TMI Blog2002 (11) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... urces" under s. 57(iii) of IT Act." Subsequently, the assessee sought to raise the following additional grounds: "1. That on the facts and in the circumstances of the case, the order of the AO allegedly passed under s. 158BD r/w s. 143(3) of the IT Act, 1961 ( the Act ) is without jurisdiction, beyond limitation, bad in law and void ab initio. 2. That the AO erred on facts and in law in computing the block assessment de hors the materials and evidence found as a result of search under s. 132 of the Act. 3. That the AO erred on facts and in law in assessing the interest income amounting to Rs. 47,65,712 as undisclosed income of the appellant for the block period under Chapter XIV-B of the Act." It appears that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount (Rs.) 1989-90 17,358 1990-91 3,02,466 1991-92 2,18,657 1992-93 69,316 1994-95 3,08,767 1995-96 40,07,942 49,24,506 During the hearing, it was explained by the learned counsel for the assessee that in the accounts of the assessee-company, the above income was netted against the project cost in the light of the decision of the A.P. High Court in the case of CIT vs. Nagarjuna Steels Ltd. (1988) 71 CTR (AP) 118 : (1988) 171 ITR 663 (AP). In the returns of income filed by it for the asst. yrs. 1991-92 to 1994-95, the assessee did not show any income, as according to it, the interest income derived by it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irculation subsequent to the issue of the money receipts. The ADIT in his report dt. 23rd July, 1996, encosing a copy of the survey report dt. 6th March, 1996, has suggested that a notice under s. 158BD may be issued. Secondly, M/s Srinivasa Resorts Ltd. details of assessment year-wise cost of construction of the Hotel Grand Kakatiya have already been called for. Issue notice under s. 158BD of the IT Act, 1961. Sd/- Asstt. CIT, Circle-4(1), Hyderabad" In pursuance of the above notice under s. 158BD, the block assessment has been framed on the assessee bringing to tax the above mentioned interest income derived by the assessee of Rs. 49,24,506 during the financial years 1989-90 to 1992-93, 1994-95 and 1995-96. 6. There is no disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .00" From the above, it is evident that the accrued interest has been debited to the bank deposit account and credited to the interest paid account, thus reducing the debit of interest paid account and it appears that the netted interest paid was capitalised under project cost . The amount of interest actually accrued is not reflected in the final accounts, but there is no dispute before us about the quantum of interest that had accrued and had been brought to tax in the block assessment in the respective years. Neither of the parties before us could tell us, from where exactly the AO took his figures, but we are told that there is no dispute about the figures adopted. So, the only question that remains for adjudication before us i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 166 CTR (Raj) 83 : (2001) 248 ITR 350 (Raj) (f) CIT vs. Ravi Kant Jain (2001) 167 CTR (Del) 566 : (2001) 250 ITR 141 (Del) It is further pleaded that in the present case, the assessee-company had filed the returns for the asst. yrs. 1991-92 to 1994-95 before the date of search, and the assessee has duly enclosed the audited final accounts along with the returns. Hence, the Department was quite aware of the treatment given by the assessee to its interest income even before the search, and no new material relating to receipt of the interest income was located during the search action on the premises of M/s Cosmos Enterprises. So, it is pleaded that there is no justification at all for initiating the proceedings under s. 158BD against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 49,24,506 in the impugned block assessment. We find that the AO has relied heavily on the decision of the apex Court in the case of Tuticorin Alkali Chemicals Fertilizers Ltd. vs. CIT (1997) 141 CTR (SC) 387 : (1997) 227 ITR 172 (SC) in the impugned assessment for bringing to tax the interest incomes. This issue has to be considered only in a regular assessment, but not in a block assessment. In this view of the matter, we find no justification for the impugned block assessment, which is accordingly cancelled. 11. Before parting, we may mention that the Department is free to take whatsoever action is deemed fit or valid in the context of regular assessments made for the respective years. 12. In the result, assessee s appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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