TMI Blog2014 (10) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... ot file any returns for the AYs 1996-97, it is difficult to straightaway conclude as to whether they had any unabsorbed loss to their credit - the verification of their books of accounts is necessary. It is only when the AO is satisfied on verification of the books, that the assessee incurred loss during the period preceding search, that an occasion may arise to adjust the same - If in the course of verification it emerges that the assessee have incurred any losses during that period, losses do not answer the description of unabsorbed loss - even while upholding the view taken by the AO as well as the Tribunal, the verification of the books of accounts for the AY 1996-97 preceding the date of search needs to be undertaken – thus, the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covering 1986-87 to 1996-97 were made. The 1st appellant admitted the undisclosed income of ₹ 26,0,9000/- and the 2nd appellant stated that he has undisclosed income of ₹ 3,96,000/-. However, both of them have made an attempt to post losses either equivalent to or exceeding the income so discovered for the assessment year 1996-97 on the ground that as on the date of search, they still have time to file the returns for that assessment year. The assessing officer did not agree with the same and passed block assessment orders dated 31-01-1997 imposing tax on the undisclosed income. The said orders were challenged before the Tribunal. The appeals were dismissed through common order dated 30-08-2002. Sri S. Ravi, learned Senior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years 1986-87 to 1996-97. A perusal of the block assessment discloses that there was no discrepancy or disparity of facts and figures in relation to all the assessment years within the block, except the last year. Even for that year, the returns were not filed. It so happened that in the year of search, the appellants still had time to file returns. Incidentally, the entire controversy is only with reference to the facts and figures of the year of search. It is too well known that Section 158BB(1) prescribes the procedure to be followed to determine the undisclosed income for the purpose of the proceedings under Chapter XIVB. That incidentally happens to be the first step in the process. Every caution is taken to ensure that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It prescribes the procedure to be followed whenever searches are conducted and the undisclosed income is discovered or found. To be fair to the assessee, the chapter provides for allowing all the deductions etc., as is done in the ordinary assessments. Section 158BH makes this aspect clear. Though in the process of reckoning the undisclosed income that is discernable from the orders of assessment covering block period is to be deducted and the losses, if any, are to be added, in the ultimate processing of the block assessment, the deductions or allowances covering that very period must be done as though it is a regular assessment. The substantial difference, if at all, is the rate of tax which is at 60% on the undisclosed income as against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants did not file any returns for the assessment year 1996-97, it is difficult to straightaway conclude as to whether they had any unabsorbed loss to their credit. Another fact which needs to be taken into account, is that they did not have any unabsorbed loss since such a loss did not cross the assessment year 1995-96. Therefore, they have to fall back upon the losses, if any incurred in that part of the year 1996-97 which preceded the date of search. For this purpose, the verification of their books of accounts is necessary. It is only when the assessing officer is satisfied on verification of the books, that the appellants incurred loss during the period preceding search, that an occasion may arise to adjust the same. If in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
