TMI Blog2010 (8) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... es Deemed income u/s.69-C - the outflow claimed is quite small as compared to inflow - This ground is allowed - I.T (SS) A No. 51/Mum/2008 - - - Dated:- 27-8-2010 - S.V. MEHROTRA, ACCOUNTANT MEMBER J. AND VIJAY PAL RAO, JUDICIAL MEMBER J. M.N. Nandgaonkar for the Appellant. D. Songate for the Respondent. ORDER S.V. Mehrotra, Accountant Member. The appeal filed by the assessee is directed against the order dated 18th March, 2008 of ld. CIT (A)-XXIII, Mumbai for the Block period: 1989 to 1990 to 1999-2000. 2. Facts in brief are that a search and seizure operation was carried out u/s.132(1) of the IT Act, 1961 on 11.6.1998 at the residential premises of the assessee situated at Alguj, Rambag Lane, 4, Kalyan and at the office premises at 18-19, Sai Vihar, Shivajipath, Kalyan(W). Notice u/s.158BC was issued on 6.7.1998 and was served on the assessee on 21.7.1998. The assessee filed his return of income for the block period on 2.11.2008 declaring total undisclosed income at 1,01,33,700/-. The business was dealing in lands and also he was partner of Alguj Chemical Industries. Annexures A-4, A-5 and A-6 of Panchanama dated 11.6.98 pertaining to office premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estored to the file of the AO. The assessee should be given good and sufficient opportunity to substantiate its claim that the cash payments were made for purchase of land which were subsequently sold. Assessee s claim shall be considered in the light of other provisions of the Act including the provisions contained in section 40A(3) which prohibits/limits deduction for payments made in cash. This matter accordingly stands restored to the file of the AO subject to our remarks above. 3. The AO had also noted that at page 7 of Annexure-7 that there was a letter dated 9.7.1994 from Charishma Shelters Pvt. Ltd., regarding interest free loan of ₹ 50 lakhs given by the assessee to the said company. He noted that the assessee had paid interest @ 18% on the loans received by him. Therefore, by applying rate of interest @ 18%, he disallowed 1,29,452/- out of the interest debited to profit and loss account. The assessee s appeal on this count was dismissed by the CIT (A). However, the Tribunal had restored this issue to the file of the AO, observing as under:- On careful consideration of the facts of the case, we think this is a fit case for restoring the matter to the file of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication of certain facts that the matter was restored to the file of the AO. (b) that the ITAT as the last fact finding authority delegated a limited assignment to him for the purpose of granting, and not denying the appellant the relevant relief. 3. On the facts of the case in law, the ld ACIT 23(3) Mumbai has erred in not allowing the deduction of Rs.3,85,000/- under the principle of telescoping from the income of the block period as directed by the ITAT. 4. On the facts of the case in law, the ld ACIT 23(3) Mumbai has erred in levying interest u/s.158BFA (1) at Rs.6,62,923/-. 5. The first and second grounds of appeal before the CIT (A) was that the ACIT circle 23(3) Mumbai erred in passing the order dated 18.5.2007 i.e. beyond the period of limitation provided u/s.153 of the Act. The CIT (A) taking note of the fact that section 153(3)(ii) does not prescribe any time limit for completion of assessment in order to give effect to the findings and directions contained in an order under section 250, 254, 260, 262, 263, 264 or in an order of any court dismissed the assessee s ground, inter alia, observing that since the Tribunal had neither set aside nor had cancelled th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sub-sections (1) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment under section 146 or in pursuance of an order under section 250, section 254, section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of two years from the end of the financial year in which the order under section 146 cancelling the assessment is passed by the Assessing Officer or the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner. Section 153(3)(ii): (3) The provisions of sub-sections (1) and (2) shall not apply to the following classes of assessments, reassessments and recomputations which may, Subject to the provisions of sub-section (2A) be completed at any time (i) Where a fresh assessment is made under section 146; (ii) Where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Explanation (2) and Explanation (3) to Section 153, which read as under: Explanation 2 : Where, by an order referred to in clause (ii) of sub-section (3), any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order. Explanation 3 : Where, by an order referred to in clause (ii) of sub-section (3), any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, provided such other person was given an opportunity of being heard before the said order was passed. These explanations have been specifically incorporated in section 153 so as to save the limitation in those cases where in consequence of fresh assessment order passed in pursuance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed in Chapter XIV-B for making fresh block assessment in pursuance of order u/s.250, 254, 263 or 264, the limitation contemplated in section 153 would apply or not. The view taken by us is in conformity with the decision of the Hon ble Delhi High Court in the case of CIT v. Bhan Textiles (P)Ltd., 300 ITR 176 (Del), wherein, it has been held that in case assessment is set aside, the limitation as contemplated u/s.153(2A) would apply. 