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2014 (5) TMI 704 - HC - Income TaxBlock assessment - Return filed beyond the due date u/s 139(1) of the Act - Whether the Tribunal was justified in holding that in the Block period, for the AY 1994-95, 1996-97, 1998-99, 1999-2000 and 2000-2001, though the return of income had been filed by the assessee beyond the date prescribed u/s 139 (1) of the Act, the income disclosed cannot be brought to tax in the Block assessments as per section 158 BB of the Act Held that:- Block assessment is not intended to be substitute for regular assessment - Its scope and ambit is limited in that sense of the materials unearthed during search - This is in addition to the regular assessment already done or to be done. The income unearthed on the basis of evidence found as a result of search or requisition of books of account or documents or such other materials or information available with the AO and relatable to such evidence alone could be assessed so as to declare undisclosed income for all the six assessment years in the block period - The Tribunal has not examined the case in proper perspective - The income that has been disclosed by the assessee in the returns of income, other than the income unearthed as a result of search, cannot be treated as undisclosed income while assessing the income during the block period thus, the matter is remitted back to the Tribunal for fresh adjudication Decided in favour of Revenue. Acceptance of agricultural income Failure to prove the carrying on of agricultural activity Held that:- The Appellate Authority deleted the addition as undisclosed income for the block period - the agricultural income for 1995-96 was accepted by the AO - the income of Rs.3,50,000/- for the AY 1996-97, was deleted being undisclosed income for the block period there was no reason to interfere in the order of the Appellate Authority and the Tribunal Decided against Revenue. Availability of deduction u/s 54 and 54F of the act assessees had sold their undivided interest in the land - Capital gains derived Held that:- Section 54F provides that if the assessee has a residential house he cannot seek the benefit of long term capital gain - Under this provision, merely because, the words residential house are preceded by article 'a' would not exclude a house shared with any other person - Even if the residential house is shared by an assessee, his right and ownership in the house, to whatever extent, is exclusive and nobody can take away his right in the house without due process of law - co-owner is the owner of a house in which he has share and that his right, title and interest is exclusive to the extent of his share and that he is the owner of the entire undivided house till it is partitioned - The right of a person, may be one half, in the residential house cannot be taken away without due process of law or it continues till there is a partition of residential house the order of the Tribunal is set aside Decided in favour of Revenue. Valuation of closing stock of immovable property Held that:- The Tribunal was of the view that the amount received may include both capital as well as profit, if any - treating the entire amount as income would also not be correct - the question as regards valuation of closing stock in respect of the land in litigation deserves to be considered afresh in the light of the settled position of law that the assessee, in such a situation, has a choice to value the stock at cost or market price whichever is lower - None of the authorities have considered this question in proper perspective - It was necessary to find out the value of the land at which it was purchased and the market price, at the relevant time, in the light of the fact that the property was in litigation, and then fix the liability thus, the matter is remitted back to the Tribunal for fresh adjudication - Decided in favour of Revenue. Treatment of undisclosed income - Amount standing in credit - Whether the Tribunal was justified in holding that the amount standing to the credit of G. Anand having not been claimed as expense cannot be treated as undisclosed income of the assessee during the block period Held that:- The amount of Rs.10,00,000/- remained unexplained and treating the same as undisclosed income - the assessee has not only not disclosed the said amount but failed to file return of income for the AY 1998-99 before the search - he did not file return of income for this AY within the time stipulated u/s 139(1) and (4) of the Act - he also failed to maintain books of account for the AY thus, the amount of Rs.10,00,000/- has rightly been brought to tax - the Tribunal did not consider the materials on record in proper perspective and has simply by single sentence in the order set-aside the concurrent findings of fact recorded by the authorities below - the order of the Tribunal is set aside Decided in favour of Revenue.
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