TMI Blog2011 (7) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... in no way it is connected with the assessee, the same cannot be the subject matter of the block assessment. In so far as levy of interest is concerned, it is not in dispute that at the time of seizure, cash was seized and kept in the PD account. Without taking into consideration the aforesaid amount, interest is levied by the Assessing Authority up to the dale of filing of the return. It is in that context, it was held that when payment of interest is compensatory in nature, when the amount belonging to the assessee is also in possession of the Revenue it is kept in FD, the said payment is to be taken into consideration in order to determine the tax liability and thereafter they have to determine the delay in payment of tax which alone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 68 of the Act in the block assessment of the Appellant when the credits are found in the regular books of the Appellant? 4. Whether the Tribunal was justified in upholding the addition of Rs.6,73,750/- determined out of the slips in the block assessment of the Appellant, when the slips were found in the premises of one of the partners of the Appellant and when the Appellant or its partner disowned the ownership of such slips? 5. Whether the Tribunal is justified in applying the Explanation to Section 37(1) of the Act when the very expenditure was not claimed by the Appellant and over and above the Appellant had denied incurring of these expenditure and the Revenue had no material found in the course of the search in the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Authority declined to accept the assessee's claim that it had identified the persons who had given money towards supply and thus no cash credit could be added. Thus, an addition of Rs.6,50,000-00 was made. The Assessing Authority found a bunch of loose slips in the residential premises of N. Leela Kumar and it was found that in some of these slips entries have been made with regard to the payments made to Excise Deputy Superintendent of Arasikere. Hassan, payments to local Police and also to Arkalgodu Police and Channarayapatna Police. The summing up of the payment amounted to Rs.6,73,750-00. The Assessing Authority had brought to tax the amount as unexplained expenditure. The Assessing Authority declined to accept the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant assessment year was not due as on the date of search. Further, the Commissioner of Income Tax (Appeals) found that none of the creditors have denied the transaction and was in the course of business, Since the amount of credit was appearing in the books of the assessee, even if the credits were unacceptable, no addition can be made in the block assessment and Section 68 could have been invoked only in the regular assessment of the assessee. The Commissioner of Income Tax (Appeals) also found that the persons are retail businessmen and therefore, he cancelled the impugned addition. In respect of mamuls also it was held that the said slips were not found in the premises of the assessee nor did the assessee owned the slips and they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing the return is not yet over, it could not constitute undisclosed income as defined under the Act. 7. Per contra, the learned Counsel for the Revenue contends that though the amount was disclosed in the accounts, in the enquiry when the explanation offered by the assessee is not accepted, it amounts to undisclosed income. 8. We are afraid, it is difficult to accept the said contention. A block assessment proceedings can be initiated only in respect of undisclosed income. Once the income is disclosed in the books of accounts maintained by the assessee under the Act, merely because the assessee is unable to substantiate the said entries by acceptable evidence, it does not become an undisclosed income. It is open to the authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of seizure, cash was seized and kept in the PD account. Without taking into consideration the aforesaid amount, interest is levied by the Assessing Authority up to the dale of filing of the return. It is in that context, it was held that when payment of interest is compensatory in nature, when the amount belonging to the assessee is also in possession of the Revenue it is kept in FD, the said payment is to be taken into consideration in order to determine the tax liability and thereafter they have to determine the delay in payment of tax which alone would give rise to payment of interest. In that regard the appellate Commissioner remanded the matter back to the Assessing Authority to consider that aspect and pass appropriate ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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