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TMI Blog2014 (2) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... operties. The Firm came into existence from 28-01-1998. A search was conducted on 28-01-2000 under Section 132 of the Act in the business premises and residence of the Managing Partner of the respondent-Firm, Sri.Nagendra Baliga, who is a Jeweller by profession. During the search, certain documents like bills of material purchased, labour charges paid and the cheques relating to the assessee-Firm were found and seized. On the basis of the said records, notice under Section 158-BD was issued calling upon the respondent-Firm to file their returns for the Block Period from 01-04-1989 to 28-01-2000. The assessee-Firm filed return of income on 30-11-2000 declaring 'NIL' income. On the basis of the said returns, a notice under Section 143(2) and 142(1) of the Act was issued calling upon the assessee to produce necessary documents. An authorized representative of the assessee appeared and produced the computerized books of accounts. As per the records produced by the assessee, the assessee-Firm had started constructing two buildings, i.e. Vasudev Towers and Vasudev Plaza. Vasudev Towers was nearing completion and Vasudev Plaza was just started at the time of search. The assessee conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 22-09-2006. Being aggrieved by the said order, the revenue has preferred this appeal. 5. Sri.K.V.Aravind, learned counsel appearing for the appellant contended that the order passed by the Tribunal as well as the First Appellate Authority is contrary to law. The finding of the Tribunal that the difference in the cost of construction of buildings as valued by the DVO and the value accounted by the assessee is less than 15% is contrary to law. The Tribunal failed to appreciate that the percentage of difference should be reckoned with reference to the actual cost as per the assessee's books and not after giving effect of telescoping the suppressed sale consideration. The further finding of the Appellate Authority that the difference in cost of construction based on valuation report shall not constitute undisclosed income as per Chapter-XIV-B is contrary to law. He relied upon a judgment reported in (2007) 159 TAXMAN 258 (SC) in the case of MANISH MAHESHWARI v/s ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER and sought for allowing the appeal. 6. On the other hand, Smt.Vani H, learned counsel appearing for the assessee supported the order passed by the Tribunal as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arguments addressed by the learned counsel for the parties and perused the orders impugned in the appeal. 9. The records clearly disclose that search was conducted in the residence and business premises of Sri.Nagendra Baliga, who is one of the partners of respondent-Firm. During the course of search, the said Nagendra Baliga made a statement that he has invested a sum of Rs.65,00,000/- for construction of the buildings. On the basis of bills of materials purchased, labour charges paid, cheques relating to the assessee- Firm found during the search, a notice was issued under Section 158-BD calling upon the assessee to file the return of undisclosed income for the block period 01-04-1989 to 28-01-2000. The assessee filed NIL returns. Thereafter, a notice was issued under Section 143(2) and 142(1) of the Act. The construction of the buildings by the assessee-Firm was referred to the DVO, for valuation under Section 133(6) of the Act and for estimating the cost of construction of two buildings. The DVO submitted a report on 15-04-2002. There was difference in valuation by the assessee-Firm and the Valuator to an extent of Rs.20,97,351/-. The assessee-Firm filed objections to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law laid down by the Hon'ble Supreme Court in the cases referred to above by the advocate appearing for the respondent. The Hon'ble Supreme Court in a judgment reported in (2010) 321 ITR 332 (SC) (supra) has clearly held that the undisclosed income unearthed as a result of search. The scope and its ambit is limited in that sense to materials unearthed during the search. Paragraph 12 of the judgment reads as under: "Chapter XIV-B provides for an assessment of the undisclosed income unearthed as a result of search without affecting the regular assessment made or to be made. Search is the sine qua non for the block assessment. The special provisions are devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering the previous years falling in the block period. The special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. It is not intended to be substituted for regular assessment. Its scope and ambit is limited in that sense of materials unearthed during search. It is in addition to the regular assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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