Income Tax Appellate Tribunal - Madras
Smt. Sivabala Devi vs Assistant Commissioner Of Income-Tax on 14 February, 2003
Equivalent citations: [2004]88ITD333(MAD)
ORDER
O.K. Narayanan, Accountant Member
1. This is a block assessment appeal. The block assessment has been completed under Section 143(3) read with Sections 158BC and 158BD of the Income-tax Act, 1961. The impugned block assessment is the one governed by the provisions of Section 158BD of the Income-tax Act, 1961.
2. There was a search under Section 132 of the Income-tax Act on 19/20-1-1996 in the case of the co-brother of the assessee. According to the Assessing Officer, the documents and materials seized with reference to the above search have led to the framing of the impugned block assessment on the assessee under Section 158BD of the Income-tax Act. Accordingly, the relevant assessment years involved in the impugned block period are the assessment years from 1986-87 to 1996-97 (upto 19-1-1996).
3. According to the Assessing Officer, the seized records and materials made out a case of undisclosed income against the assessee. Therefore, he issued notice under Section 158BC on 7-3-1997, which was served on the assessee on 18-3-1997. The assessee filed the return in Form No. 2B on 26-5-1997. She admitted an undisclosed income of Rs. 2,31,098 and paid tax of Rs. 1,38,659.
4. Later on the Assessing Officer issued notice under Section 143(2) on 29-5-1997 and set in motion the process of assessment of undisclosed income in the case of the assessee. The Assessing Officer found that the assessee is the proprietrix of three' business concerns, namely M/s Bharani Yolkam International, M/s Bharani Real Estate and Sri Bala & Co. M/s. Bharani Yolkam International is doing business as commission agent for M/s The Karur Co-operative Handloom Export Production Project Limited. The said business was said to be commenced from the assessment year 1984-85. The rate of commission entitled for the assessee was 10%. The assessee claimed various expenditure in respect of the said business in the form of salary, rent, electricity and other establishment charges and had shown certain amounts as income from the said concern for all the assessment years included in the block period. But the Assessing Officer was of the view that the assessee has worked out the income and expenditure on an estimate basis and therefore the income disclosed by the assessee for the various years from the said business concern cannot be accepted as such. Instead, he treated 60% of the commission receipts as income of the assessee and the differential amounts were treated as undisclosed income. The total commission income so determined by the Assessing Officer for the purpose of the block assessment comes to Rs. 5,99,405 as shown below :
Assessment year Amount
Rs.
1986-87 48,610
1987-88 20,016
1988-89 23,485
1989-90 Nil
1990-91 1,86,805
1991-92 1,87,986
1992-93 34,969
1993-94 9,500
1994-95 29,124
1995-96 41,116
1996-97 (Upto 19-1-1996) 17,794
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5,99,405
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5. M/s. Bharani Real Estate is a concern having real estate business. The Assessing Officer accepted the net income from Bharani Real Estate as returned by the assessee (paragraph 2.3-2 of the assessment order). The assessee has claimed an income of Rs. 20,000 per annum from the assessment year 1991-92 onwards on sale of thorn trees from the patches of land purchased for development and sale as house plots. These receipts were treated by the Assessing Officer as undisclosed income of the assessee. He computed an undisclosed income of Rs. 1,16,000 against the sale of thorn trees as detailed below:
Assessment year Amount
Rs.
