TMI Blog2000 (4) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-91, 1992-93 and 1995-96. The assessee's original return for asst. yr. 1994-95 was assessed at Rs. 38,040 whereas in return for block period even after showing truck income at Rs. 24,000 which was not shown originally the assessee had computed total income at Rs. 37,090. The same was due to certain adjustments made by the assessee, like depreciation on car claimed at Rs. 10,750 and salary from M/s Super Pipes at Rs. 24,000 restricted to Rs. 12,226, in the, light of provisions of s. 158BB(1)(a). AO took income for asst. yr. 1994-95 at Rs. 38,040 as originally filed. He made addition on account of truck income at Rs. 24,000 separately. AO further observed that the assessee had made certain adjustments while computing income for asst. yr. 1995-96 and that he had shown Rs. 30,000 as his share from Super Pipes and Rs. 24,000 as truck income. Since the assessee did not file regular return for asst. yr. 1995-96, no credit for adjustments made on account of depreciation and car expenses at Rs. 24,038 could be allowed, in view of provisions of s. 158BB(1)(a). He held that for computation of undisclosed income, was taken at Rs. 30,000. For similar reasons given in para. 4 of the order, AO c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s premises; and (ii) Pradip C. Patel vs. Dy. CIT (1997) 58 TTJ (Ahd) 409 wherein the Tribunal observed that if certain income was not required to be disclosed for the purpose of the Act, it could not be treated as undisclosed income. 3.2. Learned Departmental Representative relied heavily on assessment order and submitted that learned counsel is trying to suggest that deductions should be allowed even when no return had been filed. No benefit of deduction is allowable under Chapters IV and VI-A. Learned Departmental Representative referred to decision in the case of Bhag Chand Jain vs. Asstt. CIT (1998) 65 ITD 11 (Cal), wherein the Tribunal held that while computing income in block assessment deductions under Chapter VI-A could not be allowed. He also referred to the decision in the case of P.K. Kaliannan vs. Asstt. CIT (1999) 64 TTJ (Mad) 704 : (1999) 68 ITD 401 (Mad), wherein it was held that where the assessee had not filed return of income within due date, he was not entitled to any deduction out of total income under s. 158BB(1)(c). The basic exemption allowed to the assessee while levying tax for a particular assessment year was not applicable, while tax is charged under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old accordingly in the present case. The next question posed relates to allowability of basic exemption in relation to income for which no return had been filed under s. 139(1) within due date. We feel that this issue is covered against the assessee by the decision reported in (1999) 64 TTJ (Mad) 704 : (1999) 68 ITD 401 (Mad), wherein it has been held that tax under s. 113 @ 60 per cent is chargeable on undisclosed income of block period and it does not refer to any assessment year. We endorse this view and in view of the provisions of s. 158BB(1)(c), where the assessee had not filed return under s. 139(1) within due date, then no deduction is allowable with reference to disclosed income for relevant assessment year once the assessed income in relation to relevant assessment year exceeds taxable limit specified in s. 139(1). The next question posed relates to allowability of deductions under Chapters IV, VI and VI-A. Here, we may refer to p. 5735 of Vol. 4, 9th Edn. of Law of Income-tax by Sampath Iyengar's, where the provisions of Chapter XIV-B have been examined and it has been observed that since computation of undisclosed income is to be made in accordance with provisions of Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 1994-95, the income was declared at Rs. 38,040 and assessment completed at that figure under s. 143(1). In return for block period, the assessee declared income of Rs. 37,490 in relation to asst. yr. 1994-95. However, AO took income at Rs. 38,040 as originally assessed, in view of provisions of s. 158BB(1)(a). He also made an addition of Rs. 24,000 on account of truck income separately. 4.1. Learned counsel referred to p. 9 of paper-book, where statement of income for asst. yr. 1994-95 is placed. The assessee had claimed depreciation on car plus car expenses totalling Rs. 10,750, after disallowing 1/4th on account of personal usage. Salary income received as partner from Super Pipes was restricted by the assessee, in view of the provisions of s. 40(b) at Rs. 12,226. Truck income was shown at Rs. 22,000. Learned counsel referred to provisions of s. 158BB, Expln. (b), whereunder disclosed income of the firm determined under that clause shall not be chargeable to tax in the hands of the partners, whether on allocation or on account of enhancement. He referred to p. 3 of paper-book, where a copy of acknowledgment of return filed showing income of Rs. 38,040, is placed. He referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to by learned Departmental Representative, and it is observed that the said clause prohibits set off of unabsorbed depreciation under s. 32(2). We feel that claim of depreciation made by the assessee in revised computation of income cannot be treated as a claim for set off of unabsorbed depreciation, as depreciation has been claimed in relation to asst. yr. 1994-95 itself, though not claimed in original return. We feel that in whichever way figures of returned/assessed as undisclosed in the light of provisions of s. 158BB(1)(a). AO is, therefore, directed to allow appropriate relief to the assessee on the said basis. 