TMI Blog2003 (2) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaration of any undisclosed income made during the course of the search. Out of the group, 10 regular firms and few individuals were filing their returns regularly, but in other cases, including that of the assessee, no returns were filed and no assessments had taken place before the search action was taken. As far as the firms were concerned, the returns were filed for the asst. yr. 1995-96 and the assessments were also made. Apart from these partnership firms which had filed their regular returns, there were 42 AOPs, 23 partnership firms, 3 HUFs, 3 family trusts and 15 individuals out of whom the assessee is one such individual. 3. The block assessments were completed in the case of a number of AOPs and these assessments were challenged in appeal before this Tribunal. The representative case was that of G.C. Associates vs. Dy. CIT in IT(SS)A No. 198/Pn/1997 which was decided by this Tribunal vide order dt. 18th Aug., 2000. Some of the grounds in the present appeal have already been dealt with in the order of the Tribunal in the case of G.C. Associates, Pune, to which suitable reference will be made later on while discussing the grounds of appeal. 4. After the search, assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tten objections with evidence to him with a copy to this office on or before 25th Sept., 1997." In view of this specific opportunity given to the assessee, the assessee filed number of papers and evidences before the CIT with his letter dt. 26th Sept., 1997. Copies of these evidences and submissions have been placed in paper book No. 1. From the various letters addressed by the AO seeking information from the assessee, it is clear that scrutiny of Bafna group of cases started some time in the month of June, 1997, as is clear from the letters issued by the AO dt. 24th June, 1997, 4th July, 1997, 7th July, 1997, etc. As far as the assessee is concerned, his case was taken up along with other individual assessees, viz., his brothers, his mother and his sons, etc. Thus, it is seen that in the short span of three months, compiling data for large number of assessees for a period of ten years was extremely difficult. This was mainly because the activities of the assessee and the group were on very substantial scale. It was submitted by the learned counsel of the assessee that getting the data from the various assessees' books could be started only in the month of May, 1997 when all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iates. As per para 9 in that order, we have held that filing of the belated return was valid in law and the AO is directed to take cognizance of the entire return as also its accompaniments in regard to computation of income. 10. Ground No. 2 reads as under: "On facts and circumstances prevailing in the case and as per provisions of law, it be held that the undisclosed income should have been assessed at Rs. 36,21,770 as is admitted by the appellant as against Rs. 2,93,78,183 cornputed by the AO. The appellant be granted just and proper relief in this respect." This is general ground challenging various additions made to the undisclosed income returned. This ground has, therefore, to be read along with other grounds. The ground does not, therefore, call for any specific comment. The ground does not, therefore, call for any specific comment. 11. Ground No. 3(a) reads as under: "3. Without prejudice to ground Nos. 1 and 2, and circumstances prevailing in the case and as per provisions of law it be held that: a. The AO ought to have granted depreciation on actual cost of truck declared by the appellant. It may further be held that not accepting such actual cost of truck ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the period from 1st April, 1996 to 12th Sept., 1996. The depreciation should have been allowed in full as per provisions of law and on facts and circumstances prevailing in the case for the said period. Just and proper relief be granted to the appellant in this respect." The facts and arguments of both the sides on this ground are identical to those discussed by us in our order in the case of G.C. Associates. As such, the decision given by us in our aforesaid order will apply mutatis mutandis. For the detailed reasons given in our aforesaid order, we direct the AO to allow depreciation at the rate of 50 per cent of the allowable depreciation for the broken period. This ground accordingly succeeds. 15. Ground No. 3(d) reads as under: "The AO ought to have granted claims of expenses pertaining to trips of trucks, truck expenses and administration expenses on the basis of the P L a/c submitted by the appellant along with the returns and details submitted from time to time in that respect. It may further be held that disallowing part of such expenses and or allowing such expenses on percentage basis is arbitrary, unjust and improper. The appellant be granted just and proper rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire income so computed for the said period is to be adjusted and to be set off in terms of provisions of s. 158BB(1)(d) of the Act and tax imposable on such income would be regular tax leviable under the general provisions of the Act and not at the rate of 60 per cent chargeable on the basis of undisclosed income. Just and proper relief be granted to the appellant in this respect." 