TMI Blog2008 (3) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... is finding of fact based on the material on record. In the case of CIT v. N. Vellaiyan[ 2005 (10) TMI 77 - MADRAS HIGH COURT] , following its earlier decision in the case of Asstt. CIT v. A.R. Enterprises [ 2004 (9) TMI 34 - MADRAS HIGH COURT] held that the income in respect of which the advance tax has been paid cannot be said to be undisclosed income. Report of valuation officer obtained by AO cannot be taken into consideration for block assessment unless it is co-related with some seized material - HELD THAT:- Tribunal held that no material was found to show that any investment has been made towards construction or renovation during the year under consideration and, therefore, in the absence of any material the addition on the basis of the valuer report is not justified. We are of the opinion that the view taken by the Tribunal is correct and in accordance to the law. The addition cannot be made on mere presumption. There must be some material found during the course of search to suggest any investment towards construction or renovation in the property and only on the basis of such material the matter could be referred to the Departmental Valuer. Merely on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wife of Shri B.K. Agrawal, (iii) Shri B.K. Agrawal and (iv) Shri Karunesh Agrawal, S/o Shri B.K. Agrawal and Smt. Radhika Singhal, wife of Shri Karunesh Agrawal. Shri B.K. Agrawal is working as Chemist and also looking after the business affairs of M/s. Disinfecto Chemical Industries, Prop. Smt. Padmawati Agrawal, wife of Shri B.K. Agrawal. Shri Karunesh Agrawal is also getting salary, interest and commission from M/s. Disinfecto Chemical Industries. Smt. Radhika Singhal is enjoying income from house property and other sources. Shri B.K. Agrawal besides enjoying salary was also in receipt of commission, interest and rent from M/s. Disinfecto Chemical Industries. During the course of search, assets were found as detailed in assessment order in para 3 and besides the same, the assessee was found to be owner of house-property situated at 43, Cantt. Road. While considering the income, the Assessing Officer observed that remuneration for services rendered by an employee in terms of the contract of employment on percentage of turnover achieved, it partakes the character of salary in view of the provisions contained in rule 2(h) of Part A of 4th Schedule to the Act. Therefore, the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The counsel for the assessee also referred to pages 1 to 7 of the paper book indicating payment of advance tax for the current year at ₹ 59,120 including tax deducted at source for the assessment year 1995-96 and also indicating that ₹ 3,663 was paid as self-assessment tax and in view of the same, whether the income of the assessee under the head Salary, Commission , income from house property, capital gains and income from other sources for the assessment year 1995-96 should be considered as undisclosed income. Income of the assessee from these various sources earned from M/s. Disinfecto Chemical Industries were well-known as the department is regularly assessing the firm and during the course of assessment proceedings, these facts are well before the Assessing Officer. Moreover, after paying advance tax including TDS and self-assessment tax, the income for the assessment year 1995-96 cannot be said to be escaping for the purpose of income. The counsels also submitted that the assessee being an employee of M/s. Disinfecto Chemical Industries, the details of payments are being disclosed by the employer through reports under section 44AB of the Income-tax Act. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he valuation cell was illegal and the addition of ₹ 5,12,400 on the basis of the valuation report in which it has been held that the construction took place from 1992-1995 was unjustified. 7. The Tribunal allowed the appeal on the aforesaid two issues and deleted the addition. The Tribunal held as follows :- We have considered the rival submissions as well as the relevant details placed before us in the form of paper book. After going through the case law as well as the scheme of the Act and the relevant papers before us, especially the evidence that the details of payments of salary and commission etc., were not only available as per the record of the employer for the purpose of audit under section 44AB of the Income-tax Act, but also in view of the fact that the tax was deducted at source and the assessee also paid advance tax and even the balance amount was paid as self-assessment tax. Therefore, there could be no intention on the part of the assessee for hiding the same from Income-tax Department. Under the facts and circumstances, and material particulars, as referred to above, the income of the assessee cannot be treated as undisclosed income. After consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee under the head Salary, commission, house property, capital gains and income from other sources as undisclosed income and is directed to exclude the same from the block assessment. We have considered the rival submissions and the relevant details and the case laws. Since the Assessing Officer and the DVO has not referred to any seized material on the basis of which cost of construction regarding the addition and alteration could be co-related within the block period, therefore, the valuation report regarding the estimate of construction as adopted by the DVO and taken into consideration by the Assessing Officer cannot be upheld, specially when the DVO and the Assessing Officer has not properly considered the approved valuer s report dated 26-4-1983, which only covers the construction pertaining to additions and alterations carried out up to 1982-83, which is beyond the block period. Therefore, the action of the DVO in estimating the cost of alteration and addition in the absence of documentary evidence and treatment thereof as undisclosed investment in the construction cannot be upheld. In view of various case laws relied upon as referred to above, therefore, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax, at the rate specified in section 113, as income of the block period irrespective of the previous year or years to which such income relates and irrespective of the fact whether regular assessment for any one or more of the relevant assessment years is pending or not. Explanation.-For the removal of doubts, it is hereby declared that- (a)the assessment made under this Chapter shall be in addition to the regular assessment in respect of each previous year included in the block period; (b)the total undisclosed income relating to the block period shall not include the income assessed in any regular assessment as income of such block period; (c)the income assessed in this Chapter shall not be included in the regular assessment of any previous year included in the block period. (3) Where the assessee proves to the satisfaction of the Assessing Officer that any part of income referred to in sub-section (1) relates to an assessment year for which the previous year has not ended or the date of filing the return of income under sub-section (1) of section 139 for any previous year has not expired, and such income or the transactions relating to such income are recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances, it is established that the intend was to disclose the said income, it cannot be said to be undisclosed income. The intention of the assessee is to be considered on the facts and circumstances of each case. 11. In the present case, Tribunal held that the details of the payment of salary and commission etc., was available as per the record of the employer for the purpose of audit under section 44AB of the Act, the tax was deducted at source and the assessee also paid advance tax and even the balance amount was paid as self-assessment tax. Therefore, there could be no intention on the part of the assessee for hiding the said income from the Income-tax Department. Therefore, merely because the return for the assessment year 1995-96 could not be furnished within the specified period it cannot be said to be undisclosed income. In our opinion, the finding of the Tribunal is finding of fact based on the material on record. 12. In the case of CIT v. N. Vellaiyan [2006] 287 ITR 520 (Mad.), the Division Bench of the Madras High Court following its earlier decision in the case of Asstt. CIT v. A.R. Enterprises [2005] 274 ITR 110 (Mad.) held that the income i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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