TMI Blog2010 (10) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is tenable or not. When there is no proper exercise of jurisdiction by the first appellate authority, particularly in a case of block assessment, where undisclosed income has to be assessed based on evidence gathered on inspection, in terms of section 158BB(1) of the Act, the recourse open to us is only to set aside the orders issued in appeal by the Tribunal and that of the first appellate authority and remand the matter to the CIT (Appeals), for fresh decision. - IT Appeal No. 1362 of 2009 - - - Dated:- 13-10-2010 - C.N. Ramachandran Nair, K. Surendra Mohan, JJ. P.K.R. Menon and Jose Joseph for the Appellant P. Balakrishnan for the Respondent JUDGMENT C.N. Ramachandran Nair, J. 1. This is an appeal filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then started another account again, closed it after a duration of time and started another account and so as along with the recovery of purchase orders, sale bills, bank accounts and other records, the search team recorded statements from managing partner who confirmed the unaccounted business that was carried on. After search, the assessee was called upon to furnish return of undisclosed income. The assessee filed the return disclosing an additional unaccounted income of 32,88,333 for the block period. Besides this, assessee had filed returns for the assessment years 1997-98 declaring an income of 30,03,638 and for the year ending 1998-99 upto the date of search, assessee declared 15,34,342. The Assessing Officer assessed the undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tern of income returned by the assessee for the assessment years 1991-92 to 1996-97 show that the income for every year is a steady average of around 1.25 lakhs. However, after the search, the assessee filed income-tax return for 1997-98 declaring an income of 30,30,368, in addition to declaring undisclosed income of 32,88,333 for the block period. Therefore, the average undisclosed income returned by the assessee for each year is above 5,00,000, which is four times the income originally returned by the assessee. In the return filed, the assessee has given a note stating that the partners of the assessee have no other source of income and that the deposits made in the bank accounts represented business income of the firm. In the block asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyee and the details of the bank accounts maintained by the partners, there could be no doubt that only surplus unaccounted income was deposited in the banks. Partnership firm has maintained separate bank accounts and therefore there was no justification for the appellate authority to assume that the expenditure is also incurred by the partners, for the purpose of the firm which was maintaining separate bank accounts. 7. The most important aspect that did not engage the attention of the CIT (Appeals) is that the firm was engaged in cash transactions inasmuch as sales and expenditure were in cash and what is seen deposited in the bank as found by the Assessing Officer is only surplus. Therefore if that surplus is taken as undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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