19. In this ground, it has been contended that the AO was in error in computing the income pertaining to the previous year ending on 31st March, 1996, and for the period from 1st April, 1996 to 12th Sept., 1996, as undisclosed income and not granting relief in terms of provisions of s. 158BB(1)(d) of the Act. It is further contended in this ground that the entire income so computed for the said period is to be adjusted and to be set off in terms of the provisions of s. 158BB(1)(d) of the Act and tax imposable on such income will be regular tax leviable under the general provisions of the Act. We find that this ground is the same as in the case of G.C. Associates and it has been dealt with in para 45 of the order in that case. The learned Departmental Representative, however, submitted that the AO i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeds. 23. Ground No. 4(a) reads as under: "Without prejudice to ground Nos. 1, 2 and 3, on facts and circumstances prevailing in the case and as per provisions of law it be held that: a. Addition of Rs. 50,000 out of cash found at Rs. 55,054, that of Rs. 3,35,329 on account of value of part of the jewellery found at the time of search and seizure that of Rs. 5,07,543 on account of value of silver found at the time of search and seizure is unjust and improper. The same be deleted." This ground has to be read in the context of block assessments in the case of the assessee as well as of other individual members of the Bafna family. Shri K.A. Sathe, the learned counsel for the assessee, submitted that the cash found has relevance to the entire Bafna group and the addition has to be seen in the context of entire Bafna group. This issue has been dealt with in para 1 on p. 2 of the assessment order. Out of the total cash of Rs. 3,84,569 at the time of search, cash in possession in the room of Shri G.C. Bafna was of Rs. 55,054. Other cash was found in the room of Smt Kundanbai C. Bafna. The AO considered the cash of Rs. 50,054 only in the case of the assessee, while rest of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel, the assessee has a system of giving advances to the various staff members as also persons to whom some work like welding, painting, etc. is given. At the time when the advances are given, entries in the cash books are not made, but when the final bill is received from the concerned staff member or the concerned welder, fitter, etc., expenses are debited. He submitted that a separate record is kept of such IOUs or the advances given which on the date of raid were of Rs. 3,31,906. The balance of Rs. 1,02,674, according to the learned counsel, representing further shortage will be on account of cash withdrawn by the family members from the family concerns for the purpose of business or advances, but which has remained to be accounted for. 25. The learned Departmental Representative relied upon the order of the AO. 26. We have considered the rival submissions and perused the facts on record. We find considerable force in the submissions of the learned counsel, but the facts and figures given by the learned counsel need verification at the end of the AO. We accordingly direct the AO to verify the cash balances of various Bafna group members as have been brought on p. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book No. 2. These details show the entire jewellery found in the house of Bafnas and it was requested that instead of considering the jewellery in the bedroom of each member of the family, the entire jewellery should be seen as a whole for the family, particularly because Smt K.C. Bafna who was the seniormost member of the family and Shri G.C. Bafna were also having jewellery of the family. The learned counsel submitted that the total jewellery as found in the various bedrooms was 8122.24 gms. as is clear from second column on p. 4. Out of this, jewellery to the extent of 5146 gms. is fully explained by way of jewellery declared by the four ladies in the house in their wealth-tax returns amounting to 3100 gms. and purchase of jewellery of 2046,15 gms. The details of purchase of jewellery are given on p. 21 of the paper book No. 1. The items of purchase are supported by bills and their sources also have been explained on p. 21. In addition to this gold, credit for three daughters-in-law whose marriages have taken place during the year to the extent of 1500 gms. can be given. These three daughters-in-law are wives of Rajendra and Sanjay (two sons of the assessee) and