TMI Blog2005 (9) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... ations. 6. On careful consideration of the material made available to the Tribunal and analyzing the same in the light of the submissions made by both the parties, the admitted facts relating to the issues are as under: The assessees are the father and sons residing at Ranchi. A search operation under s. 132 was conducted in the office and residential premises of Shri Shiv Kumar Dhelia on 25th Feb., 1997 and 2nd Dec, 1997 during which two documents marked PCN 19 and PCN 20 were found and seized. These two documents showed cash receipts and payments from 18th Nov., 1993 to 22nd Nov., 1997. These also contained details of brokerage received on the receipt side and the details of household expenses, details of office expenses and the details of expenses incurred on the construction of house. In pursuance of notice issued under s. 158BC, the assessees have filed returns for the block period showing income at a nil figure. But during the course of assessment, the AO has found that brokerage as shown in the documents marked PCN 19 and PCN 20 are more than those returned by the assessees in their declared returns filed before the date of search. Therefore, rejecting the contentions ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not based on any document or asset that was found during the course of search, since except the two documents no other valuable asset or cash or any document showing any investment in valuable assets was found to show that the assessees have invested undisclosed investment without disclosing to the Department. As can be seen from the order of assessment, it is clear that the assessees have filed returns offering their income from brokerage earned by them which were accepted by the Department. The documents seized during the course of search show the very same income but it does not contain any details of expenditure that was incurred by the assessee. For earning the said income or in the process of earning such income the assessees might have incurred some expenses which the assessees have claimed as deduction during the course of block assessment. In any way, the AO is wrong in assessing the income of the assessees that was disclosed in the regular returns as income in the block assessment. This action of the AO is not sustainable for legal scrutiny, as the AO cannot treat the income returned and already disclosed in the regular return, so far as the regular assessment is differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seizure-Block assessment-Validity-On the basis of search and seizure proceedings at the premises of husband of one of the partners of the assessee-firm, survey under s. 133A carried out at the assessee-firms premises and books and documents impounded-Further, assessment was completed under s. 158BC-There was thus no proper application of relevant sections/provisions-AO not observing technicalities of block assessment under Chapter XIV-B and making a mess by applying all sections/chapters of the IT Act-Additions made by the AO and partly affirmed by the CIT(A) cannot be sustained as the block assessment is invalid. 4. Sunder Agencies vs. Dy. CIT (1997) 59 TTJ (Mumbai) 610 : (1997) 63 ITD 245 (Mumbai) Search and seizure-Undisclosed income under s. 158B-Assessment for block period could be made only in respect of undisclosed income detected as a result of search-Revenue is not empowered under s. 158BA to make roving enquiries connected with completed assessment unless the AO comes across some direct evidence as a result of search which indicates factum of undisclosed income- De hors the evidence AO is not empowered to draw any presumption as to existence of undisclosed income-No qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be linked or correlated with the assessee-Presumption under s. 132(4A) has got a limited scope and is a rebuttable presumption-Assessee had rebutted the presumption by categorically pointing out that the loose papers related to 'B' on whose pad the notings were made-Since the document was not sealed after its seizure and was kept in the custody of the Departmental authorities the chances of subsequent notings pointed out by the assessee could not be ruled out- Uncorroborated loose paper could not be taken as a sole basis for determination of undisclosed income-Findings of the Departmental Authorities in making addition on the basis of jottings in such loose paper were neither legally sustainable nor factually maintainable because the Departmental Authorities had failed to consider relevant factual and legal aspects properly while considering the evidentiary value of the loose papers. 8. Jinka Plaza vs. Asstt. CIT. (2002) 77 TTJ (Bang) 327 Search and seizure-Block assessment-Proceedings under s. 158BD-If the AO is satisfied that the seized material leads to conclusion that the undisclosed income belongs to any person other than the person searched under s. 132, action un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions in dispute based on the estimation arrived at by taking the figures that was disclosed in the seized documents marked PCN 19 and PCN 20, but he has not taken into consideration the claim of the assessee that for earning the brokerage they may have incurred certain expenses. Such expenditure is to be allowed as allowable expenditure. The AO has estimated the amount of brokerage not based on any undisclosed investment made by the assessee in his valuable asset such as jewellery or cash. The learned CIT(A) in the impugned order in para 9 has categorically observed as follows: "I have considered the submissions of the appellant. Though the submissions of the appellant are not fully acceptable, there is some substance in them. From the figures mentioned in the assessment order itself, it is seen that the concerned seized documents, namely, PCN-19 and PCN-20, do not give a coherent picture of income and expenditure of the three assessees. It is seen from the assessment order that the outgoings in financial year 1993-94 and financial year 1994-95 are more than the receipts. It is also seen that the office expenses vary widely as in financial year 1994-95 the office expenses ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. In that view of the matter such an income cannot be assessed in the block assessment unless there is any seizure of valuable asset representing the investment of alleged undisclosed income by the assessee. Admittedly, in the present case there is no recovery of cash or jewellery, etc., during the course of search which can point out any investment of undisclosed income earned by the assessee. In that view of the matter also, the assessment made by the Departmental authorities under this head is nothing but considering an income in block assessment which is to be considered in regular assessment only as the same was already disclosed in the regular return filed by the assessee. Hence, we are of the considered view that the said addition under the head 'brokerage' is not sustainable for legal scrutiny and accordingly the same is hereby directed to be deleted from the assessments of the assessees. Hence, the first issue raised by the Department in all the appeals is dismissed whereas first issue raised by the assessees in all the appeals is allowed. 15. Now we come to the second issue raised by the Department which relates to the deletion of addition made by the AO on account of ..... 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