period. 12. The assessee again approached the Hon'ble High Court contending, inter alia, that in the absence of any books of account maintained by the assessee, there could have been no order of audit u/s 142(2A). Such assertion of the assessee appears on page 94 of the paper book which is a part of the writ petition filed before the Hon'ble Bombay High court. The Revenue in its affidavit in reply, copy at pa....
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..... 14. It was pursuant to such order of the Hon'ble High court passed on 03-06-2008 that the AO got a period of 60 days for completing the assessment from 3.6.2008, even if we presume that the audit report was submitted during the currency of proceedings before the Hon'ble High Court. As against that, the AO completed the assessment on 26-06-2008, which is well within the limitation period. Thus, it clearly emerges that the case of the assessee is eventually covered by clause (ii) of Explanation 1 to section 158BE read along with the proviso, being the date on which the Hon'ble Bombay High Court disposed off the assessee's writ petition on 03-06-2008 and not the date of rejection of application by the Settlement Commission, as has been contended by the ld. AR. 15. The ld. AR contended that the Hon'ble Bombay High Court did not render any specific adjudication on the validity of second order u/s.142(2A) in its interim order dated 3.6.2008 and hence the period of limitation should not considered with reference to such date. 16. We are again unable to comprehend the view point of the assessee. The Hon'ble Bombay High Court in its order dated 03- 06-2008 has categorically held ....
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.... other sub-grounds, therefore, stand dismissed as 'not pressed'. 19. Ground No. 4(a) is against the confirmation of addition of Rs. 13,34,231/- towards unexplained investment in Sai Farm House and Cattle Shed. 20. The factual matrix of this ground is that during the course of search, the assessee was found to have invested certain sum in Sai Farm House and Cattle Shed as per the seized material. In the block return, the assessee offered Rs. 53,91,887/- on this count. The AO observed that the assessee did not offer full amount in the block return. On being called upon to explain the reason, the assessee submitted that Cattle Shed and Sai Farm House were located in the same plot on which expenditure was incurred simultaneously. He further submitted that total withdrawal as per seized material worked out to Rs. 53,91,887/- on this score. The AO made a reference to the Departmental Valuation Officer for determining the value of Sai Farm House and Cattle Shed, who determined such value at Rs. 49,76,971/- and Rs. 9,82,430/- respectively totaling to Rs. 59,59,401/-. The assessee also furnished report of a Registered Valuer valuing investment in Sai Farm House at Rs. 37,05,500/- and ....
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....ty which has not been or would not have been disclosed for the purposes of this Act, or any expense, deduction or allowance claimed under this Act which is found to be false'. On circumspection of the definition of `undisclosed income' and section 158BC r.w.s. 158BB, it clearly emerges that undisclosed income, which is the subject matter of taxation in block assessment, inter alia, refers to any income based on the evidence found as a result of search etc. 22. With the above understanding, we now proceed to determine the instant issue. It is seen that the amount as per seized material representing investment in Sai Farm House stood at Rs. 54,88,518/- which the AO has rightly considered for the purposes of addition. Insofar as the investment in Cattle Shed is concerned, the AO took value of Rs. 12,37,000/- as per the Valuation Report of the Registered Valuer. As against that, the amount of undisclosed investment in Cattle Shed as per the seized material stood at Rs. 2,77,727/-. The ld. AR contended that the investment in Sai Farm House and Cattle Shed was common, which amount was Rs. 54,88,518/- only in total. On going through pages 13 and 14 of the assessment order dealing with ....