Hemant, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had brought to the notice of the learned CIT that the lady members of Bafna family had declared jewellery in their wealth-tax returns filed for the asst. yr. 1982-83. This fact was not before the AO. It was also pointed out that jewellery was purchased in subsequent period from disclosed sources of funds. There was an addition of jewellery also on account of lady members when they got married in the family. The submissions made before us now by the learned counsel with facts and figures were not before the AO and accordingly, we restore this issue to the file of the AO to readjudicate upon the same after giving an opportunity of being heard to the assessee. Same is the position with silver. The issue of gold jewellery and silver has to be considered in the context of different members of the family as a whole and accordingly we restore both the issues to the file of the AO with direction that he should go through the details furnished before us in the paper book and referred to supra and readjudicate upon the issue after giving an opportunity of being heard to the assessee. 33. Ground No. 4(b) reads as under: "Addition of share profit from M/s Bafna Automobiles (ASD), Bafna M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll other concerns the entire share profit as well as credits to capital account were assessed as undisclosed income of the assessee for the asst. yrs. 1987-88 to 1992-93. 35. In this behalf, Shri K.A. Sathe submitted that since the Bombay firm was not with the AO, separate information was given but in regard to other firms assessed in Pune the fact that these firms were regularly filing their returns and the details of share profit from the firms was already on record of the Department much before the date of search and there was thus no justification for treating share profit as undisclosed income, Shri Sathe submitted that the decision of the Bombay High Court in the case of Shamlal Balram Gurbani squarely applied to the facts of the case. 36. The learned Departmental Representative objected both in regard to the amendment of the ground as well as the applicability of the decision of the Bombay High Court. According to him, the ground as amended was not a mere amendment, but seeks deletion of the entire share income as undisclosed income and it is in that sense a new ground of appeal. He urged that this ground required to be rejected. He further submitted that the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same are estimated at Rs. 75,000 in asst. yr. 1987-88 with the increase of 10 per cent every year. Since there are three male members in his family, same are distributed in all the three male members. Addition, therefore, on account of household expenses is made as per Annex. 22 enclosed with this order." 40. Shri Sathe, the learned counsel for the assessee, submitted that though the AO had proposed the addition on account of household expenses, there was absolutely no material found during the search warranting any conclusion that any undisclosed income is involved on account of inadequate household expenses. In fact, the AO had no material at all as to the total expenditure incurred by the assessee or his family members during the block period. During the course of assessment, details regarding household expenses could not be furnished. However, reply to the query raised was given before the learned CIT during the course of his approval in the letter dt. 26th Sept., 1997. This is dealt with at point No. 3 on pp. 5 and 6 of the paper book No. 1. 41. The details of household expenses and the addition made on that account are given by the AO in Annex. 22 to the assessment order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject-matter of undisclosed income and, secondly, because in fact the expenses as shown by the assessee by way of withdrawals are far in excess of estimates made by the AO. But the figures of withdrawals as shown by the assessee deserve verification at the end of the AO and we direct the AO to verify the figures and subject to the verification, the addition as proposed may be deleted. 44. Ground No. 4(d) reads as under: "Addition of Rs. 12,751, Rs. 30,000, Rs. 1,78,650, Rs. 5,41,800, Rs. 4,85,360 and Rs. 1,55,395 for asst. yrs. 1987-88, 1988-89, 1989-90, 1990-91, 1991-92 and 1992-93, respectively, being credits appearing in capital account of the appellant in various firms is unjust and improper. The entire addition so made be deleted. Just and proper relief be granted to the appellant in this respect." 