TMI Blog2003 (1) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... d by G. C. BHARUKA J. -This Departmental appeal has been filed under section 260A of the Income-tax Act, 1961 (in short "the Act"), against the order dated October 31, 2001, passed by the Income-tax Appellate Tribunal, Bangalore Bench "B", in I. T. (SS) A. No. 12/Bang of 1999. It pertains to a block assessment made against the assessee for the period 1989-90 to 1999-2000 made under section 158BC of the Act. The substantial question of law which has fallen for our consideration is-"Whether, on the facts and circumstances of the case, the findings arrived at by the Tribunal for cancelling the block assessment in question are perverse being contrary to the materials on record and have been arrived at on conjectures and surmises ?" Foundational facts : The assessee is an individual. At the material time he was the managing director of Mayura Hotels Pvt. Ltd. and Swathi Hotels Pvt. Ltd., Bangalore. He was also a partner in Hotel Mayura in Bellary and Shanthakumar Ganeshlal Enterprises, Bangalore. He was also carrying on a proprietorship hotel business in the name and style New Prakash Bhavan at Bangalore as a karta of his Hindu undivided family. He was being regularly assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assailed the block assessment order before the Commissioner of Income-tax (Appeals), who granted partial relief by order dated April 23, 1999. Consequent to this relief, the income from undisclosed sources reduced to Rs. 77,51,986. The assessee questioned the order of the Commissioner of Income-tax (Appeals) before the Tribunal. The Tribunal accepting the plea of the assessee that the entire undisclosed income was covered by the regular assessment made for 1998-99, cancelled the block assessment. Reasons assigned by the Tribunal : It is not in dispute that the assessee had produced a cash book/day book before the Assessing Officer for the period April 1, 1997, to March 31, 1998, being the previous year pertaining to the assessment year 1998-99. This book contained two entries on April 7, 1997. The credit side showed cash receipts of Rs. 90 lakhs and the debit side reflected the investment of the entire Rs. 90 lakhs in the form of bank F.Ds., IVPs and other investments. This entry reads as under : Receipts Payments .............................................. .............................. 7.4 To Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income from such investments." We hardly find any ground to sustain this finding because, admittedly, none of the investments detected during the search and seizure can be co-related with the entry made on April 7, 1997. Further, admittedly, undisclosed income has not been found recorded in the books of account so produced. The Tribunal, in order to cancel the block assessment has relied on the following circumstances : (i) The assessee was under tremendous mental tension after seizures were effected, therefore he had filed a wrong return for the block period showing undisclosed income of Rs. 72 lakhs ; (ii) The admission so made in the return cannot be held to be conclusive ; (iii) The assessee cannot be subjected to double taxation." In our considered opinion, none of the above circumstances can be of any avail to the assessee because even if the assessee is found to be suffering from "tremendous mental pressure", the fact remains that he had made investments worth Rs. 72 lakhs and those were not recorded in the books of account. This being the situation, the assessee clearly became liable to be assessed for the block period in question in terms of the provision co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 recorded on or before the date of the search or requisition in the books of account or other documents maintained in the normal course relating to such previous years, the said income shall not be included in the block period. In the present case, the assessee, in order to esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterials on record and has been arrived at on appreciation of evidence, then certainly this court cannot interfere with such a finding. But, here, the situation is otherwise. In this case, the Tribunal has recorded a finding contrary to the documentary evidence available on record and further by acting on surmises and conjectures. Therefore, this finding falls in the realm of perversity which certainly gives rise to a question of law. In the above context, Sri Ranjit Kumar Murarka, learned senior counsel appearing for the Department, has rightly brought to our notice a recent judgment of the Supreme Court in the case of Kulwant Kaur v. Gurdial Singh Manti, AIR 2001 SC 1273, 1282 ; [2001] 4 SCC 262, wherein in the context of section 100 of the Code of Civil Procedure, it has been held that : "... while it is true that in a second appeal a finding of fact, even if erroneous, will generally not be disturbed but where it is found that the findings stand vitiated on wrong test and on the basis of assumptions and conjectures and resultantly there is an element of perversity involved therein, the High Court in our view will be within its jurisdiction to deal with the issue. This is, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section." Keeping in view the above provisions, in our opinion, the law laid down by the Supreme Court in the case of Kulwant Kaur, AIR 2001 SC 1273, clearly applies to appeals preferred before this court under section 260A of the Act as well. Sri Sarangan, at the end, made efforts to persuade us to remand the case to the Tribunal for fresh consideration particularly in view of paragraph 28 of the Tribunal's order which reads as under : "In the light of the decision we have reached on the validity of the assessment made in this case, we do not feel it necessary to go into the merits of any of the additions or with regard to the levy of interest under section 158BFA of the Act." In our opinion, keeping in view the facts of the present case, there is no occasion on our part to remand the case to the Tribunal because when once it is found that the investments detected during the search have not at all been recorded in the books of account, there hardly remains any other aspect to be determined by the Tribunal on merits of the assessment. Similarly, the leviabil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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