TMI Blog2010 (6) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 - Coram: The Honourable Mr.Justice F.M.Ibrahim Kalifulla And The Honourable Mr.Justice M.M.Sundresh For Appellant: Mr. K. Subramaniam, Senior Standing Counsel for IT Dept. For Respondent: Mr. C.V.Rajan for M/s. Subbaraya Aiyer Padmanabhan JUDGMENT F.M.IBRAHIM KALIFULLA, J. The brief facts which are required to be stated are that the respondent assessee is the wife of Mr. S. D.Rajandran, an officer in M/s. Oriental Insurance Company Limited. She is the younger sister of Mrs. Prema Dyaneswaran, w/o Mr. Dyaneswaran. Mr. Dyaneswaran was an officer belonging to the Indian Administrative Services and was the then Chairman of M/s. Tamil Nadu Minerals Ltd., 2. There was a search on Mr. Dyaneswaran under Section 132 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') on 19/20.01.1996. In connection with the said search, the residence of Mr. S. D. Rajendran, the husband of the respondent assessee was also searched. 3. According to the appellant, number of documents were seized in the course of the search evidencing the fact that the respondent assessee had 'undisclosed income' assessable to tax under Section 158BD read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a valid return filed by the assessee disclosing the said amount in the manner set out under Section 139(1) of the Act. 8. To put it differently, according to the learned standing counsel, the assessee cannot be permitted to rely upon any other material other than a 'valid return' in order to claim that the allegation of 'undisclosed income' of the department in a block assessment cannot be true, in as much as, such undisclosed income had already been disclosed by the assessee in a valid return and that such return was filed within the period for filing such return under Section 139(1) of the Act, even if there was a search prior to the time within which such return could have been filed under Section 139(1) of the Act. 9. The learned standing counsel contended that in the case of the respondent assessee since the materials were unearthed in the course of search on her brother-in-law Mr.Dyaneswaran, Section 158BD was attracted and consequently when notice under Section 158BC came to be issued, unless there had been a valid return filed by the assessee disclosing the income as per the statutory provisions, the Tribunal was not justified in relying upon the reply filed by the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of material evidence unearthed in the search and therefore the findings of the Tribunal was well justified and cannot be interfered with. 14. The learned counsel therefore contended that the statutory conditions imposed under Section 158BB, not having been satisfied to make a block assessment, the order of the Tribunal in having set aside that part of the order of the assessing authority which was not inconsonance with Section 158BB of the Act was fully justified. 15. In support of the above contentions, the learned counsel appearing for the respondent assessee placed reliance upon the following decisions reported in: (i) (2006) 284 ITR 222 (Commissioner of Income Tax Vs. Premier Tobacco Packers P. Ltd.) (ii) (2008) 300 ITR 152 (Mad) (Commissioner of Income Tax Vs. S.Ajit Kumar) (iii) (2009) 308 ITR 124 (Mad) (Commissioner of Income Tax Vs. P.K.Ganeshwar) (iv) (2010) 321 ITR 362 (SC) (Assistant Commissioner of Income Tax Vs. Hotel Blue Moon) (v) (2005) 274 ITR 110 (Assistant Commissioner of Income Tax Vs. A.R.Enterprises) and (vi) (2006) 282 ITR 349(MP) (Dr.Brijesh Lahoti Vs. Commissioner of Income Tax) 16. Having heard the learned sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income have been filed under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 but assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such returns; (c) where the due date for filing a return of income has expired, but no return of income has been filed,-- (A) on the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such entries result in computation of loss for any previous year falling in the block period; or (B) on the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such income does not exceed the maximum amount not chargeable to tax for any previous year falling in the block period; (2)..... (3) The burden of proving to the satisfaction of the Assessing Officer that any undisclosed income had already been disclosed in any return of income filed by the assessee before the commencement of search or of the requisition, as the case may be, shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly." 18. Keeping the above statutory provisions in mind, when we examine the facts relating to the respondent assessee, the following undisputed facts emerge:- (a) There was a search under Section 132 of the Act on Mr.Dyaneswaran, brother-in-law of the respondent assessee, as well as, the premises of her husband Mr.S.D.Rajendran. (b) In the course of the search number of documents and other materials were seized. (c) The respondent assessee was issued with a notice under Section 131 of the Act on 01.03.1995, and that the respondent sent two replies dated 11.03.1995 and 15.05.1995. (d) There was no valid return of income filed by the assessee in the prescribed format for any of the years of the block period. (e) By virtue of the search made on Mr.Dyaneswaran and the premises of the assessee's husband and based on the seizure of number of documents Section 158BD was invoked based on which a notice under Section 158BC came to be issued on 07.03.1997, to the respondent assessee which was served on her on 18.03.1997. (f) In response to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the respondent. 