TMI Blog2014 (5) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) TMI 19 - ANDHRA PRADESH High Court] followed - considering the fact of service of orders refusing the registration of the firm on one of the partners by name, after dissolution of the said firm, the appeal filed by the other partner, on obtaining certified copies of the relevant orders, was held to be within time and not barred by limitation - there was no delay in the filing of the first appeal before the CIT(A), and consequently, the CIT(A) was not justified in holding the appeal before him as barred by limitation – thus, the order of the CIT(A) set aside – Decided in favour of Assessee. Estimation of undisclosed income - Evidentiary value of the documents found and seized at the time of search – Held that:- The undisclosed income for the purpose of block assessment has to be completed solely on the basis of seized material and any enquiry made by the AO relatable to such material, meaning thereby neither any enquiry report nor any document procured either before or after search can be considered while computing the undisclosed income of the assessee - any document found and seized during the course of search has to be interpreted literally and nothing can be added or subtr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ventures constructed by the asee0firm, viz. 'Victory Vihar' and 'Victory Vision' were found. In view of the above, a notice under S.158BD r.w..s. 158BC was issued to the assessee calling for the return of income for the block period, comprising of assessment years 1991-92 to 2000- 01 and from 1.4.2000 to 4.1.2001, on 1.11.2002, admitting undisclosed income at Rs.120.60 lakhs. T.Prakash, during the course of search operations conducted, confirmed the fact of non-maintenance of regular books of account and non-filing of returns of income for the assessment years 1991-92 to 2000- 01, in the statement given by him. 3. There was no compliances to the notices issued by the Assessing Officer under S.143(2) and 142(1) of the Act. Hence, proceeding on the basis of seized material, being page Nos.31 and 32 of Annexure A/TP/1, which is a typed statement mentioning the names of Shri N.Surender Rao and Shri T.Prakash, partners of the assessee-firm, to the court with regard to some dispute, which showed that they sold commercial space at the rate of Rs.2,000 per sq. ft. and residential space at the rate of Rs.1,200 per sq. ft in the ventures constructed by the assessee fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seized material. 4. The learned AD estimated the total undisclosed income at Rs. 52,02,000/- by his assessment order dated 29.10.2003. 5. Shri. N. Surender Rao, erstwhile partner of the appellant firm, did not know anything about the assessment proceedings and receipt of the assessment order, since, according to the dissolution deed, the tax matters are to be looked after by another partner, Sri. Thota Prakash. And due to financial problems, this erstwhile partner of the appellant firm shifted his residence. It is only when his friend informed him that TRO of the IT Department was trying to locate his address in connection with tax arrears of the firm, this erstwhile partner of the appellant firm went to the Departmental Officers and found to his surprise that a huge demand of more than Rs. 60 lakhs is pending against the firm and the Department is pursuing for collection of the taxes by all means, including coercive methods. This erstwhile partner of the appellant firm has not been in contact with the other partner, Sri. T. Prakash, for the last four to five years and his present efforts to locate him have not been fruitful. 6. This erstwhile partner of the appellant fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Shri Thota Prakash under S.132 of the Act on 4.1.2001, and subsequent initiation of the proceedings under S.158BD in the case of the assessee, the assessee had to filed block return admitting undisclosed income of Rs.9,66,000, as against which Assessing Officer estimated the undisclosed income at Rs.52,02,000. 6. The CIT(A), at the outset, took note of the fact that the assessment order was served by affixture. He also took note that that the show cause letter dated 25.9.2002, and other notices sent subsequently were properly served on the assessee, though even in response to the same, there was no response from the assessee, except filing of the block return. In the circumstances, he found no merit in the contention of the assessee that the assessment order was not served, and consequently, the prayer for condonation of delay does not arise at all. The CIT(A) further observed that even if it was taken that Surender Rao was not aware of the facts of the case as the partnership was dissolved, the condonation of delay in filing of appeal cannot be accepted, as the Authorised Representative of the assessee at the appellate proceedings had never raised this issue and sought to fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in Manish Maheshwari V/s. Asst. CIT and another reported in 289 ITR 341(SC) and the order passed u/s. 158BD r.w.Seciton158BC(c) of the IT Act of 1961 on 29.10.2003 is invalid and bad in law and is to be quashed. 