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TMI Blog2012 (11) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... losing 'nil' income. The petitioner produced affidavits of various parties who had given these ornaments and also produced such parties before the Assessing Officer who confirmed the fact of lending or giving of ornaments and also replied the questions put by the Assessing Officer about the source, ownership, capacity, identity etc. Pursuant to inquiry made by him, the Assessing Officer did not propose any addition in respect of jewellery. However, when the order was presented for the approval of the Joint Commissioner of Income Tax, he directed such addition. Accordingly, assessment was framed under section 158BC of the Act on 27th March, 2001 computing the undisclosed income at Rs.48,49,902/- which was the value of the ornaments taken as undisclosed investments of the petitioner. The petitioner carried the matter in appeal before the Commissioner (Appeals), who, by his order dated 9th May, 2001 allowed the appeal on almost all points except the point of application of section 40A(3) of the Act. Against the order of the Commissioner (Appeals), the Department went in appeal to the Tribunal. In the said appeal, the petitioner preferred cross-objections against the upholding of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned counsel submitted that the Commissioner (Appeals) as well as the Tribunal have examined the issue on merits and have held in favour of the petitioner and as such the reopening of assessment in relation to such issue is without authority of law inasmuch when the very same issue has been scrutinised by the Commissioner (Appeals) as well as by the Tribunal, the Assessing Officer can have no reason to believe that income chargeable to tax has escaped assessment. It was argued that the reopening of assessment is contrary to the scheme of the Act, inasmuch as matters detected during the course of search, would be subject matter of block assessment and not regular assessment. Therefore, for this reason also the reopening of assessment is bad in law. Under the circumstances, the impugned notice being without jurisdiction is required to be quashed and set aside. 5. Opposing the petition, Mr. Manav Mehta, learned standing counsel for the respondent reiterated the averments made in the affidavit-in-reply filed by the respondent as well as the reasons recorded by the Assessing Officer for reopening the assessment under section 147 of the Act. 6. The undisputed facts of the case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of Rs.29,77,726/- made by the Assessing Officer. He directed the A.O. to exclude all recorded materials for the consideration for the purpose of block assessment in view of specific provisions of law because such additions can be made only in the block assessment. During the course of search, physical stock of gold found was 16153.7 gms. while the stock as per books was 1473.28 grms. and the excess stock as per books comes to 7396.94 gms. which claimed to be pertaining to customers given for conversion into new ornaments on job work basis. During the course of search, as well as assessment proceedings u/s.158BC of the I.T. Act assessee had failed to prove the creditworthiness and identity of the persons to whom the so called jewellery was claimed to be belonging. Following glaring mistake were observed which proves that jewellery found does not belonging to outsiders but belongs assessee himself. It is therefore required to be taxed in the A.Y. 1999-2000. I. In the register maintained in Form No.11, address of customers is not written and it was claimed by the assessee that as customers are known. There is no need of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kes back his gold ornament, at the time of delivery the jeweler would ask in normal course, copy of receipt or at least take signature of the person indicating fact of return of jewelery. But in the assessee's case, there is none, neither copy of receipt (which in any way is not issued to customer) not there is any signature or fact of return mentioned in register. Nor outgoing receipt book contains any such entry. VI. Loose majuri bills found and seized indicate that within three days of receipt of gold customers took back their gold. Then how in current year, gold is with the assessee for such long period and that too exhibited in show room over the counter and ready for sale. VII. Certain order books have been seized and inventoried, during the course of search. These order books contain name and address/telephone number of customers and also details of weight of old ornament received. But none of these are mentioned in Register No.11. Why it is not so is clear because Register No.11 does not represent record of persons who have given gold for job work, rather, it represents partly introduction of assessee's own unaccounted gold and partly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock belongs to the assessee and in paragraph IX he has recorded that during the course of search proceeding no record was found containing details of remolding of ornaments and that the assessee upon being called upon to explain the same had stated that no such records are maintained. After the above discussion, the respondent has observed that it is clear that the jewellery claimed to be belonging to the customers actually belong to the assessee. He has also emphasized that the Commissioner (Appeals) has deleted the addition of Rs.29,77,726/- with the remarks that such additions can be made only in regular assessment under section 143(3) or 144 of the Act. Based on the above the respondent has stated that he has reason to believe that income chargeable to tax has escaped assessment. 9. Thus two things are apparent. Firstly, that the issue in respect of which the assessment is sought to be reopened was subject matter of the block assessment. Secondly, that the addition of Rs.29,77,726/- made by the Assessing Officer during the course of block assessment under section 158BC of the Act had been deleted by the Commissioner (Appeals). 10. At this juncture, it may be germane to refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck period while the other for assessing the total income or loss of the previous year in a regular assessment. 11. In Cargo Clearing Agency (Gujarat) v. Joint Commissioner of Income-tax, (2008) 307 ITR 1 (Guj), a Division Bench of this court after an in-depth study of the scheme of Chapters XIV and XIVB of the Act held that the Legislature does not intend to reopen assessments completed under Chapter XIV-B of the Act assessing the undisclosed income by adopting the special procedure provided in the said Chapter. Observing that the entire Chapter XIV-B of the Act relates to assessment of search cases, viz., undisclosed income found as a result of search, the court expressed the view that one cannot envisage escapement of undisclosed income once a search has taken place and material recovered, on processing of which undisclosed income is brought to tax. Section 147 of the Act itself indicates that the same is in relation to income escaping assessment and applies in a case where either income chargeable to tax has escaped assessment by virtue of non-disclosure by way of non-filing of return, or non-disclosure by way of omission to disclose fully and truly all material facts for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavits has been verified by the Assessing Officer through examination of the depositors in person over a few days. The depositors were produced by the assessee for such examination at the instance of the Assessing Officer. It was further recorded that the Assessing Officer also sent the Ward Inspector to the area the depositors came from and the Inspector duly submitted a report on these enquiries. Nothing amiss was found in all these enquiries conducted by the Assessing Officer himself and through Ward Inspector. In not a single case did the Assessing Officer record any finding that the facts narrated in any affidavit were false. The Commissioner (Appeals), accordingly, was of the view that the onus that lay on the assessee had been amply discharged and if the Assessing Officer still wanted to make an addition, the onus was on the Assessing Officer to establish that the claim was not genuine and that the facts stated in the affidavits were false etc. Such onus had not been discharged by the Assessing Officer to the slightest. Finding that there was no justification in making the addition, the Commissioner (Appeals) had directed deletion of such addition. 14. In appeal by the D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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