TMI Blog2002 (3) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... ication for admitting fresh material, Bench passed order on 6th Feb., 2002, which order has been typed on the order sheet dt. 6th Feb., 2002. 5. Since the arguments were mainly advanced by the parties in ITA No. 1559/All/1997, this appeal is taken as a leading appeal. The decision on this appeal on similar issue in other appeals will also be applicable in those appeals. ITA No. 1559/All/1993 6. The assessee has filed this appeal by taking ten grounds, out of which ground No. 8 challenges the validity of notice under s. 158BC(a) and other grounds particularly ground Nos. 2 to 7 and 9 have been taken to challenge various additions made in the block assessment order dt. 28th Nov., 1992, for the block period of 10 years ending upto 1st Nov., 1996. 7. Ground No. 1 is against not providing fair, full and reasonable opportunity to the assessee before completing the assessment and ground No. 10 is of general nature. 8. Before taking up various additions included in the grounds of appeal, we consider it proper to take the legal ground first, which is ground No. 8 and which runs as under: "8. That the learned AO failed to allow statutory time as provided in 158BC(a) of the IT Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving 16 days time for filing the return and again vide second notice dt. 29th Aug., 1997, the assessee was provided another opportunity to file return within 16 days of the service of notice. The learned senior Departmental Representative also submitted that on behalf of the assessee, Shri Rohit Seth filed power of attorney on 1st Aug., 1997, and reply was also filed against the notice dt. 29th Aug., 1997, on 9th Sept., 1997. 11. In reply, Shri Garg. learned counsel submitted that the AO of Delhi who issued earlier notices had no power or jurisdiction to issue the notice under s. 158BC and, therefore, the notice issued from the AO of Delhi cannot be treated to be valid notices. It may be pointed out that the cases on which the reliance has been placed by the learned counsel for the assessee in support of his arguments are distinguishable on facts and, thus, are not applicable to the present matter. 12. We have carefully considered the facts and circumstances relating to this matter, the material to which our attention was invited and the rival submissions. As clarified in the letter dt. 30th April, 2001 of the Dy. CIT, Circle 2(3), Kanpur, jurisdiction over the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the learned counsel for the assessee that proper and fair opportunity was not given to the assessee while completing the assessment order. Hence, this ground also stands rejected. Ground No. 4 15. This ground challenges the addition of Rs. 4,36,480 made on account of enhanced price in the purchase of property No. 7/71-A, Tilak Nagar and treating the same as unexplained investment. 16. The relevant observations of the AO on this point are being reproduced below: "The property is situated in a posh locality of Kanpur and is beautifully constructed. Substantial investment seems to have gone into its acquisition. The assessee has not given any evidence to support the real purchase price. It is normal practice that in the purchase of ready built-up properties, there is ratio of payment i.e., on record 60 per cent and unrecorded 40 per cent of total price. Thus a sum of Rs. 4,36,480 being the payment made over and above the assessee s investment of Rs. 6,48,000 shall be added in the hands of the assessee as unexplained investment." 17. Learned counsel for the assessee, Shri Garg submitted that the AO was not justified in presuming that the ratio of payment for pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us any authority or any material to support such a presumption as has been raised in this case. Thus, after considering the entire relevant material, we are unable to uphold this addition of Rs. 4,36,480, which is deleted by us. Ground No. 4 is rejected. Ground Nos. 2 and 3 21. These two grounds are directed against the addition of Rs. 6,48,000. 22. The AO has worked out this addition on account of investment in acquisition of property, namely, 1/3rd portion of property No. 7/71, Tilak Nagar, Kanpur. During the course of assessment proceedings, the assessee filed reply dt. 22nd Nov., 1997, in which the position of investment made by the assessee was shown as under: S. No. Date Amount Mode 1. 5-7-1993 40,000 Cheque 2. 7-8-1993 50,000 -do- 3. 8-10-1993 60,000 -do- 4. 3-12-1994 75,000 -do- 5. 20-4-1995 50,000 Cheque issue yourself 6. 20-4-1995 1,50,000 -do- 7. 1-11-1995 1,00,000 -do- 8. 31-10-1995 1,23,000 -do- 23. Before us, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the AO on 26th Nov., 1997. (xxi) Details of payments made in 1993-94 by the assessee through challans. (xxii) Reply of the assessee dt. 19th Nov., 1997. Besides the above, the learned counsel for the assessee also made reference to the copies of accounts, certificates of bank, details of accounts of seller and other documents to show that the assessee had furnished entire information regarding investment made by her in purchase of the property and she was filing her return showing her income every year. 24. The main contention of the assessee before us was that Chapter XIV-B of the IT Act, 1961, lays down a special procedure for assessment of search cases and provides for assessment of undisclosed income as a result of search. According to him, under s. 158BB(1) r/w s. 158BC of IT Act, 1961, what is assessed is the undisclosed income of the block period and not the total income or loss of the previous years required to be assessed in the normal regular assessment under s. 143(3). He further elaborated his submission by saying that the power of regular assessment are kept intact and enquiry under s. 143(3) for regular assessment is not stopped. The learned counsel als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as issued to the assessee on 9th May, 1997, by Asstt. CIT, Central Circle 20. This notice remained unserved. IV. The second notice was issued by the Asstt. CIT, Delhi, on 29th Aug., 1997. This notice was served, but the jurisdiction of the ITO, Delhi, was challenged by the assessee, since the Hon ble High Court passed order dt. 20th May, 1997, in Writ No. 386/1997. The jurisdiction was again transferred to the ITO Investigation Circle 2(1), Kanpur. V. The notice for filing return was again issued on 5th May, 1997, and was served on the assessee on 6th Nov., 1997, and was served on the assessee on 6th Nov., 1997 through which