24. In the first place, the submission made on the set of expression contained under Section 158B(b) cannot be considered in isolation. The various provisions contained in Chapter XIV-B has been specifically captioned under the head 'Special Procedure for Assessment of Search Cases'. The contention that the various disclosures in the letter dated 15.05.1995, should be construed as one disclosed for the purpose of this Act, if has to be accepted as an abstract proposition, then the various other procedures and prescriptions set out in the rest of the provisions of the said Chapter would become otiose. For instance, under Section 158BB(1), while prescribing the method of computation of undisclosed income of the block period, it is stipulated that it should be on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence. The main thrust is the evidence found as a result of search which should form the basis and all other situations should be relatable to such evidence. Therefore, the main ingred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 (Mirch Vs. Russel) where it has been held as under" "By the application of the maxim ejusdem generis, which is only an illustration or specific application of the broader maxim noscitur a sociis, general and specific words which are capable of an analogous, meaning being, associated together, take colour from each other, so that the general words are restricted to a sense, analogous, to the less general." 29. The above statement of ours based on Sections 158B(b) and 158BB(1) of the Act is further strengthened by a specific provision contained in Section 158BB(3) of the Act, which specifically mandates that the burden of proving to the satisfaction of the Assessing Officer that any 'undisclosed income' had already been disclosed in any return of income filed by the assessee before the commencement of search or of the requisition, as the case may be, shall be on the assessee. Such a stringent stipulation by way of casting the onus on the assessee to discharge the burden makes it amply clear that one cannot claim the disclosure of any income, much less, 'undisclosed income' based on any other material other than the return filed before the expiry of the due date and where aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 131 of the Act and thereafter contend that she has disclosed the income. 33. Going by the admitted facts which shows that there was a search made under Section 132 and thereby Section 158BD was attracted which empowered the Assessing Authority to proceed under Chapter XIV-B, the question for consideration is whether in the course of such search any material was seized, which form the required evidence for proceeding against the respondent assessee under Section 158BB and 158BC of the Act. It is relevant to note and stress that it was not the case of the respondent assessee that in the course of the search no materials were seized. In the elaborate order passed by the Assessing Authority, while we find a specific reference to the seizure of materials as per the Panchanama dated 20.03.1996, as stated in paragraph 2.4.2, in no part of the order of the Assessing Authority, there was any reference to any contentions raised on behalf of the respondent assessee that nothing was seized in the course of search. 34. The various reference to different transactions of the respondent assessee in the block period makes no reference to the respondent assessee's replies dated 11.03.1995 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as that under Section 158BD necessary reasons should have been recorded before making the block assessment and on that ground also the assessment was invalid. Both the above first two additional grounds were rejected by the Tribunal and the respondent has not made any challenge to the said part of the order of the Tribunal by way of raising substantial questions of law. The last of the additional ground was to the following effect: "22(iii). The information and materials used by the assessing officer to complete the impugned block assessment under sec.158BD had in fact already been furnished to the Asstt.Director of Investigation, Madurai as early as on 15.05.1995 itself, who sought relevant information from the assessee. In the course of search, no documents, materials or information other than those documents, materials or information furnished to the Asstt.Director of Investigation, Madurai on 15.05.1995, have been recovered. Therefore, there is no "undisclosure" as far as the case of the assessee is concerned and therefore the impugned assessment is void ab initio." In which the specific contention raised was that all the information where already disclosed in the reply dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the search and that all the information found in the order of assessment were disclosed in the reply dated 15.05.1995. 42. While such a contention of the respondent assessee found favour with the Tribunal as noted by us earlier, in the very same order, the Tribunal had itself recorded the submission of the authorised representative of the assessee herself wherein the contentions were raised questioning the assessment based on 'undisclosed income' with particular reference to several seized materials as untenable. Apparently the Tribunal completely lost sight of those related factors when it entertained the third additional ground and chose to accept the same. Of course, in that process, the Tribunal has not considered the merits of the conclusions made by the assessing authority in respect of various items of 'undisclosed income' and the correctness of those evidence made by the assessing authority. 43. Having regard to our above conclusions, we are not able to countenance the plea of the learned counsel for the respondent assessee that there was no materials found in the search and that what was relied upon by the assessing authority were based on the information furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would show that the assessee by making a self assessment under Section 139 read with Section 140A of the Act paid the advance tax and therefore the proceedings under Chapter XIV-B was not justified. 