TMI Blog1999 (4) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment under s. 158BD on a total undisclosed income of Rs. 38,45,518. Aggrieved with the assessment of the undisclosed income at Rs. 38,45,518, the assessee has filed this appeal before the Tribunal. 3. At the time of hearing, Shri V. Ramachandran, Advocate appeared before us on behalf of the assessee and Shri Ambasanker Dev on behalf of the Revenue. 4. The first ground raised by the assessee in this appeal, is that the assessment order passed on 30th July, 1998, in tins case was beyond the time-barring date and so the assessment was invalid. The learned counsel for the assessee submitted that the search conducted on 22nd April, 1996, was actually a search at the office of the assessee-firm as the firm was having the office in the same premises where Shri M.L. Ittoop was staying. It was pointed out that Miss Asha Ittoop, the managing partner of the firm also was staying in the same house. Shri Ramachandran stated that in the case of Shri M.L. Ittoop, the Department had proceeded on the basis that the business of Divine Builders was his proprietary business and that the entire income from the business was included in his individual assessment. It was his contention that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed the transaction in real estate in the name of the firm. It is provided in s. 158BD that when the AO is satisfied that any undisclosed income belongs to any person other than the person with respect to whom the search was made under s. 132, then the books of accounts, etc. seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO shall proceed against such other person for assessment under the provisions of Chapter XIV-B. From the assessment order it is clear that the order is passed under s. 158BC r/w s. 158BD. Notice under s. 158BC was issued on the assessee on 23rd July, 1997. It is provided in s. 158BE(2) that the period for completion of the block assessment in the case of the other person referred to in s. 158BD shall be one year from the end of the month in which the notice under Chapter XIV-B was issued on such other person. The assessment order passed on 30th July, 1998, cannot be said to be time-barred in view of the time available for making the assessment under s. 158BE(2). This ground of appeal is thus decided against the assessee. 6. The learned counsel for the assessee raised another plea for annulling the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see without at least making that statement available to the assessee. It was pointed out that the average selling price of land was taken at Rs. 19,000 on the basis of the statement of Shri M.L. Ittoop. The statement recorded from other persons were also not put to the assessee before taking adverse inference. It was pointed out that on 27th June, 1998 and again on 6th July, 1998 the assessee wrote to the AO requesting for an opportunity to cross-examine those persons whose statements were used in regard to the computation of the assessee's undisclosed income. It was further stated that though the assessee had given detailed objections on 27th June, 1998, and again on 6th July, 1998 against the computation, without considering the various claims made in the letter, the AO had proceeded to make the assessment, Shri Ramachandran stated that the assessment in this case has been made on the basis of the inspection report of the Investigation Wing. But a copy of that report was not furnished to the assessee. Our attention was drawn to the fact that in the assessment order Rs. 19.57 lakhs was estimated as the cost of development of the properties. It was his contention that the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es by filling the land and providing roads. According to Shri Ittoop, the cost of development comes to Rs. 4,000 per cent. It is also supported by evidence seized, Mathrubhoomi diary as Annexure I and admitted by Shri Ittoop in his cash flow accounts for similar properties purchased and developed in nearby survey numbers." 10. It may be noted that the entire addition has been made on the basis of the statement of Shri M.L. Ittoop who was not even a partner in the firm. During the relevant period, there were 5 partners including Miss Asha Ittoop, the managing partner. The AO has proceeded to make the addition on the basis of the statement of Miss Asha Ittoop that the business matters were looked after by her father. In his sworn statement Shri Ittoop first stated that proper books of account were maintained for the business, but in the same statement he later deposed that no books of account were maintained for the business carried on by the firm. The contradiction in his statements might have weighed with the AO to conclude that no books of account had been maintained by the firm. The books produced at the time of hearing were not accepted by the AO on the view that they were pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27th June, 1998 the assessee objected to the estimate of the sale price at the average rate of Rs. 19,000 per cent. The assessment order is silent about the assessee's objection. 12. On going through the assessment order it could be seen that the entire addition has been made on the basis of the statement of Shri M.L. Ittoop. It may be noted that the income from the business of M/s Divine Builders was also considered in the assessment of Shri Ittoop. In the case of Shri Ittoop the assessment order under s. 158BC was set aside by the Tribunal by the order in IT (S S) A No. 46/Coch/97, dt. 11th Dec, 1998. In the interest of justice, we think, it is better that the assessment in the case of the firm also is set aside so that the AO will make a proper assessment after verification of the facts. In redoing the assessment the AO should make available to the assessee the materials on the basis of which the additions are proposed to be made. The assessee should also be given a reasonable opportunity to cross-examine the witnesses whose statements are being used against the assessee for the purpose of assessment. The AO will make a proper assessment of the income of the block period in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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