the assessee was required to file her return in Form No. 2B by 11th Dec., 1997. VI. The return on From No. 2B was filed by the assessee on 25th Nov., 1997, declaring undisclosed income at NIL. Thus, the proceedings for block assessment were actually started by issuance of notice on 5th Nov., 1997, and were completed and culminated by assessment order dt. 28th Nov., 1997, i.e., within only 23 days. VII. The assessee had been filing her returns for earlier years and was being regularly assessed as pointed out by the learned counsel for the assessee on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reed to sell the property No. 7/71, Tilak Nagar, Kanpur i.e., 1/3rd portion each of their ownership. That the 1/3rd portion belonging to Sri Suraj Kumar Anand was purchased by Smt. Savitri Devi w/o Sri Amar Nath Agrawal and Sri Anil Kumar Agrawal s/o Sri Amar Nath Agrawal in their individual capacity jointly for Rs. 6,00,000 and the payments have been made by crossed cheques from their account works and shown in balance sheet which can be examined. (ii) That the payments for 1/3rd portion of the building has been equally made i.e., half of the amount by Smt. Savitri Devi and her son Sri Anil Kumar Agarwal. (iii) That the sale deed of 1/3rd portion of the building has been executed by Suraj Kumar Anand s/o Late Shri Ram Saran Dass Anand on 4th Nov., 1995 (photostat copy for perusal). (iv) That the other 1/3rd portion which is owned by Sri Durga Dass Anand s/o Sri Ram Saran Dass Anand was also agreed upon to sell to Sri Amar Nath Agrawal, husband of Smt. Savitri Devi, in his individual capacity for Rs. 7,50,000. Rs. 7,00,000 were paid by Sri Amar Nath to Sri Durga Dass Anand by cheque, by draft and cash as demanded by the vendor. No sale deed has been executed so far becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace of assessment and permanent address, etc. are being furnished, which can be verified". 33. In the copies of the bank account filed by the assessee, the transactions of payment through cheque are duly reflected. 34. The statement of income from 1st April, 1996, to 31st March, 1997, available at p. 126 of the paper book also includes the following information: Rs. Old balance 5,33,000 Renovation 2-11-1996 30,000 Rs. 6,13,000 35. The assessee had also filed balance sheet with her return for asst. yr. 1996-97, which contained the following details: Purchaser 1/6/(Und) 3,00,000 Stamp 1,16,530 Misc. Exp. 3,470 Brokerage (Jimmi Patel) 3,000 4,23,000 Renovation 31st March, 1996 1,10,000 5,33,000" 36. With her return for asst. yr. 1997-98, the statement of income was submitted. 37. It may be pointed out that even in asst. yr. 1994-95, the details of payment for this property were submitted by the assessee, which are as under: Rs. "1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income of the previous year falling within the block period computed in accordance with the provisions of Chapter IV on the basis of evidence found as a result of search or requisition of books of account of documents". Here in the instant case of the assessee, the income was estimated on the basis of the estimate filed by the assessee though belated along with the return of income for the asst. yr. 1990-91. When the assessee filed this computation, along with it, the proof of payment of advance tax was filed, and at that time the search had not taken place. If the assessee had paid the advance tax and the existence of the income was known to the Revenue, merely because the assessee failed for some reason or other, it cannot be treated as an undisclosed income that came into knowledge of the Department as a result of search and seizure operation that took place at the residential premises of the assessee." 43. In the case of Salvi Divakar Shankar vs. Asstt. CIT (2000) 66 TTJ (Pune) 678 : (2000) 72 ITD 552 (Pune) also, the same Bench again considered the issue and observed as under: "The AO had taken a very narrow view in interpreting undisclosed income. It appeared, according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o various circumstances, beyond the control of the assessee the return could not have been filed on or before due date and the search might have taken place just after the due date. In such case, it would be unreasonable to hold that assessee would not have disclosed such income particularly when assessee is legally permitted to file the valid return under s. 139(4) i.e., after the expiry of the due date specified under s. 139(1). Though such income would fall under cl. (c) of s. 158BB, but would be outside the scope of s. 158B. Therefore, such income cannot be taxed under s. 158BA. Therefore, in our considered opinion, where there is a conflict between the provisions of s. 158BB and s. 158BA r/w s. 158B the provisions of s. 158BA must prevail being charging section and non obstante clause. Accordingly, in genuine cases, where income does not fall within the provisions of s. 158B, the same cannot be brought to tax under s. 158BA even though such income may be computed as undisclosed income under s. 158BB(c)." 46. In the case of Pooja Bhatt, it was found that no substantial material was found from the assessee to come to the conclusion that there was substantial tax evasion. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n filed before us on this issue in the form of bank certificate and copies of statement of income, which material is available at pp. 1 to 13 annexed with the application dt. 12th Dec., 2001, cannot be considered by us at this stage for deciding this issue. As the material was not produced by the assessee nor was considered by AO, we consider it proper to restore the issue to the AO for deciding the issue afresh in the light of the material produced before us and after making proper inquiry and as per law. For this purpose, the assessee shall be given proper opportunity. The issue is decided accordingly. Ground No. 9 53. This ground challenges the addition of Rs. 1,40,000 made on account of investment in the renovation over and above the disclosed amount. 54. The contention of the learned counsel for the assessee before us was that the investment was made by withdrawing the amount from the bank. On perusal of the assessment order, we find that this addition has not been made on the basis of any document or evidence found during the course of search earlier. The assessee has filed return for asst. yr. 1996-97 and asst. yr. 1997-98 later on. On perusal of details given at p. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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