46. The learned Senior Standing Counsel appearing for the Income Tax Department submitted that the judgment of the Division Bench is pending consideration before the Hon'ble Apex Court. However, we only venture to consider the applicability of the judgment as discussed above. 47. In any case, having regard to the distinguishable feature namely the assessee in that case paid advance tax based on its own self assessment under Section 139 read with Section 140A of the Act, the said case is clearly distinguishable. 48. Chapter 17 of the Act speaks about Collection and Recovery of Tax. Part-C of the said Chapter speaks about the Advance Payment of Tax. Section 207 of the Act speaks about liability for payment of advance tax of the Act. Section 208 and 209 speaks about conditions of liability to pay advance tax and the consequential computation. Similarly Section 210 provides for the payment of advance tax by the assessee of his own accord or in pursuance of order of Assessing Officer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XIV-B has not been gone into in the said case. It is well established principle of law that for a judgment to be treated as a precedent will have to involve a conscious consideration of the issue raised in the case to which it is sought to be applied. In other words, a passing remark or observation made cannot be a binding precedent unless the issue is taken into consideration and decided by applying the provisions of law. 51. It is also a well established principle of law that a judgment cannot read like a statute and the ratio laid down therein will have to apply in the facts of the case. In (2008) 306 ITR 277 ( UNION OF INDIA v. DHARMENDRA TEXTILES PROCESSORS) , the Hon'ble Supreme Court in paragraph 52 has observed as follows: "52....It is a well-settled principle in law that the court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. Similar is the position for conditions stipulated in advertisements. Words and phrases are symbols that stimulate mental references to refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law, it is for the legislature to amend, modify or repeal it, if deemed necessary. (See Commissioner of Sales Tax v. Popular Trading Co. (2000) 5 SCC 511 ). The legislative casus omissus cannot be supplied by judicial interpretative process...." Hence applying the said ratio to the facts of the present case on hand, we are of the opinion that the judgments relied upon by the assessee reported in (2005) 274 ITR 110 (ASSISTANT COMMISSIONER OF INCOME TAX v. A.R.ENTERPRISES) and (2006) 282 ITR 349(MP) (DR.BRIJESH LAHOTI v. COMMISSIONER OF INCOME TAX) are not applicable to the present case on hand. 52. The reliance placed upon the decision reported in (2008) 300 ITR 152 (Mad) (Commissioner of Income Tax Vs. S.Ajit Kumar) , is also not helpful to the assessee in as much as there was a categorical finding in paragraph 5 which is as follows: "5......Admittedly, no material was found during the course of search operation in respect of the amount said to be paid in cash over and above the cheque payment. Hence, the Tribunal correctly come to the conclusion that the information or material found during the course of survey operation at the premises of M/s.Elegant C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing suffered a search, the assessee is not to be enabled to escape the consequences of his failure to disclose all his income by filing a return after the search and after the expiry of the time prescribed under section 139(1) and by disclosing therein income which had remained undisclosed upto the date of the search. Section 158BB(1)(c) is not in any way unconstitutional." The above statement of law of the learned Judge is fully inconsonance with the provisions contained in Sections 158BB(1)(c) and 158BB(3) of the Act. We fully endorse and approve the above said proposition of law laid down by the learned Judge. 55. It will be worthwhile to refer to the principles laid down by the Hon'ble Supreme Court while working out the provisions under Chapter XIV-B of the Act for making block assessment of 'undisclosed income'. In the decision reported in (2010) 321 ITR 362 (SC) (Assistant Commissioner of Income Tax Vs. Hotel Blue Moon) , where the Hon'ble Supreme Court has held as under in paragraph 12: "12. Chapter XIV-B provides for an assessment of the undisclosed income unearthed as a result of search without affecting the regular assessment made or to be made. Search is the si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57. The decision relied upon by the learned standing counsel for the appellant reported in (2009) 310 ITR 64 (Karn) (Chief Commissioner of Income Tax Vs. Pampapathi) though a converse case, fully supports the case of the appellant. The Division Bench has held as under in para 11: "11.When the said letter cannot be made use of against the assessee, then the question to be considered by this court is whether such letter can be treated as a return filed under the provisions of the Income-tax Act to enable the Assessing Officer to pass an order of assessment. The learned counsel for the Revenue fairly submits that the letter dated January 25, 1995, cannot be treated as a return. It is also not in dispute that return has to be filed in the proforma prescribed under the Income-tax Act. The letter dated January 25, 1995, is not in such proforma. After a perusal of the letter dated January 25, 1995, it is clear to us that there is no unconditional disclosure of income by the assessee....." 58. Applying the above principles to the facts of this case, we find the necessary ingredients set down therein have been satisfactorily complied with by the assessing authority while passing th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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