TMI Blog2013 (10) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... authority as well as the Tribunal after examining the entire evidence has observed that the additions had already been deleted relating to her husband Dr. Lalit Verma in whose hands additions were made on substantive basis. Regarding fixed deposits of N.B.F.C., the factual position is that remaining investments stood already disclosed (prior to the search) in the partnership firm, namely, M/s. Three Aces Construction & Consultants where the assessee is one of the partners. The said firm was being assessed to tax since long and the disclosures of all these transactions had duly been made there in the pre-search period. Further, these additions again did not have their origin to any material found during the course of search. Regarding the firm, it is an individual assessee, regularly assessed to tax even in the period prior to the search - The said fixed deposits pertaining to NBFC were already disclosed in the hands of the partnership firm, prior to the search - So, no addition can be made in the block period. For the remaining additions, which were made on the protective basis were already deleted in the hands of the assessee's husband Dr. Lalit Verma, being the substantive add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d". With these observations, the CIT(A) has set aside the block assessment orders and restored the matter back to the Assessing Officer to pass the fresh assessment orders. Against this order, second appeal bearing No. 264/Luc/2000, was filed by the assessee before the Tribunal. On 31.12.2003, the Tribunal has passed an order and observed that "In the case in hand, the A.O. himself has admitted in para 3 of the block assessment order that he has utilized the material, which was available prior to the date of search for completing the assessment". Finally, the Tribunal observed that : "the matter has been restored back to the AO by CIT(A) vide order dated 08.08.2000 to complete block assessment only on the basis of material found and seized at the time of search carried out by the Department on 26.03.1998 and the Department will be at liberty to utilize the other material in possession of its for use against the assessee by taking appropriate action as provided under the Act". Against the Tribunal's order, the Department has filed an appeal bearing No. 48 of 2004 - CIT vs. Dr. Lalit Verma, before this Hon'ble High Court under Section 260A of the Act. When the CIT(A) has pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted the appeal on the following substantial question of law:- "Whether the Tribunal has erred in law in failing to appreciate that the Finance Act, 2002 has amended Section 158 BB F(1) with retrospective effect from 01.07.1995 to secure that assessment of undisclosed income for the block period can be made not only on the basis of material found during the course of search but also on the basis of documents, other material and information available with the A.O. gathered during the course of inquiries made either perior to or after the search". As mentioned above, in pursuance to the direction issued by the Tribunal, the Assessing Officer has also issued a detailed query letter dated 20.01.2006 along with notice under Section 142 and 143(2) of the Act, pertaining to the FDRs, in the name of family members of the assessee, which were seized under the search and seizure operation. The family of the assessee consists of four members i.e. the assessee himself, wife Smt. Chitwan Verma and two sons, namely, Raghav and Vinayak. After considering the assessee's reply, the Assessing Officer has made various additions for the block period, but the same were deleted by the CIT(A) by obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to Section 158BA of the Act was inserted with retrospective effect from 1.4.1995 that regular assessment and block assessment can be framed separately." The Hon'ble Kerala High Court in the case of Malayil Bankers vs. ACIT, 236 ITR 869, observed that powers of ITO for framing an assessment order u/s 143 remain intact inspite of framing of block assessment for the same period. From the above, it appears that the additions cannot be made in the block assessment, which was already disclosed in the regular assessment or known to the Department. During the search if some material was found that alone can be added in the block period. Moreover, it may be mentioned that the CBDT in the Explanatory Notes on provisions relating to Direct Taxes as contained in CBDT Circular No. 8 of 2002 dated 27.08.2002, reported in (2002) 258 ITR 13 (ST) observed that :- "61.3.2. The Finance Act, 2002, has amended section 158BB to clarify that the block assessment of undisclosed income is to be based on the evidence found in the search and material or information gathered in post-search inquiries made on the basis of evidence found in the search." Further, this Hon'ble High Court in Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed income had been shown in the returns of M/s. Three Aces Construction Consultants, filed at Delhi in which the assessee was herself a partner. 2. Whether the Tribunal has erred in law in directing the Assessing Officer to complete the block assessment only on the basis of material found and seized during the course of search, without appreciating the fact that the Finance Act, 2002 has amended Section 158BB(1) with retrospective effect from 1.7.1995 with a view to providing for the computation of undisclosed income for the block period not only on the basis of material found and seized during the course of search, but also other documents and other material and information available with the Assessing Officer, whether gathered during the course of enquiries made prior to, or after the search. 3. Whether the learned ITAT has failed to appreciate that the material found during the search and pre/post search operations were sufficient to establish the undisclosed income as computed by the Assessing Officer after giving an opportunity to the respondent. The assessee is wife of Dr. Lalit Verma and is regularly assessed to tax even from her maiden days at Jammu. She has indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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