TMI Blog2011 (7) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of the drawer - Appeal is partly allowed - I.T.A. No.218 of 2001 - - - Dated:- 1-7-2011 - Mr. Justice Bhaskar Bhattacharya, Mr. Justice Raghunath Bhattacharyya, JJ. For the Appellant: Mr. N. K. Poddar, Mr. Vineet Tibrewal, Mr. Dilip Kumar Kadel. For the Respondent: Mr. Sailen Dutt, Mr. Aniket Mitra. Bhaskar Bhattacharya, J.: This appeal under Section 260A of the Income-tax Act is at the instance of an assessee and is directed against order dated March 30, 2001, passed by the Income-tax Appellate Tribunal, E Bench, Calcutta, in Income-tax Appeal bearing IT (SS) A No.69/(Cal) of 1997 for the block-period April 1, 1985 to February 12, 1996. Being dissatisfied, the assessee has come up with the present appeal. The facts giving rise to filing of the present appeal may be summed up thus: a) During the previous year ended March 31, 1993 relevant to the Assessment Year 1993-94, the assessee allegedly purchased for the purpose of resale 141.075 MTs of HTS wire from M/s. D. K. Hardware Stores at the cost of Rs.39,78,315/-. Payment in respect of the said purchase was made by account payee cheques partly during the previous year ended March 31, 1993 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer, however, proceeded on the assumption as if the material was shown in the assessee s account as consumed in the fabrication work. The Assessing Officer held that the assessee did not require HTS wire for the fabrication work and as such, concluded that the assessee had inflated its expenses by claiming bogus purchases to the extent of Rs.39,78,315/-. The Assessing Officer, thus, treated the said sum of Rs.39,78,315/- as undisclosed income for the Financial Year 1992-93 for inclusion in the block assessment. f) Another issue arose in course of the block assessment proceedings as regards to two payments of Rs.10 lakh each shown in the regular books of account allegedly made to M/s. Faissan Construction and M/s. Sakti Construction Co. on August 24, 1995 and August 25, 1995 respectively. The books of account reflecting the said payments were seized in course of the search. The search took place as indicated earlier on December 21, 1995 before the close of the Financial Year 1995-96 and the assessee s return for the Assessment Year 1996-97 relevant to the Financial Year 1995-96 was due to be filed much later. g) The Assessing Officer asked the assessee to explain as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y surcharge. Mr. Poddar, the learned Senior Advocate appearing on behalf of the appellant, has raised a pure question of law in support of the present appeal. According to Mr. Poddar, aforesaid two transactions being reflected in the return of the assessee and being also supported by the entries made in the books of account produced by the assessee, there was no justification of making assessment in respect of those transactions in block assessment. In other words, according to Mr. Poddar those two items of transactions being reflected in the account of the assessee, if those were disbelieved and treated to be fictitious, at the most, the Assessing Officer could pass necessary order in the regular assessment, but there was no scope of passing such order in block assessment when the findings recorded by the Assessing Officer were not based on any material recovered at the time of search and seizure. Mr. Poddar submits that it appears from the materials on record that in course of search and seizure, no incriminating papers were recovered from the office of the assessee and as such, the findings in respect of the aforesaid two items, are not based on any documents seized in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the Assessing Officer indicating that no such persons existed at the address given by the Assessee. As regards the finding of the Assessing Officer in respect of the two payments of Rs. 10 lakh, each shown in the regular books of account and made to M/S Faissan Construction and M/S Sakti Construction on August 24, 1995 and August 25, 1995 respectively are concerned, we had initially some doubts in our mind and for that reason, after conclusion of the hearing, we again fixed the matter to enable Mr. Dutt, the learned Advocate for the Revenue to produce the records relating to search and seizure for the purpose of ascertaining whether there was any material seized which could be linked with the payment of the aforesaid sum of Rs. 20 lakh. Those records were placed before us. We find that in course of search and seizure, a certificate of license showing that Shri Umesh Narayan Jha as proprietor of Sakti Construction who was found to be an employee of the propriety concern of D. K. Goyal was recovered. The Photostat certified copy of the cheque which was encashed after deleting the account payee mark in favour of Sakti Construction and making it a self drawn one has been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer. Therefore, the income assessable in block assessment under Chapter XIV-B is the income not disclosed but found and determined as the result of search under Section 132 or requisition under Section 132-A of the Act. (Emphasis supplied by us). By applying the aforesaid test to the facts of the present case, we find that the finding as regards addition of Rs.39, 78,315/- and a further sum of Rs. 20 lac is not based on any materials unearthed on search and seizure and thus, not liable to be assessed on block assessment under Chapter XIV B of the Act but should be subject to regular assessment. As regards the two decisions relied upon by Mr. Dutt of Madhya Pradesh High Court and the Allahabad High Court (supra), we find that those dealt with the provisions contained in Section 68 of the Act. We do not for a moment dispute the principles laid down therein but we fail to appreciate how the said decision can have any application for resolving the question as to whether block assessment is applicable even if the finding is not based on any material unearthed in search and seizure. We thus hold that those decisions are irrelevant for our purpose. Similarly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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