1991-92 20,000
1992-93 20,000
1993-94 20,000
1994-95 20,000
1995-96 20,000
1996-97 (Upto 19-1-1996) 16,000
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1,16,000
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6. The other concern of the assessee, Sri Bala & Co., dealt with a property known as Loch End Compound in Kodaikanal. The assessee had entered into a purchase agreement with Indian Evangelical Lutheran Church Trust Association on 29-4-1991. The assessee had originally invested a sum of Rs. 10 lakhs by way of advance to the Trust for purchase of the property. The assessee also invested Rs. 5 lakhs thereafter. Even though the assessee has taken over the possession of the property, the property could not be registered in her name for a number of litigations. The assessee had spent money to develop the property for running the business of a guest house. She was earning rental income from the assessment year 1993-94 onwards. The assessee did not admit such rental income from the guest house as income, but on the other hand, set off the income against the work in progress for the reason that the main business of real estate did not commence. The Assessing Officer relying on various Court decisions, including that of the Hon'ble Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [1997] 227 ITR 1721 hold that the rentals constituted income and treated such receipts as undisclosed income of the assessee. A total amount of Rs. 10,85,000 has been adopted as the undisclosed income of the assessee on this ground. The details are as below :
Assessment year Amount
1993-94 2,50,000
1994-95 2,75,000
1995-96 3,00,000
1996-97 (Upto 19-1-1996) 2,60,000
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10,85,000
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It is to be stated that the above income has been worked out by the Assessing Officer on an estimate basis and not on the basis of exact accounts.
7. As per the statements and details furnished by the assessee, the source of investments made by her in various businesses were availed by way of loans from about 42 persons. She has furnished the details of those persons from whom she availed such loans. According to the Assessing Officer, the genuineness of those loans were not proved and accordingly he treated the entire loan amounts as assessee's undisclosed income. A total of Rs. 75,31,500 is taken as the undisclosed income of the assessee against the loan creditors. The year-wise particulars are as below :
Assessment year Amount
Rs.
1991-92 16,92,000
1992-93 19,90,000
1993-94 9,60,000
1994-95 8,10,000
1995-96 16,27,500
1996-97 (Upto 19-1-1996) 4,52,000
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75,31,500
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8. While preparing the cash flow statements for the various assessment years included in the impugned block period, the assessee has taken credit for certain gifts said to be received by her. The Assessing Officer did not accept the genuineness of the gifts and treated the gifts as the undisclosed income of the assessee. The total amount on this point treated as undisclosed income of the assessee is Rs. 1,20,700, as shown below :
1986-87 3,000
1987-88 3,500
1989-90 4,000
1990-91 42,500
1991-92 4,200
1992-93 7,500
1993-94 15,000
1994-95 11,000
1995-96 28,000
1996-97 (Upto 19-1-1996) 2,000
------------
1,20,700
------------
9. The assessee has taken credit for agricultural income obtained from various properties owned and held by her during the block period. But the Assessing Officer did not accept the quantum of the agricultural income claimed by the assessee as such. He treated a portion of such agricultural income as non-agricultural in nature and thereby undisclosed income in substance. Such partial disallowance of agricultural income and impressing it as undisclosed income amounted to Rs. 1,97,200. The details are as below :
Assessment year Amount
Rs.
1989-90 12,000
1990-91 17,000
1991-92 17,000
1992-93 34,000
1993-94 34,000
1994-95 34,000
1995-96 34,000
1996-97 (Upto 19-1-1996) 15,200
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1,97,200
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10. The assessee has claimed income by way of commission from M/s. Chenkumar Weavers Co-operative Production and Sales Society. The Assessing Officer treated the said commission income also as the undisclosed income of the assessee. The total comes to Rs. 38,538 as stated below :
1991-92 10,986
1992-93 7,669
1993-94 1,112
1994-95 18,771
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38,538
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11. While considering the undisclosed income for the assessment year 1991-92, the Assessing Officer has rejected the claim of the assessee that she had received a loan of Rs. 2 lakhs from P.C. Palaniswamy of Erode for making investments in Sri Bala & Co. and M/s. Bharani Real Estate. This loan amount of Rs. 2 lakhs is also added by the Assessing Authority as undisclosed income.
12. While mentioning about M/s. Bharani Real Estate, we have mentioned that the Assessing Officer has accepted the income as returned by the assessee. Accordingly, he has treated Rs. 1,242 as the undisclosed income of the assessee for the assessment year 1993-94. In the case of the same business, the assessee has claimed a depreciation of Rs. 15,228 for the assessment year 1994-95 in respect of an air conditioner. The Assessing Officer held that the Air Conditioner was installed in assessee's residential house and therefore the same could not be allowed. The said amount of Rs. 15,228 was also treated as the undisclosed income of the assessee.
