TMI Blog2002 (10) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... ess and residential premises of the Assessee on 16-1-1997 wherein various documents were found and seized by the Department. In response to notice issued under section 158BC, a return of Income for the block period was filed by the Assessee on 18-8-1997 declaring a undisclosed income of Rs. 7.00 lakhs. During the course of assessment proceedings, the Assessee submitted that his total undisclosed income for the block period works out to Rs. 6,60,633 comprising of Rs. 3,64,309) on account of balancing figure being excess of assets over liabilities worked out on the basis of entries appearing in the various diaries and a further sum of Rs. 2,89,324 on account of difference in opening capital appearing in the said diaries which was more than the capital appearing in the regular books as on 1-4-1990. The working of the undisclosed income at Rs. 6,60,633 furnished by the Assessee was verified and found to be correct by the Assessing Officer. He, however, made a further addition of Rs. 42,500 on account of value of shares found during the search on the basis of offer made by the Assessee in the statement recorded by the ADI under section 132(4). The contention of the Assessee raised in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 158BC, the Assessee declared the total undisclosed income at Rs. 6,60,663 which was much more than the disclosure made before the ADI. He, therefore, contended that the addition on this count made by the Assessing Officer was not correct and the learned CIT(A) was fully justified in deleting the same. 6. We have considered the rival submissions and also perused the relevant material on record. It is observed that the unaccounted transactions in respect of cloth business recorded in various rough diaries were aggregated by the Assessee and the balancing figure worked out on the basis of the same at Rs. 3,64,309 was declared as his undisclosed income on the basis of rough diaries found during the search. This working furnished by the assessee was verified by the Assessing Officer and he had also found the same to be correct. In these circumstances, the explanation of the Assessee that the withdrawals shown in the rough diaries were available with him for making the investment in shares was quite plausible and in our opinion the Assessing Officer was not justified in making addition on this count relying merely on the statement recorded by the ADI under section 132(4) without even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the group members on ad hoc basis. He submitted that the exact bifurcation of the total undisclosed income of the group as a result of search was not available and in the absence of such details, the undisclosed income was declared in the hands of different assessees on estimated basis. He submitted that after filing the said returns, the Assessee obtained the copies of relevant seized documents and after doing the necessary working of undisclosed income assessable in the hands of different assessees, submission was made before the Assessing Officer for assessing the exact amount of undisclosed income as per the provisions of section 158BC after verifying the said working. He submitted that in the case of the Assessee, the actual undisclosed income for block period as per the detailed working made by the Assessee was worked out to Rs. 6,60,633 and the said working submitted by the Assessee before the Assessing Officer was also verified by him and found to be correct. He submitted that since the Assessee had returned the undisclosed income for Block period at Rs. 7.00 lakhs, the Assessing Officer proceeded to make a further unwarranted addition of Rs. 42,500 just to assess the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to consider the text and context of the said proviso inserted with effect from 1-1-1997, it would be worthwhile to consider the exact meaning of the expression 'undisclosed income' contemplated in Chapter XIV-B and the manner and method of computation of the same for the block period. 11. The 'undisclosed income' as defined in clause (b) of section 158B includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purpose of the Income-tax Act. The manner and method of computation of undisclosed income of the block period is given in section 158BB according to which the undisclosed income of the block period, in simple terms, shall be the aggregate of the total income (undisclosed income as well as disclosed income) of the previous years falling within the block computed in accordance with the provisions of Chapter IV as reduced by aggregate of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment arose for consideration before the Hon'ble Delhi High Court in the case of CIT v. Bharat General Insurance Co. Ltd. [1971] 81 ITR 303 wherein it was held by their Lordships that even if an assessee declares an income in the return, the Assessing Officer cannot assess it merely on that basis and he has to consider its taxability in the light of other circumstances de hors the admission made in the return. In the case of Narayanan v. Gopal AIR 1960 SC 235, the Hon'ble Supreme Court has held that an admission in the return is not conclusive and it would be decisive only if not subsequently withdrawn or proved to be erroneous. It is well established that the object of an assessment is to determine the correct income and consequently the correct tax liability. In our opinion, this settled position equally holds good in the matter of block assessment also since the scope of undisclosed income assessable in the block assessment is specifically provided and the procedure for determination of such income is also clearly laid down. In these circumstances, any amount which is not assessable as undisclosed income for the block period cannot be assessed as such merely for the reason that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppears that the very purpose of inserting the second proviso to clause (a) of section 158BC prohibiting the Assessee from filing the revised return is to prevent the assessee from revising his income originally returned from time to time depending on the developments that take place and the findings of the Assessing Officer during the course of assessment proceedings, to get away with the penalty imposable under section 158BFA. The plain language used in he said proviso conveys explicitly the legislative intention to prevent the assessee from revising the income returned originally in an upward manner to avoid the admission made by penal consequences and in our opinion the same cannot be extended to draw an analogy, as sought by the Revenue, that the ad the Assessee in the return of block period is conclusive and he cannot withdraw it subsequently. This is so also because a genuine claim for reduction in the returned income is not always required to be made by filing a revised return and the assessee can very Well Stake such claim in any other manner during the course of assessment proceedings or for that matter even during the appellate proceedings which is considered to be a cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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