45. In this ground, various additions made by the AO in respect of credits appearing in the capital account of the assessee in various firms has been challenged. This ground has to be read with ground No. 4(b) under which it was firstly contended that the details of capital account were already available to the Department in the assessment of the firms before the date of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details regarding the credits in the savings bank accounts of the assessee, but subsequently in the month of September two days before preparing the draft order, the AO obtained details of the credits from banks and asked the assessee to explain these details. Since the assessee could not immediately file these details, all such credits in the bank account were considered by the AO as undisclosed income of the respective assessment years in the block. 50. Shri Sathe submitted that the details were, however, before the CIT in the letter dt. 22nd Sept., 1997. These details and summary of the savings bank account are to be found on pp. 387 to 543 of the paper book No. 1. He submitted that from these details it will be seen that most of the amounts appearing in the deposit side of the account are by way of dividend received from companies or refund of share application money or maturity of LIC policy. To the extent the credits represent refund of share application money, they do not represent any income and such credits will have to be excluded from consideration. He further submitted that to the extent these credits represent dividend, interest or capital gain and to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchased (copy of the letter is placed at p. 66 of paper book No. 2). The AO thereafter never asked about the stock of wooden logs and source of investment in individual cases. In draft assessment order, by giving reference as "since you have filed certificate regarding ownership of the same", the addition was proposed. Reply was also filed before the CIT by letter dt. 26th Sept., 1997, relevant portion is on p. 767 of the paper book. The submissions before the CIT were filed in reply to addition which was proposed by the AO in the draft assessment order. According to the assessee, the assessee and his family members purchased wooden logs for construction at Suparshwanath bungalow from Shree Mahavir Saw Mills, Parathwada R.S. Pendhari. Payments were made from drawings made from the business from time to time. The payment of Rs. 2,75,000 was made from Bafna Roadlines in the year 1995-96 and was debited in the name of Suparshwanath Constructions on behalf of family members. Further payment of Rs. 4,00,000 was paid towards purchase of wooden logs in the year 1990-91 and out of which Rs. 2,00,000 was debited in the books of Bafna Motor Transport Co. (Poona) on behalf of family membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e capital, paid-up share capital and shareholding pattern, etc., In the chart of shareholding pattern, certain shareholding was shown in the name of individuals. Reply dt. 15th Sept., 1997, was filed in response to query raised by the AO on 9th Sept., 1997, stating source of investment in BIFSPL. Copy of letter placed at pp. 79 to 80 of paper book No. 2. The AO has made addition by giving reference as "above explanation of the assessee does not clearly explain the source of investment in shares of BIFSPL." 59. Shri Sathe, the learned counsel for the assessee, submitted that the investment made by the individual is recorded in the books of account. The source of investment in BIFSPL is explained below in the statement of facts: "The assessee applied for shares in BIFSPL in the year 1995-96. The amount was paid from his proprietary concern namely, G.C.B. Goods Transport. All the money was paid by cheque only and was duly recorded in the books of accounts. Source regarding amount received in G.C.B. Goods Transport: In G.C.B. Goods Transport, the assessee received amount as refund of share application money which was paid in the earlier year. The refund received was in turn paid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marriages in the Bafna group during the block period and as far as the assessee was concerned, according to the assessee's information, there were three marriages of the following persons: Name of the person married Dt. of marriage 1. Shri Rajendra G. Bafna, son of Shri G.C. Bafna 25.11.1987 2. Shri Sanjay G. Bafna, son of Shri G.C. Bafna 7.12.1989 3. Mrs Swati Mehta, daughter of Shri G.C. Bafna 26.11.1992 According to the AO details like head-wise marriage expenses, jewellery gifted, etc. had not been furnished. He estimated the marriage expenditure on the marriage of the daughter, i.e., Swati K. Mehta of Rs. 4,00,000 for the asst. yr. 1993-94, marriage expenses of Sanjay G. Bafna (son of the assessee) at Rs. 2,00,000 in the asst. yr. 1990-91 and expenses on the marriage of Shri Rajendra G. Bafna other son at Rs. 1,50,000 in the asst. yr. 1989-90. 