13. The assessee had sold a plot of land at Karur for a consideration of Rs. 1,80,000. The land was purchased in 1988. The Assessing Officer computed a capital gains of Rs. 1,50,650 against the above transaction and treated the same as the undisclosed income of the assessee for the assessment year 1996-97. During the same assessment year, the assessee has claimed that she received a sum of Rs. 9,50,000 by way of compensation from one Dr. Suriya Shekhar in cancellation of an agreement dated 9-2-1992 by which the assessee agreed to purchase a property at plot No. 4530, Y-201, 5th Avenue, Anna Nagar, Madras-40. The Assessing Officer treated the sum of Rs. 9,50,000 as the income of the assessee, as according to him, the assessee did not produce any evidence to establish that the said amount was received by way of compensation. For bringing the amount to tax, the Assessing Officer also relied on the decision of the Hon'ble Supreme Court in CIT v. G.R. Karthikeyan [1993] 201 ITR 866.
14. In her cash flow statement filed along with the block return, the assessee had shown the receipt of agricultural income from M/s. MBS Granites, and according to the assessee, the amount received from M/s. MBS Granites were her share from the agricultural income earned by the said firm. But the Assessing Officer treated those receipts as the undisclosed income of the assessee on the ground that the assessee has not produced any proof in support of her contention. A total amount of Rs. 4,66,000 has been treated by the Assessing Officer as undisclosed income on the above ground. The details are as follows :
Assessment year Amount
Rs.
1993-94 1,25,000
1994-95 1,25,000
1995-96 1,20,000
1996-97 (Upto 19-1-1996) 96,000
------------
4,66,000
------------
15. The Assessing Officer has also treated the interest accrued in the Bank accounts maintained in the name of the assessee's minor children by clubbing the same under Section 64 of the Income-tax Act. The total amount comes to Rs. 30,375 as follows :
1992-93 6,375
1993-94 6,000
1994-95 6,000
1995-96 6,000
1996-97 (Upto 19-1-1996) 6,000
------------
30,375
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16. For the assessment year 1996-97 the assessee had shown an opening capital of Rs. 60,000. This was not accepted by the Assessing Officer and the same is treated as the assessee's undisclosed income.
17. A sum of Rs. 32,150 was found in the course of search. Out of the above sum, the Assessing Officer treated Rs. 30,000 as the undisclosed income of the assessee for the assessment year 1996-97.
17A. As seen from the above paragraphs, the Assessing Officer has worked out the undisclosed income in the case of the assessee by estimating commission income; disbelieving the gifts received by the assessee; disallowing the opening capital; treating the cash found in the course of search as undisclosed income; disallowing a portion of the agricultural income returned by the assessee; treating the guest house income as undisclosed income; treating the loan amounts as undisclosed income; agricultural share income from M/s. MBS Granites treated as undisclosed income; income from sale of thorn trees treated as undisclosed income, etc. etc., at Rs. 1,15,75,840.
