TMI Blog2003 (3) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... f the court was delivered by DIPAK MlSRA J. - This is a reference under section 256(1) of the Income-tax Act, 1961, wherein the Income-tax Appellate Tribunal has referred the following two questions for answer to this court. They read as under: "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law to direct the Assessing Officer to allow deduction under section 158BB in respect of the book profit for the assessment years 1988-89,1989-90 and 1994-95, though no return of income has been filed under section 139(1)/139(4) of the Income-tax Act, 1961? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that disallowance under section 40A(3) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal has formulated two questions as stated earlier. As far as question No. 1 is concerned, it is pertinent to reproduce clause (c) of section 158BB(1) as the aforesaid provision is relevant for our purpose. "158BB. Computation of undisclosed income of the block period. -(1). . . (c) where the due date for filing a return of income has expired, but no return of income has been filed, - (A) on the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such entries result in computation of loss for any previous year falling in the block period; or (B) on the basis of entries as recorded in the books of account and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the aggregate of the losses of such previous years. It is pertinent to state that the major part of this provision has been amended by the Finance Act, 2002, giving retrospective effect with effect from July 1,1995. If the provisions so inserted in the main sub-section (1) and clause (c) are read conjointly, it would be graphically clear that in respect of a block period assessment, even if no return is filed, the benefit would be given in respect of the period which would not come within the frame of tax liability as per the books of account but as far as the balance period is concerned, the tax liability would be treated as undisclosed income. Needless to emphasise if for some years which constitute the block period, the tax liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at if there is a transaction more than the permissible limit in the aforesaid provision, the assessee would not be allowed any deduction. The Tribunal in the original appeal in paragraphs 29 and 30 has held as under: "29. The next ground of appeal is against the addition under section 40A(3) for the assessment years 1995-96 and 1996-97 as under: Assessment year Addition (Rs.) 1995-96 82,435 1996-97 1,67,088 2,49,523 30. We have considered this aspect in detail while deciding the ground No. 5 in the case of Shri Santosh Kumar Tamrakar. The facts are similar in the case of the assessee also. In the case of the assessee also, the income on sale of utensils has been assessed on estimat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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