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....er : DAY OP Standing 1,61,35,853.60 Credit 53,208.83 1,61,89,062.43 Debit 2,68,395.89 Closing 1,59,20,666.54 Actual 1,59,20,666.54 25. From the above details containing business done outside the books of account, the AO observed that outstanding debtors of M/s Sushila Vansale Highway Services, Takali were Rs. 1,59,20,667/- as on 26-08-2002. The said debtors were not reflected in the regular books of account maintained for the said business. Ms. S.D. Vansale, licensee of the said business, in her statement submitted that she received only commission @0.5% of sales of Diesel, Petrol etc. purchased from BPCL. She further denied the ownership of the petrol pump business including such debtors. The assessee, in his statement, accepted that he looked after the business and enjoyed profits there from as owner. He further admitted that only commission @0.5% on sales was given to the licensee as a consideration. As against the outstanding debtors from the business run outside the books of account, recorded on such page at Rs. 1.59 crore, the assessee included a sum of Rs. 68,69,634/- in the block return as undisclosed income.. The AO obser....
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....ound that the assessee accepted the ownership of the petrol pump, though run in the name of Ms. S.D.Vansale. Item No.5 of Annexure-A of Panchanama prepared at the business premises of M/s Sushila Vansale High Services revealed that on the backside of page 42 there was a table depicting the carrying on business of sale of Petrol, Diesel outside the books of account. Description on the backside of page 42 has been set out above, which was the position as on 26-08-2002. As per this document, the amount receivable from debtors as on the opening of the day stood at Rs. 1.61 crore. Fresh credit sales of Rs. 53,208/- were made on 26-08-2002. A sum of Rs. 2,68,395/- was received, leaving closing balance of debtors of unaccounted business at Rs. 1.59 crore. The assessee suo motu offered undisclosed income Rs. 68.69 lakh on this score in the block return by explaining that the remaining amount of Rs. 90.51 lakh was Bad Debts. However, the documents found at the time of search containing details of amounts not realized relating to the relevant financial years divulged actual unrealized amount at Rs. 80,51,032/-. As against that, the assessee wrongly wrote off Rs. 90,51,032/- by making totalli....
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....02. As against such outstanding debtors, the assessee offered a sum of Rs. 5,04,122/- in the block return. Regarding the differential amount, the assessee submitted that a sum of Rs. 28,22,774/- reflected recoveries from 03-06-2002 to 17-08- 2002; a sum of Rs. 14,43,754/- represented the amount due from M.S. Swami wrongly entered in the list; a sum of Rs. 20,86,788/- was amount of Bad Debts pertaining to Financial years 1996-97 till 2001-02, thereby leaving net income of Rs. 5,04,122/-, which was offered for taxation. Not convinced with the assessee's submissions, the AO made an addition of Rs. 63,53,316/- (Rs. 68,57,438 minus Rs. 5,04,122), which came to be upheld in the first appeal. 31. Having heard both the sides and gone through the relevant material on record, it is found as an admitted position that the facts and circumstances of this ground are mutatis mutandis similar to Ground No.4(d) which has been dealt with hereinabove. From the relevant claim by the assessee before the AO, enumerated at pages 33 and 34 of the assessment order, it is seen that the assessee claimed that a sum of Rs. 28,22,794/- were recovered between 03- 06-2002 to 17-08-2002, which the ld. AR could ....
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....ssessee at Rs. 16,16,352/- in relation to S.D. Vansale and Rs. 7,97,807/- in relation to Mr. M. S. Swami, as includible in the total income of the assessee. The ld. CIT(A) deleted such addition. 34. Having heard both the sides and gone through the relevant material on record, it is seen that there is no dispute that the AO accepted that some of the assets and liabilities from both the petrol pumps did not belong to the assessee but to Ms. S.D. Vansale and M.S. Swami, for which obviously no addition has been made in the hands of the assessee. However, as regards the excess of other assets over liabilities pertaining to the assessee, the AO made computation by reducing the figures of Rs. 3,95,896 and Rs. 1,52,803 as relatable to the apparent owners. Actually these two figures represent the excess of assets over liabilities at the beginning of the block period and not the figures pertaining to the apparent owners. The correct procedure for calculating the undisclosed block income of the assessee on this issue was to find out the excess of assets over liabilities of the two petrol pumps on the date of search, then reduce the excess of assets over liabilities as at the beginning of t....