TaxTMI 
TaxTMI 
2020 (10) TMI 752
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....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 27-08-2002 02 The AO undisputedly admitted vide Para No.4(d) Page....
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....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 order was actually passed on 26-06-2008, which was claimed to be time barred. 6. In order to properly analyze the question of limitation raked up in this appeal, it would be apposite to ....
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....n 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 days, then the time limit gets extended to 60 days. The ld. AR has accepted this position and has made out a case that the time limit in the case of the assessee stood increased to 18.8.2006, being, a period of 60 days from the date of the rejection of application by the Settlement Co....
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....o 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 page 124 of the paper book, submitted before the Hon'ble Bombay High Court that maintenance of regular books of account was not a condition precedent for audit u/s.142(2A). The Revenue relied on the judgment of Hon'ble Delhi High court in Rajesh Kumar, Prop. Suraj Trading in DCIT (2005) 275 ITR 641(Del)....
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....ompleted 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 that: `Specially for the reason stated in the affidavit in reply, we are not inclined to stay the Assessment Proceedings'. At this juncture, it is relevant to reiterate the settled legal position on the meaning of the term "Assessment Proceedings" - as the one starting with the filing of return or issue of notice an....
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....ested 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 Cattle Shed at Rs. 12,37,000/- totaling to Rs. 49,42,500/-. The AO noticed itemized value of investment made in Sai Farm House at Rs. 54,88,518/- and Cattle Shed at Rs. 2,77,727/-, as per the seized documents, break-up of which has been tabulated at pages 13 and 14 of the block assessment order. He took value of total inves....
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....bject 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 the seized material found relating to investment in Sai Farm house and Cattle Shed, we find that all the items on both the pages are different from each other. In other words, there is no common expenditure which has been recorded on both the pages. This shows that the amount of undisclosed investment in Sai Farm House, as per ....
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....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 observed that the assessee wrote off debtors of Rs. 90,51,032/- as Bad Debts out of such total debtors and offered only Rs. 68.69 lakh as undisclosed income. On being called upon to explain his stand, the assessee submitted that during the course of search and seizure, computer disk of sundry debtors was seized from the hardware maintained at Vansale Highwa....
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....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 totalling mistake of Rs. 10.00 lakh. Since the very basis of the gross amount of addition of Rs. 1.59 crore is the document found at the time of search, it is but natural that other documents found at the time of search having record of transactions relating to such gross undisclosed income of Rs. 1.59 crore also ought to have been considered for determining th....
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....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 not substantiate with any evidence. Similarly, the assessee could not produce any evidence regarding the amount of Rs. 14,43,754/- due from M.S. Swami Highway Services wrongly entered in the list. The assessee's contention to this extent cannot be accepted. As regards the Bad Debts of Rs. 20,86,788/-, we are inclined to accept the contention of the assessee for th....
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....es 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 the block period and then further reduce it by the figure of excess of assets over liabilities as pertaining to the apparent owners. If we make such a calculation, the amount of excess of assets over liabilities relatable to the assessee in relation to the two petrol pumps comes to Rs. 9,93,429, as has been tabulated at page 95 of the impugned order. It is this amount whic....