64. Shri Sathe submitted that the AO has made the addition of Rs. 4 lakhs as undisclosed income on the marriage of Swati K. Metha, whereas the withdrawals were Rs. 7,02,642. Further, the withdrawals were made by the family members from the reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account, then an addition of Rs. 86,000 will have to be made, but the figure of Rs. 1,16,521 needs to be verified by the AO. Accordingly, we restore this issue to this issue to the file of the AO. He may verify whether the assessee debited an amount of Rs. 1,16,521 and then readjudicate upon the issue after giving an opportunity of being heard to the assessee. As regards the estimate of marriage expenses of Rajendra G. Bafna, since the assessee does not have details, an estimate has to be made. The AO has made the estimate at Rs. 1,50,000 which, in our opinion, taking into consideration the status of the assessee, is fair and reasonable and no interference is called for. 67. Further, an addition of Rs. 1,00,000 has been made by the AO on the basis of loose paper No. 18 with the following remarks: "Loose paper No. 18 of party No. 5 Panchnama dt. 25th Sept., 1996, shows expenditure of Rs. 27,143 on 30th May, 1986, in the name of the assessee. Details of expenditure show that same has been incurred on Mandap, stage, decoration, generator, etc. It appears that some marriage/function has been performed on 30th May, 1986, for which no details have been filed by the assessee. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search, loose papers, details of which have been given in the ground as above were found. The AO has discussed these loose papers in para 9 of his order under the head 'Seized material'. He has added the figures given in the loose papers because according to him the assessee did not furnish any explanation about the entries in the loose papers. 69. Shri Sathe, the learned counsel for the assessee, has relied upon his detailed submissions given in the Statement of Facts on pp. 14 to 23. The crux of his explanation is that the assessee did respond to the queries made by the AO. but the AO summarily rejected the explanation furnished by the assessee. Detailed explanations were also filed before the learned CIT. But he also did not consider the same. For example L.P. No. 4: The assessee and his other family members purchased wooden logs for construction at Suparshwanath bungalow from Shree Mahavir Saw Mills, Paratwada and R.S. Pendhari. The payments were made from drawings made from the business from time to time. Further payment of Rs. 4 lakhs was made towards purchase of wooden logs in the year 1990-91 and out of which Rs. 2 lakhs was debited in the books of Bafna Motor Transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: "Addition of Rs. 22,554, Rs. 37,000, Rs. 22,230, Rs. 2,06,556, Rs. 3,90,764, Rs. 1,57,180, Rs. 70,200, Rs. 3,20,580, Rs. 97,800 and Rs. 2,91,900 in asst. yrs. 1987-88, 1989-90, 1990-91, 1991-92, 1992-93, 1993-94, 1994-95, 1995-96, 1996-97 and 1997-98 on account of investments in shares is unjust and improper. The additions so made be deleted. It may further be held that estimating the value of certain shares at 6 times of the face value is unjust and improper. The value of the shares should have been considered on the basis of the investments made duly recorded by the appellant. Just and proper relief be granted to the appellant on these scores." The above additions related to alleged investment in shares seized during the course of search. Shares given in the annexures are few out of large number of shares seized by the Department on 12th Sept., 1996. Shri Sathe submitted that reply was filed before the CIT under common issue vide letter dt. 26th Sept., 1997. Further, chart showing shares seized and source of investment of that shares was enclosed at the time of hearing before the CIT. He further submitted that this chart was already filed before the AO during the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of shares seized during the course of search. 77. Shri Sathe submitted that the assessee had offered dividend received as income from other sources in the return filed for the block period. Further, the AO has not given any explanation why he has considered dividend at the rate of 30 per cent of the investment. 78. The learned Departmental Representative relied upon the order of the AO. 79. We have considered the rival submissions and perused the facts on record. We have already restored the issue of shares seized during the course of search to the file of the AO for verification as to whom the shares belong and to verify the source of investment. Further, we do not find any justification on the part of the AO for estimating dividend at the rate of 30 per cent of the investment. There cannot be any uniform formula of dividend on investment because investments are in shares of different companies. Accordingly, only the dividend which the respective company had declared has to be added in the hands of those persons to whom the shares belonged. Accordingly, we restore this issue to the file of the AO with the direction that as per our directions given in respect of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had already declared profit on sale of