2. Whether on the facts and circumstances of the case the CIT(A) VI Hyderabad was justified and correct in law in holding that the service of assessment order by Affixture at the premises bearing no- 403 Raghuram Apartments, Malakpet, Hyderabad only on Ex- Partner Mr.T.Prakash was valid and if not, whether the appeal filed by the Appellant through Ex-Partner, Mr.N.Surender Rao on 03/03/2008 was within the period of limitation as laid down by the jurisdictional High Court in the case of CIT V/s. Gangadhar Goud Ram Gowd and Co. reported in 158 ITR 0075(AP). 11. Since the above additional grounds are legal in nature and go to the root of the matter, relying on the decision of the Apex Court in the case of National Thermal Power Corporation Ltd. V/s. CIT (229 ITR 383) we admit the same and proceed to dispose of these appeals, taking into account those additional grounds as well. 12. Let us first take up for consideration, the first additional ground, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fusing the registration of the firm on one of the partners by name, after dissolution of the said firm, the appeal filed by the other partner, on obtaining certified copies of the relevant orders, was held to be within time and not barred by limitation. Facts and circumstances of the case being identical in the case on hand as well, we are of the view that there was no delay in the filing of the first appeal before the CIT(A), and consequently, the CIT(A) was not justified in holding the appeal before him as barred by limitation. We accordingly set aside the impugned order of the CIT(A) on this aspect. Assessee's grounds on this aspect are accordingly allowed. 16. Notwithstanding the fact that the appeal as held to be barred by limitation, since the CIT(A) has proceeded to dispose of the appeal of the assessee on merits as well, we proceed to dispose of the appeal on the merits of other grounds as well. 17. Assessee's ground on the merits of the assessment is that the CIT(A) erred in confirming the estimation of undisclosed income at Rs.52,02,000 without considering the fact that there was no seized material supporting such computation. 18. The Assessing Officer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that impugned addition made by authorities on the basis of dumb documents only is liable to be deleted. Further, reliance is also placed on the decision of ACIT V.s. Dr.Kamala Prasad Singh (3 ITR (Trib) 0533), wherein observing that the documents found and seized and relied upon for making the addition, had neither date nor the name of the assessee, it was held that it was not known in what connection the notings were made and those documents being dumb document, addition could not be made on the basis of assumptions and presumptions. The Assessing Officer, therefore, is not justified in adopting the rates per sq. ft., based on such seized unsigned papers. 20. Without prejudice to the above contentions, learned counsel also submitted that the Assessing Officer is also not justified in estimating the profit at 15% of the receipt, since the assessee firm worked on the project with borrowed money, and had to fight various litigations. He submitted that there were also disputes between the partners and the assessee had to encounter various other problems. As such there was no profit at all in these projects. In this connection, it is submitted that the Tribunal in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocument found and seized during the course of search has to be interpreted literally and nothing can be added or subtracted. The material found and seized in the present case are two sheets of typed paper. They are simply unsigned and cannot be attributed to the assessee. Such unsigned papers are mere dumb documents and cannot be relied upon for making a block assessment. We are supported in this behalf by the decision of the Patna Bench of the Tribunal in the case of as in ACIT V/s. Dr.Kamla Prasad Singh (3 ITR (Trib) 533), relied upon by the learned counsel for the assessee before us. Consequently, the impugned addition made by the Assessing Officer on the basis of such unsigned papers in the present case cannot be sustained. We accordingly delete the same, setting aside the impugned orders of the Revenue authorities on this issue, and allowing the grounds of the assessee in this appeal. 23. In the result, assessee's appeal, IT(SS)A No.17/Hyd/2011 is allowed. IT(SS)A No.18/Hyd/2011 24. This appeal is directed against the order of the Commissioner of Income-tax(Appeals) VI Hyderabad dated 15.2.2011 confirming the penalty imposed under S.158BFA(2) of the Act. 25. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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