TMI Blog2010 (12) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee having no known source of income during the relevant period is, in view of the deeming nature of section 69, of little consequence. The said provision, it needs to be appreciated, does not require for its application, a finding to the effect that assessee had some known source of income for the relevant period or prior thereto. If that be so, this argument could validly be taken by any ‘major’ assessee as well. Purchase of property in the name of near and ear ones - What would be more relevant for the purpose in the present case, is to see whether the assessee’s father had any source/s of income or not - No doubt, the Revenue has not proceeded against the assessee’s father in the matter, and which may have been detrimental to its case. However, section 64(1A) answers the situation, effectively precluding the adoption of a plea as being raised. - That is, a minor’s income, where not arising out of any personal labour or application of knowledge, skill, etc., as in the present case, is to be included in the computation of the total income of the parent whose income is higher. Increase in value - how the assessee’s adjacent plot could be valued at Rs. 7194 per cent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis that as she was a minor during some of the previous years for which the undisclosed income stands assessed. 3. A brief recount of the facts would be necessary before we could consider, issue wise, the merits of the assessee s case. A search u/s. 132 of the Act was conducted on 21.9.2000 at the business and residential premises of one, Shri K.P. Beeran (of M/s. Riyaz Jewellery, Kozhikode), the assessee s father. The documents seized thereat included a sale deed for the purchase by the assessee of a plot of land admeasuring 13.9 cents at Cheruvannur on 26.9.1998, i.e., falling within the block period. The documented price of the same was at Rs. 1 lakh. The seized material also revealed purchase of two plots of land by the assessee s father (each measuring 10.5 cents) at Cheruvannur per agreement/s entered into in May, 1999 at a consideration of Rs. 60,100 per cent, even as sale deeds in their respect were registered subsequently on 12.7.1999 for Rs. 1.55 lakhs only, with the purchaser - the assessee s father - admitting (per the cash flow statement filed in explanation of the investments) to have paid a purchase consideration of Rs. 6,46,075 for one of the two plots ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubscribe to the view of the Id. CIT(A) that the decision in the case of NTPC ( supra ) would not apply, precluding the assessee from raising this ground before him. On the merits of the issue, the assessee was admittedly a major on the date of search, so that the assessment for the block period u/s. XIV-B of the Act had to be framed on her by the issue of notice in her name. The fact of the assessee being a minor for a part of the block period, and for which the assessee adverts to the mention of her date of birth on the return form itself, would not operate to disqualify or imbue the notice, issued on a major, with legal infirmity. Further, the definition of an assessee under the Act (section. 2(7)) does not exclude a minor. It is only during the assessment proceedings that if some income is found to be assessable for the period for which the assessee is a minor, that the same, where not representing an income arising or accruing on account of any personal labour or application of knowledge, skill, etc., that it shall be included in the hands of his parent whose income is higher. As such, we find no infirmity with the issue of notice u/s. 158BD read with section 158BC on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent, which would depend on the relative merits of the case, and cannot decide the question of validity or otherwise of the issue of notice u/s. 158BD and, thus, of the initiation of the proceedings thereby, for which the sole criteria is the existence of a prima facie satisfaction on the part of the AO of the person searched, and which we have found as so. Reference in this context is made to the decision in the case of Harvey Heart Hospitals Ltd. v. Asstt. CIT [2010] 130 TTJ (Chennai) 700. This is trite law, and for which reference may be drawn to a host of decisions by the higher courts of law, rendered in the context of the reassessment proceedings, which also prescribe the procedure of recording - albeit in writing - by the AO concerned of his reasons to believe as to the escapement of income prior to the issue of notice u/s. 148, with the sufficiency of the reasons being not subject to judicial review (refer: Raymond Woolen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC); Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 (SC); Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662 (SC)). The contention that no material or information stands recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and circumstances of the case. In that case, the assessment years being 1968-69 and 1969-70, all the authorities below were in agreement as to the unsatisfactory status of the assessee s explanation toward her investment/s. However, given the circumstances she was placed in, she could not have, by any stretch of imagination, even by working for a decade, earn the requisite amount being credited to her, so as to have made the impugned investment(s). In other words, the said decision stood based on the peculiar facts of the case, and rested on the tribunal s finding of a complete and total absence of any resources with the assessee for the investment. In the instant case, in contradistinction, the assessee is a minor during the period of purchase of plot of land and its registration. She is, therefore, incompetent to contract, and the said purchase and all the related activities have been carried out by her father, Shri K.P. Beeran, the person searched. The documented price is Rs. 1 lakh, so that the assessee admittedly had resources to that extent. If she could have access to or generate resources for Rs. 1 lakh, why, we may ask, not a higher amount?, assuming the same is found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 963] 50 ITR 1(SC); CIT v. Devi Prasad Vishwanath [1969] 72 ITR 194 (SC); Chuharmal v. CIT [1988] 172 ITR 256 (SC), to cite a few. 6. The next issue that we may address is the assessee s plea that the assessment of undisclosed income cannot be made on an estimate basis. Toward this, we find that there is in law no, and rather cannot be a, legal bar on the power of the AO to frame an assessment, which is plenary; the only requirement being that the same is to be based on relevant materials, and by drawing cogent inferences therefrom. True, its open to the assessee to contest the additions/disallowances as made on merits, i.e., on quantum, claiming the same to be excessive, but that is a different matter altogether, which would require to be decided on its own merits, as would be the case in any regular assessment. The provisions of law, as well as the principles governing the assessment of income remain the same, whether the assessment is of disclosed or undisclosed income. Reference in this context is drawn to the decisions in the case of Hotel Kumar Palace v. CIT [2006] 283 ITR 110 (P H); Rajnik Co. v. Asstt. CIT [ ]251 ITR 651 (AP); CIT v. Rajendra Pras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The assessee, we find, has relied on the decision in the case of Bima Singh v. CIT, 308 ITR 171 (Patna), to the effect that where the investment as disclosed, and as valued by the DVO, reflects a meager difference, there is no cause for making any addition. The reliance is misplaced, for the reason, as also observed earlier, the AO has adopted the value as furnished by the assessee itself, so that there is no addition on this account. 8. The assessee s next and last ground relates to the levy of surcharge on the assessed tax, which, again, stands not raised before the Id. CIT(A), though being legal, stands admitted. The same is on the basis that section 113 of the Act, whereby the levy of surcharge stood extended to assessments u/s. 158BC, per Finance Act, 2001 with effect from 1.6.2002, is only prospective in nature, and would thus not be applicable in the present case; the block period ending on 21.09.2000. The matter has since been clarified by the hon ble apex court vide its decisions in the case of CIT v. Suresh N. Gupta [2008] 297 ITR 322 (SC) and CIT v. Rajiv Bhatara [2009] 310 ITR 105 (SC); holding the proviso to section 113 to be clarificatory and cu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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