TMI Blog2000 (3) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... D was issued and served upon the assessee on14th Dec, 1996. In response to that, the assessee furnished return in Form No. 2-B declaring Nil as the undisclosed income. The AO passed the block assessment order on26th Dec, 1997. Shri O.P. Sapra, the learned counsel for the assessee, at the outset, contended that the assessment order made on26th Dec, 1997was barred by the limitation. In support of his contention, he contended that the search was conducted on 11th Sept., 1995 at the residential premises of Shri Ravi Prakash Agarwal living at 1127, P.L. Sharma Road, Meerut and the office of M/s Multi-Max Engineering Works was situated at 1127/A. P.L. Sharma Road, Meerut. He contended that the books of accounts were seized from the premises of assessee and, therefore, the date of search in the case of assessee should be considered as11th Sept., 1995and the AO was not justified in making assessment under s. 158BC r/w sub-s. 158BD. He submitted that the case of assessee fell strictly within s. 158BC and, therefore, the time-limit available for completion of block assessment should be considered as provided under s. 158BE(1). Keeping into consideration, the date of search as 11th Sept., 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the genuineness of these creditors and asked the assessee to produce 18 depositors. All the 18 depositors were produced by the assessee and were examined by the AO. The AO was not satisfied with the explanation furnished by these depositors and accordingly added the following amounts to the undisclosed income of the assessee: -------------------------------------------- Sl. No. Asst. yr. Amount of cash credit Rs. -------------------------------------------- 1. 1987-88 1,13,000 2. 1989-90 8,000 3. 1990-91 1,65,000 -------------------------------------------- 3.1. The learned counsel for the assessee contended that all these deposits were included in the books of accounts of the assessee for the relevant assessment years. It was contended that the assessee maintained regular books of accounts and got them audited year after year. It was further submitted that the assessee had regularly submitted its returns of income starting from asst. yr. 1986-87 to asst. yr. 1995-96 and all these returns were accepted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that purchases and sales of sarson were not recorded in the ledger. Only the entries were made in the cash book. On being enquired about it, the assessee furnished copy of its account from the books of M/s Bateria Brothers, Hisar. For further verification, an Income-tax Inspector was sent to Hisar who found that M/s Bateria Brothers was not in existence at that time. He conducted local enquiries and came to know of the fact that Shri Bharat Kumar Garg was the proprietor of the said concern. The Income-tax Inspector contacted Shri Ram Kumar Garg, father of Shri Bharat Kumar Garg, who informed him that the said concern was in existence for two to three years only and was closed 4/5 years back due to heavy losses. The Inspector also contacted the AO Ward-3, Hisar having jurisdiction upon the said concern and it came out that the said Shri Bharat Kumar Garg, was not assessed to tax. In the background of this information, the AO came to the conclusion that the source of investment of Rs. 4,65,244 in the purchase of sarson prior to first sale was unexplained and hence treated the same income as undisclosed income of the assessee. 4.1. Before us, the learned counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that the assessee during the course of block assessment proceedings had specifically made denial about these loose papers as belonging to it or its business. It was further contended that these papers were not in the handwriting of either the assessee or any of its employees. It was stated by the learned counsel that during the course of proceedings before the AO the assessee requested for supply of photocopies of these documents. But these were supplied just two weeks prior to the completion of assessment. It was thus contended by the learned counsel that the assessee was not afforded adequate opportunity to explain these papers. It was also the case of the assessee that the AO had made the addition on account of these papers without indicating in the body of the order any basis for arriving at the figure treated by him as undisclosed income of the assessee. It was thus contended by the learned counsel for the assessee that since the assessee had denied these loose papers belonged to it, the onus shifted on the AO to prove beyond the shadow of doubt that these papers pertained to the assessee, if he was to make any addition on this count. On the other hand, the learned Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply in the case of block assessment also. The took us through the provisions of s. 69B and contended that if the assessee had not fully disclosed the investments in its books of accounts, the AO was not barred from referring the matter to the VO. 7. We have considered the rival submissions in the light of material placed before us and precedent relied upon. It is obvious that the assessee had shown investments in its books of accounts and accordingly the returns of income were filed after duly getting its accounts audited. The value as reflected by the assessee in its balance sheets was accepted by the Revenue. No question was raised at the time of making the assessments relevant to those assessment years. Since nothing was found during the course of the search which would indicate that the assessee has not reflected the full amount of investment in its books of accounts and no finding was recorded that the books are defective, we are of the opinion that the AO was not justified in referring the matter to the DVO and including the difference as the undisclosed income. Further it is relevant to see the definition of 'undisclosed income' as contained in s. 158B(b) which refers to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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