TaxTMI 
TaxTMI 
2017 (10) TMI 1544
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....rities below committed an error in failing to notice that even the dummy tally entries reflected payments to two parties and the assumptions made that the entire amount received by the assessee us erroneous. 3. Both the authorities below committed an error in holding dummy tally entries seized in the premises of Adlene Kagoo (Mr. Dayanand Pal) shows cash payment made to the assessee and a presumption has to be drawn that the same was received by the assessee as deemed Income has to be brought to tax. 4. Both the authorities below committed an error in falling to take into consideration that Mr. Dayanand Pai had declared the amounts reflected in the dummy tally entries as peak credit / debit in the declaration made before the Settlement Commission (which has been erroneously rejected) and submitted a letter to the department that these amounts have not been paid to the assessee. 5. Both the authorities below committed an error in holding that a sum of Rs. 3, 97, 59, 000/- reflected in the dummy tally ledger in the name Of Sri. Krishna Properties had been admi t ted by the assessee' s husband and therefore an adverse inference has to be drawn that all t....
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....erred to as 'the Act' for short] vide assessment order dated 13/03/2013. Consequent upon search operations carried out in the case of one Smt.Adlene Kagoo on 12/04/2011, certain material were seized vide Annexure AK/PDP/06 dated 12/04/2011. Data is in accounting software called 'tally' under caption 'Dummy Tally Training Environment'. According to the Assessing Officer, these are unaccounted receipts and payments of one Shri P.Dayananda Pai and his group of companies and from this Tally Dummy, certain payments were alleged to have been paid to the appellant. Accordingly, the Assessing Officer had proceeded to assess same by issue of notice u/s 148 on 29/03/2012 for the assessment years 2005-06 to 2008-09 and assessed the income of Rs. 5,01,00,000/-, Rs. 4,84,00,000/- Rs. 6,83,83,190/- and Rs. 2,29,00,000/- for the assessment years 2005-06, 2006-07, 2007-08 and 2008-09 respectively vide assessment orders dated 13/03/2013. 5. Being aggrieved, appeal was filed before CIT(A) contending inter alia that there is no valid assumption of jurisdiction u/s 148 as the entire addition is based on the seized material found as a result of search action u/s 132 in the case of Smt. Adlen....
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....the parties. He further submitted that even assuming for a moment that there is receipt of amount, it does not mean that it constituted taxable income in the hands of the appellant. He further submitted that these amounts were in any way offered in the hands of Shri Dayanand Pai before the Settlement Commission. Therefore, question of addition in the assessee's hands does not arise. 7. On the other hand, learned Departmental Representative placed reliance on the orders of the lower authorities. 8. We heard rival submissions and perused the material on record. At the first instance, we shall deal with preliminary ground raised challenging validity of assumption of jurisdiction u/s 148 of the Act. In the present case, original assessments were made u/s 143(3) r.w.s. 153A of the Act vide order dated 28/12/2010. Subsequently, consequent to search operations in the case of Smt. Adlene Kagoo, material disclosing alleged payment to appellant was found. The AO had proceeded to make assessment by issuing notice u/s 148 of the Act. Now the issue that arises is whether the AO was correct in law in assuming jurisdiction u/s 148 when the provisions of section 153C of the Act prescribe a s....
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....available with the AO, undisclosed income of the block period shall be computed. Therefore, even if, assuming for the sake of argument, some income has not been disclosed in the return furnished under s. 158BC of the Act, the AO is bound to assess all undisclosed income after processing the entire material available with AO. The AO cannot be heard to state that undisclosed income has escaped assessment because the officer failed to apply his mind to the material available on record, there being no lack of disclosure. 23. The last of the amendments made by Finance Act, 2002 as explained in CBDT Circular No. 8 of 2002, dt. 27th Aug., 2002 further goes to support the stand of the petitioners. The legislature has provided that the block assessment of undisclosed income is to be based not only on the evidence found at the time of search, but also on the basis of material and information gathered during the inquiries made after the search proceedings. However, on the basis of evidence found during the search proceedings certain further inquiries are undertaken by the AO resulting in collection of material or information gathered during such inquiries. The assessment for the bloc....
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....ment year. Similarly, the term "assessment year" by its very definition, cannot be read to mean "block period". 26. In light of this specific distinction in the statutory scheme brought about by specific definitions of the two terms, "assessment year" and "block period", the submission on behalf of Revenue that the term "assessment year", wheresoever it appears in the group of ss. 147 to 153 of the Act, be substituted by the term "block period" cannot be accepted, because on a plain reading of the said provisions, viz., s. 147 to s. 153 of the Act, the entire scheme becomes unworkable. The principles of interpretation also do not permit such an exercise. 27. It is well-settled that a Court is not empowered to either add words to a statute or substitute words while interpreting a provision. The Court can only read and interpret the language employed by the statute. Only in the event of a provision not conveying the intended meaning, in other words, a plain reading resulting in absurd situation, can the Court import words to make sense out of the provision. However, at the same time, even a purposive interpretation does not permit the Court to substitute the statuto....
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....of current previous year upto the date of search, but, before adoption of uniform previous year, in case of different assessees, 'block period' would be different depending on the accounting period adopted in terms of s. 3 of the Act. To obviate this situation the definition of block period was amended. This becomes clear from Circular No. 762, dt. 18th Feb., 1998 issued by CBDT extracted hereinbefore. 30. The apex Court decision on which great emphasis has been placed on behalf of Revenue in fact goes to support the view adopted in the present case. The controversy before the apex Court was in relation to the rate of tax which was to be applied to the undisclosed income assessed in terms of Chapter XIV-B of the Act. The apex Court itself has observed, as can be seen from the portion wherein emphasis is supplied by this Court, that the Supreme Court was concerned mainly with computation of undisclosed income under s. 158BB(1) of the Act. This Court has already noticed that s. 158BH of the Act provides for invoking other machinery provisions to an assessment made under Chapter XIV-B of the Act and does not require other provisions of the Act to be applied to a block ass....
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....phasised that the first proviso under s. 158BC(a) of the Act specifically provides that no notice under s. 148 of the Act is required to be issued for the purpose of proceeding under Chapter XIV-B of the Act. 34. In the circumstances, impugned notice dt. 16th April, 1999 under s. 148 of the Act cannot be upheld and is hereby quashed and set aside. In the view that the Court has adopted it has not been found necessary to go into the facts of the case and examine whether the reasons recorded by the respondent authority are germane or not as the matter has been decided only on the point of absence of jurisdiction in a case of block assessment. Thus, the ratio laid down by the Hon'ble Gujarat High Court is that once the Legislature prescribes a special procedure for assessment of search cases, such special procedure can alone be applied and not other procedure. It has been further held that where the Legislature prescribes special procedure for assessing income in the case of search matters, special procedure shall prevail over normal procedure. Therefore, in the present case, undisputedly addition was made by the AO based on evidence found as a result of search. Ther....