TMI Blog2016 (5) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the Revenue under section 260A of the Income Tax Act, 1961. The appeal was admitted on 4.9.2007, on the following two questions of law:- i) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that addition of undisclosed income cannot be made on the basis of loose sheets found at the time of search on the ground that the sheets did not contain the dates of the transactions and as such do not have any evidentiary value? ii) Whether, on the facts and circumstances of the case, the Tribunal was right in deleting the additions made on the basis of the loose sheets found at the time of search, when the assessee had accepted in his sworn statement that the information in the loose sheets pertained to his undisclosed income, and did not retract the statement until about a year later? 2. The facts leading to the present appeal that may be necessary for an adjudication of the substantial questions of law raised are narrated as under:- (1) The respondent/assessee is an individual carrying on business of Hire Purchase Finance for Automobiles. He is also having an interest as a Partner or Director or Shareholder in certain Concerns/Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS/2005 before the Tribunal. Before the Tribunal, several issues were raised, one of which revolved around the non-service of the notice under section 143(2), before making an assessment under section 143(3). Though the Tribunal recorded a finding that no notice was served under section 143(2), the Tribunal did not set aside the assessment on that ground. But, it went into other questions and held that the loose sheets, on the basis of which, additions were made, were not of any evidentiary value and that therefore, the addition of the amount of ₹ 58,53,000/- was not proper and correct. Therefore, the Tribunal allowed the appeal of the assessee. Hence, the Department is on appeal before us. 5. Before going into the two questions of law raised for our consideration, we must address ourselves to the preliminary issue raised by Mr.R.Sivaraman, learned counsel appearing for the respondent/assessee about the very maintainability of the appeal. According to the learned counsel for the respondent/assessee the appeal filed by the Revenue is not maintainable since the entire order of assessment passed under section 143(3) has no legs to stand in view of the admitted position that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income of the block period has to be computed. Therefore, we may skip the same. Section 142 deals with the procedure for making an enquiry before assessment. The procedure prescribed under section 142(1) deals with two types of situations viz., where a person has made a return under section 115WD or section 139 and a case where the time allowed for filing a return under section 139(1) has already expired, but, no return was filed. 14. The next provision that is referred to in clause (b) of section 158BC is section 143, with particular reference to sub-sections (2) and (3) alone. Subs-section (2) of section 143 contemplates the procedure to be followed by the assessing officer, where a return has been furnished under section 139 or where a return has been furnished in response to a notice under section 142(1). The proviso to clause (i) of sub-section (2) of section 143, inserted by the Finance Act, 2003, with effect from 1.6.2003, states that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003. Sub-section (2) of section 143 reads as follows:- (2) Where a return has been furnished under section 139, or in response to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to file a return within the time stipulated in the notice under section 158BC dated 6.2.2001 for nearly one year and seven months, filed a return actually on 27.9.2002. Therefore, there was actually a period of three days left for the Department to complete the assessment. It is in such circumstances, that the Department did not choose to pass a best of judgment assessment under section 144. The notice under section 143(2) could not also be issued since it contemplates the adherence of the principles of natural justice, if notice is issued. In other words, a situation has been created by the assessee for the assessing officer, whereby the default on the part of the assessee was to be taken advantage of by him. 20. Keeping the peculiar circumstances of the case in mind, if we have a look at the judgment of the Supreme Court in Hotel Blue Moon, it will be clear that the said decision did not deal with a case where the assessee waited for more than a period of 19 months and then chose to file a return at a time when it was impossible to comply with section 143(2). If we have a look at sub section (3) section 143 read with section 158BC, notice under section 143(2) should be issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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