shares. The profit as computed by the AO is higher than that shown by the assessee in the block return. The difference is mainly on account of the fact that the AO has not allowed deduction under s. 48 on account of indexing wherever applicable, inclusion of shares of other members of the family and shares of the period earlier to the block period. Even while computing undisclosed income for the purposes of block assessment, normal deductions which are available to the assessee in computing capital gains are available as is clear from the provisions of s. 158BB according to which provisions of Chapter IV are applicable. Sec. 48 falls within Chapter IV and accordingly, it has been submitted before us that there is no reason for the AO to deny benefits of deduction under s. 48 as might be due. 85. The learned counsel also brought to our notice that the AO has considered the transactions prior to the block period. This would be clear from the fact that in Annex. 30 in computing the income for the asst. yr. 1987-88 he has included profit of Rs. 6,83,172 as profit on sale of shares and an amount of Rs. 4,90,236 is added as investment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to him, these shares should be considered in the hands of Swati Bafna because these were purchased by her. 90. The learned Departmental Representative submitted that this ground is consequential to ground No. 4(j) dealing with shares and accordingly, the matter may be decided. Since we have restored the issue regarding investment in shares and dividend on shares, this matter being consequential, we restore the same to the file of the AO. He is directed to readjudicate upon the issue following our directions given in respect of shares seized in para 64 (74) supra. 91. Ground No. 4(o) reads as under: "Addition of Rs. 300 in asst. yr. 1992-93, Rs. 2,700 in asst. yr. 1993-94 and Rs. 17,100 each in asst. yrs. 1994-95 to 1997-98 being the dividend estimated on shares owned and held by Swati G. Bafna alias Mrs. Swati Mehta is unjust and improper and contrary to the provisions of law. The addition so made be deleted. It may further be held that dividend estimated at 30 per cent on investments by the AO is erroneous. The appellant be granted just and proper relief in these respects." This ground is identical to ground No. 4(k). For the detailed reasons given in para 69 (79) supra, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention to the observations of the learned CIT in Annex. 30 to the order. The CIT had directed the AO to obtain the details of cost of acquisition and to take up the issue in rectification proceedings. The AO has not taken up rectification proceedings and the learned Departmental Representative submitted that he had no objection if the issue is restored to the file of the AO. Accordingly, we restore this issue to the file of the AO. He is directed to follow the directions of the CIT, i.e., resort to rectificatory proceedings by giving an opportunity of being heard to the assessee. 95. Ground No. 4(r) reads as under: "Addition of Rs. 91,125 in asst. yr. 1996-97 and Rs. 1,25,000 in asst. yr. 1997-98 on account of alleged investment in property purchased at Ambegaon is unjust and improper and without any evidence. The addition so made be deleted. Just and proper relief be granted to the appellant in this respect." 96. The issue covered in this ground has been referred to by the learned AO in para 11 of his assessment order. It has been stated by the AO that the assessee along with other male members of the family purchased three pieces of land at Ambegaon. On perusal of rates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Feb., 1993, at the time of purchase agreement and Rs. 25,000 each was paid on 6th July, 1994 and 20th Sept., 1994. Balance payment of Rs. 11,50,000 was paid in February, 1995. The source of investment has been fully accepted by the AO and no addition was made by him. 99. As regards the second agreement, it was in respect of property at S. No. 34 and the agreement was for Rs. 6,21,000. The property was purchased from Chhajed Jain Lunawat and others. There was no Sathe-khat as far as this property was concerned. According to the learned counsel, whereas the first property was agreed to be purchased on 17th Jan., 1993, second property was purchased only in February, 1995. Though actual sale deeds of both the properties were on the same date, the agreement for the first property was two years earlier. The main reason why smaller price was paid for this transaction was that this plot had no access at all from the main road. Shri Sathe in this behalf referred to the map enclosed with the purchase agreement placed at p. 197 of paper book No. 2. It is seen from this map that Hissa No. 7 did not have any access from Mahamarg which was adjacent to Hissa No. 16 which was covered in the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Bafna Transport India, M/s Bafna Automobiles (Auto Sales Div), Bafna Motor Transport Co. (Poona) Bafna Auto Carriers, Bafna Translines for asst. yrs. 1987-88 to 1992-93 which was duly available on the file of the respective firms who had filed their regular returns in due course, before the search, constituted undisclosed income of the assessee for the above years and was to be included in the total undisclosed income of the block period. It may, therefore, be held that inclusion of the share income of the above firms as detailed in para 4 of the assessment order may kindly be deleted." We have dealt with this issue in paras 35 to 37 of our order supra. Accordingly, no further comment is called for. 103. In the result, the appeal is allowed in part. U.B.S. BEDI, J.M.: 26th Feb., 2002 104. I have had an occasion to go through the proposed order of the learned AM when the same was received by me for consideration. 105. So far as ground No. 1 is concerned, the finding and the conclusion of the learned AM is given in para 9 of the proposed order which is reproduced as under. "After hearing both the parties, we hold that this ground is identical to ground No. 1 in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Jai Prakash Singh (1996) 132 CTR (SC) 262 : (1996) 219 ITR 737 (SC) wherein it was held as under: "An omission to serve or any defect in the service of notices provided by procedural provisions does not efface or erase the liability to pay tax where such liability is created by distinct substantive provisions (charging section). Any such omission or defect may render the order irregular-depending upon the nature of the provision not complied with-but certainly not void or illegal..... Held, allowing the appeal, that the Tribunal was correct in holding that non-service of notice under s. 143(2) of the IT Act, 1961, to nine out of the ten legal representatives of the deceased S did not invalidate the assessment orders of the ITO relating to the asst. yrs. 1965-66, 1966-67 and 1967-68 and that it was at best an irregularity for which the AAC was justified in setting aside the assessments and it was not a case fit for cancellation of the assessments." 108. Therefore, in view of this authoritative pronouncement of the Hon'ble Supreme Court on the point at issue, the assessment made without following procedure as laid down, could only be held to be irregular but not null and void ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued and served on the assessee on 7th April, 1997, calling for the return for the block period. The assessee did not file return for the block period within the time allowed in the said notice. Assessee did file return for the block period on 23rd Sept., 1997, declaring therein undisclosed income of Rs. 36,21,770. As the return was filed beyond time, it was treated as non est return by the AO. AO acknowledged receipt of return in the order. It was received when AO almost finalized the assessment. Details were submitted to the CIT for his approval on 26th Sept., 1997. CIT accorded the approval on 29th Sept., 1997. 4. Both the learned Members agreed on the point that belated return filed by the assessee was a valid return. It was incumbent on the AO to take cognizance of the return and details filed along with the same. 5. Learned AM appreciated the fact that adequate time was not available at the disposal of the parties, as such information on various points could not be given before the draft assessment was completed. Substantial information was provided to the CIT. CIT could not take note of the submissions and evidence because of the time constraints. As such principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue after giving an opportunity of being heard to the assessee". Further, at para 49 it is said: "Since the assessee could not immediately file these details, all such credits in the bank account were considered by the AO as undisclosed income of the respective assessment years in the block". Thereafter, in para 50 he notes the submissions that the details were, however, before the CIT. Then he concluded in para 52 that since full details are now available these deserve to be verified by the AO. 9. The aforesaid example just indicates the approach of the learned AM in regard to the whole issue. In the case of Smt. Tapati Pal vs. CIT (2000) 158 CTR (Cal) 216 : (2002) 124 Taxman 123 (Cal), Hon'ble High Court has held that when any question or issue is raised for first time before Tribunal, which requires enquiry into facts, Tribunal cannot make enquiry of facts in second appeal, but when it has entertained plea which requires enquiry into facts, Tribunal has no option but to remit matter back to AO. 10. Hon'ble Gujarat High Court in the case of CIT vs. Valimohmed Ambedbhai (1982) 27 CTR (Guj) 97 : (1982) 134 ITR 214 (Guj) has held that r. 46A(3) of the IT Rules, 1962, makes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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