5. Ground No. 4 relates to treatment of Rs. 15,000 as unexplained investment under s. 69. AO observed that the assessee had shown cash in hand on 1st April, 1989 at Rs. 15,000 and that he failed to give basis on which the said amount had been shown especially when no books of account had been maintained. It was impossible for a person to recollect the amount held by him ten years back on certain dates. He, therefore, held that source of cash of Rs. 15,000 remained unexplained and he treated the same as income for asst. yr. 1986-87. 5.1. Learned counsel ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Roshan Di Hatti vs. CIT 1977 CTR (SC) 200 : (1977) 107 ITR 938 (SC). 5.4. We have carefully considered the rival submissions and have perused assessment order. We feel that the submissions made by learned Departmental Representative have force, in view of the basis facts that no books of account had been maintained by the assessee and there is no supporting evidence to establish availability of Rs. 15,000 as on 1st April, 1985. The plea of learned counsel that statement of affairs has not been rebutted does not have much force, as the Department cannot be expected to bring material to rebut availability of cash in hand as on 1st April, 1985. We feel that the addition cannot be deleted merely on the basis of possibility of the amount being there and it is for the assessee to give a reasonable explanation regarding availability of the impugned cash. The burden would shift to the Revenue only if a reasonable explanation is adduced by the assessee. 6. Ground No. 5 relates to addition of Rs. 5,600 in asst. yr. 1991-92. AO observed that the assessee did not file return for asst. yr. 1991-92 and that he had shown Rs. 6,669 as his share income from Super Pipes and had surrendered Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at during search it was clarified that KVPs were purchased of 17th March, 1993, for Rs. 45,000 by wife of the assessee and that she was an regular income-tax assessee and that she had filed IT return under s. 115K by paying tax of Rs. 1,400 being income from tailoring, etc. The assessee also mentioned that the said investment had been made out of past savings of his wife amounting to Rs. 10,000 to Rs. 30,000 and that her income was below taxable limit. The assessee stressed that no investment had been made by him for purchase of KVPs. He pointed out that KVPs were encashed in 1996 prematurely and the money was received by his wife only and that the amount so received had been used by her. Learned counsel submitted that return by Smt. Gurmeet Kaur wife of the assessee was filed before search, i.e. in February, 1995, while search took place on 23rd Nov., 1995. There was no evidence with the Department that investment of Rs. 45,000 has been made by the assessee. Learned counsel relief on the decisions reported in 1977 CTR (SC) 200 : (1977) 107 ITR 938 and CIT vs. Smt. P.K. Noorjahan (1999) 155 CTR (SC) 509 : (1999) 237 ITR 570 (SC). In the case of CIT vs. Smt. P.K. Noorjahan, the apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yr. 1996-97 at Rs. 24,000 from two trucks plyed for eight months. AO referred to provisions of s. 44AE and computed income from truck for asst yr 1996-97 at Rs. 32,000. No account in respect of truck income had been maintained. He, therefore, computed truck income for asst. yrs. 1994-95 and 1995-96 at Rs 24,000 and for asst. yr. 1996-97 at Rs. 32,000. 8.1. Learned counsel submitted that return for asst. yr. 1996-97 was not due when search took place on 23rd Nov., 1995, therefore, the amount of Rs. 32,000 in relation to truck income could not be treated as undisclosed. He referred to provisions of s. 44AE, whereunder income from plying, hiring or leasing of truck is required to be computed in case of assessees not maintaining any books of account. Income for asst. yr. 1994-95 has been shown from truck for 11 months, as the vehicle was purchased in April and the assessee could not have shown income for 12 months. In relation to asst. yr. 1995-96, taxable limit was Rs. 35,000 and since income from truck, etc. was below taxable limit, no return was filed. He, therefore, urged that no addition is called for on account of income from truck in relation to asst. yrs. 1994-95 to 1996-97. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent made on account of depreciation and car expenses at Rs. 24,038 can be allowed, in view of provisions of s. 158BB(1)(a). He, therefore, took undisclosed income at Rs. 30,000 and made another addition of Rs. 24,000 an account of truck income. We feel that the depreciation on car, car expenses and insurance have to be allowed having regard to the provisions of Expln. (a) to s. 158BB(1), as the only prohibition specified related to set off of unabsorbed depreciation under s. 32(2). This issue is already decided above. We, therefore, hold that AO is not right in holding that no credit for adjustments made on account of depreciation and car expenses at Rs. 24,038 can be allowed. In this view of the matter, AO may recompute income for asst. yr. 1995-96 and if assessed income for asst. yr. 1995-96 exceeds taxable limit, then whole income in relation to that year would be treated as undisclosed, as the assessee did not file any return under s.139 and the provisions of s. 158BB(1)(c) would become attracted. However, if income remains below taxable limit then, as already held above, income for asst. yr. 1995-96 cannot be treated as undisclosed. AO may recompute income for asst. yr. 1995-9 ..... 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