11. In view of above discussion, Ground No.1 raised by the assessee is dismissed. 12. Apropos Ground No.2, brief facts, as noted earlier are that the assessee was given an opportunity to explain the entries in document No.A4, A5 and A6 containing entries relating to alleged payments made by the assessee to certain land owners.. The assessee s claim u/s.37 was denied by the AO and the CIT (A). The Tribunal had restored the matter requiring the assessee to establish the nexus on the basis of seized material between cash payments made and lands purchased and sold. The AO has observed that the assessee was issued with a notice dated 20.4.2007 under which, he was given reasonable opportunity of being heard. The assessee filed his written reply dated 8.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made to those parties. He submitted that on the vouchers, the relevant details are available regarding survey No. etc. Further, he referred to paper book Nos.2,3 4, wherein, list of landlord names as per memorandum possession receipt and the corresponding vouchers details are given. He submitted that all these details were before the AO but he has not considered the same. 15 Ld D.R. relied on the order of the CIT (A). 16. We have considered the rival submissions and perused the record of the case. We find that the AO himself has observed in his order dated 18.5.2007 that the contention of the assessee was not fully agreeable. Thus, it is clear that he was of the view that entirely the assessee s claim was not acceptable. However, he has made the disallowance of the total sum. The AO has not given even a single example of the vouchers vis- -vis the memorandum possession receipt in order to demonstrate the discrepancies. Therefore, we are of the opinion that the matter needs to be examined afresh after giving due opportunity to the assessee to explain the nexus between the cash payments made to landlords and entries in the vouchers found during the course of search. As far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round the appreciation of evidence, the view taken is a reasonable and possible view which can be supported on the basis of material available on record, it can hardly be said to be a substantial question of law warranting re-adjudication by this Court. Thus, the said decision was rendered only whether the disallowance of deduction could be considered as raising substantial question of law or not. Therefore, the findings of the Tribunal in the first round regarding consideration of allowability of expenditure u/s.37 in no way got affected by the decision of the Hon ble Bombay High Court. In view of the above, this ground is allowed for statistical purposes. 17. Apropos Ground No.3, brief facts are that the assessee had raised an additional ground before the Tribunal seeking benefit of telescoping of Rs. 3,85,000/- treated as deemed income u/s.69-C on account of certain vouchers for the assessment years 1994-95 and 1995-96, against the undisclosed income of the assessee on account of alleged cash received by him against the sales commission of `₹ 1 crore declared and disclosed to tax by the assessee as undisclosed income for the assessment year 1994-95 and 1995-96. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e umbrella of section 292B of the Act. He, therefore, concluded that 45 days was to be reckoned with reference to notice dated 6.7.98 and not with reference to reply dated 29.9.98. He, accordingly, dismissed the assessee s appeal. 20. We have considered the rival submissions and perused the record of the case. The first dispute is whether 45 days is to be reckoned from 17.9.98 or from 6.7.98. In his reply dated 28.9.98, the assessee stated that he had not received notice dt.6.7.98 whereas in the assessment order, it is clearly stated that the said notice had been served on 21.7.98. The assessee had challenged notice dated 6.7.98 before the Hon ble High Court also and, therefore, the onus was on the assessee to establish that the notice dated 6.7.98 was not served on 21.7.98 but on some other date. No such evidence has been brought on record; therefore, 45 days period is to be reckoned from 6.7.98. However, the intervening period for obtaining copies of seized record is to be excluded. The assessee has not given any relevant dates when it applied for seized material and when same was granted. The AO will verify these dates while giving effect to this order and exclude this peri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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