TMI Blog2000 (3) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,62,450 out of which the assessee had offered only Rs. 78,10,531 in the return for the Block period. The assessee had also claimed deduction under section 80-I in respect of total income computed for the purpose of Block assessment. However, this claim has been rejected by the Assessing Officer on the ground that the total income for the Block period has to be computed only in the manner provided in Chapter IV as per the provisions of section 158BB(1). The contention of the assessee that provisions of Chapter VI-A were applicable by virtue of section 158BH was also rejected. The final assessment was completed on the total undisclosed income of Rs. 1,05,19,502. The said assessment is the subject-matter of appeal before the Tribunal. 3. The only ground raised in the Memorandum of Appeal relates to the claim of the assessee under section 80-1. However, in the course of hearing, the learned counsel for the assessee has raised certain additional grounds to which we will refer later on. The learned counsel for the assessee has contended before us that the scheme of the Act is to determine the total income which can be computed after allowing deductions under Chapter VI-A. He also refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee shows profit of Rs. 2 lakhs in accordance with the provisions of Chapter IV on which he is entitled to deduction at the rate of 25% of such profits. Hence, total income in regular assessment is determined at Rs. 1.5 lakhs. However, as a result of search, total income under Chapter IV comes to Rs. 3 lakhs. If the deduction under section 80-1 is not allowed as per the contention of the Revenue, then the undisclosed income would come to Rs. 1.5 lakhs (Rs. 3 lakhs - Rs. 1.5 lakhs) even though the undisclosed income was only Rs. 1 lakh as per the computation under Chapter IV." From the above example, it is clear that the interpretation as suggested on behalf of the Revenue would lead to absurd results which could not have been intended by the Legislature. 5. It is a settled principle of interpretation that provisions of a statute should be construed reasonably and harmoniously. Further, if the literal interpretation leads to absurd results, then the Court can read down such provisions in consonance with the intention of the Legislature. The intention of the Legislature is to assess only the total income of the assessee which is to be computed in accordance with the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine the undisclosed income. 7. Now we come to the additional grounds. The learned counsel for the assessee has raised four additional grounds which are purely legal and, therefore, have been admitted. 8. Ground Nos. 1 and 2 relate to the undisclosed income of Rs. 34,38,673 pertaining to the assessment year 1996-97. The addition has been challenged by raising two contentions -- firstly, this income is beyond the scope of charging provisions of section 158BA by virtue of sub-section (3). Secondly, as an alternative plea, provisions of section 158BB(1)(d) are applicable. If such provision is applied, then the undisclosed income would come down to nil According to the learned counsel for the assessee, the due date of filing of the return had not expired and the regular books of account were found at the time of search in which all relevant entries have been made. Income has been determined as per such books of account and no fault has been pointed out by the Assessing Officer. He drew our attention to pages 4 and 5 of the assessment order to show that all the purchases are duly debited in such books of account and the alleged bogus purchase vouchers, though found from the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant to this year were duly posted. The Assessing Officer has himself accepted this factual position at pages 4 and 5 of the assessment order. Therefore, in our considered opinion, provisions of sub-section (3) of section 158BA are applicable, inasmuch as the due date for filing of the return had not expired and all the transactions relating to the income were duly recorded in the books of account maintained in normal course. Accordingly, this income cannot be included in the Block period. Even otherwise, Clause (a) of section 158BB(1) becomes applicable by virtue of which such income has to be excluded. Considering from any angle, this income cannot be considered as undisclosed income. At this stage, it is mentioned that it is a settled legal position that there cannot be any estoppel against the statue. If any income is not taxable by virtue of any provision of the Act, then it cannot be taxed merely because it was offered by the assessee in his Return. Therefore, the contention of the learned D.R. in this regard is hereby rejected. Accordingly, the order of the Assessing Officer is set aside on this issue and the sum of Rs. 34,38,673 pertaining to the assessment year 1996-97 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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