18. The abstract of the undisclosed income as computed by the Assessing Officer is extracted below :
Asst. year Total Admitted Undisclosed
1986-87 1,11,610 - 1,11,610
1987-88 23,516 - 23,516
1988-89 23,485 - 23,485
1989-90 16,000 16,000 -
1990-91 2,46,305 - 2,46,305
1991-92 21,32,172 - 21,32,172
1992-93 21,00,513 - 21,00,513
1993-94 14,21,854 - 14,21,854
1994-95 13,44,123 - 13,44,123
1995-96 21,76,616 - 21,76,616
1996-97 19,95,644 - 19,95,644
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Total undisclosed income 1,15,75,838
or
1,15,75,840
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19. It is against the above block assessment that the assessee has come in appeal before us. In the exhaustive grounds of appeal filed before us, running to 23 grounds, the assessee has virtually challenged every additions made by the Assessing Officer in the impugned block assessment. Regarding the opening capital of Rs. 60,000, the assessee's ground is that the sum represented the source available in the hands of the assessee even prior to the block assessment period. In respect of commission income estimated by the Assessing Officer from M/s. Bharani Yolk am International, there is no basis for the Assessing Officer to make an addition of Rs. 3,55,361, thus making out the total commission income at Rs. 5,99,405. It is the contention of the assessee that there is no provision in a block assessment to work out undisclosed income on an estimate basis. The assessee also contends that there is a double addition of commission income to the extent of Rs. 38,538, as an equivalent amount has already been stated by the assessee in the cash summary filed before the Assessing Officer. The assessee also objects to the addition of Rs. 1,16,000 against the sale proceeds of thorn trees made by the Assessing Officer. It is the contention of the assessee that the Real Estate business contemplated by the assessee did not commence at that point of time and the assessee was only actually developing the land for future sale. In such circumstances, any income received by way of sale of thorn trees should go to reduce the capital cost of the assessee and therefore the Assessing Officer was not justified in treating the same as the undisclosed income of the assessee. It is the contention of the assessee that the Assessing Officer has erred in relying on the decision of the Hon'ble Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. 's case (supra). It is the contention of the assessee that there is no basis for disallowing the depreciation claim of Rs. 8,750 on Air conditioner on the ground that it was installed in the residential premises of the assessee. It is absolutely against facts. It is the case of the assessee that the Assessing Officer has not made any clarification on the said point. Regarding the income estimated from Kodaikanal property by way of guest house receipts, the assessee contended that the rinding of the Assessing Officer is premature. The assessee has not actually commenced the business of real estate. The assessee was only developing the property. It is in the course of developing the property, incidental thereto the assessee let out certain portions of the guest house and obtained certain interim receipts. Those receipts are inter-linked with the development 6f the property and it should go to reduce the cost of the property. There is no basis for the Assessing Officer to treat those receipts as independent source of income and further colouring it as the undisclosed income of the assessee. It is the contention of the assessee that the Assessing Officer has grossly erred in treating the loan amounts as the undisclosed income of the assessee. The assessee submits that the details of the borrowings were already available in the notings found in the seized documents on 19-1 -1996 and 20-1 -1996. When the notings are available against the loan credits disclosed by the assessee, there is no basis for the Assessing Officer to treat the same as the undisclosed income of the assessee. It is the case of the assessee that the information available from the seized records should be read in its entirety and in a logical manner. The Assessing Officer cannot accept a portion of the seized material and reject another portion of the seized materials. The assessee also contends that confirmation letters were filed before the Assessing Officer in respect of those loan credits and affidavits were filed, and therefore absolutely there is no basis to treat the loan credits as the undisclosed income of the assessee. The next contention of the assessee is that the Assessing Officer has erred in disbelieving the source by way of gifts received by the assessee during the block period at various occasions, like birthdays and ceremonial functions. The assessee further submits that the estimate of capital gains at Rs. 1,50,650 on the sale of property at Karur is absolutely against law, as the land sold in question was agricultural land. Regarding the compensation received at Rs. 9,50,000 and treated by the Assessing Officer as undisclosed income, it is the case of the assessee that it is only a capital receipt in the nature of damage and does not constitute income at all. The assessee also submits that there is no basis for the Assessing Officer to treat Rs. 30,000 as the undisclosed income out of the sum of Rs. 32,150 found in the course of search.
20. All the above contentions raised by the assessee regarding each and every item of addition made by the Assessing Officer are described in ground Nos. 7 to 23 of the grounds of appeal filed by the assessee.
21. In addition to the grounds raised on the merits of the various additions made by the Assessing Officer in the impugned block assessment, the assessee has also raised additional grounds, which are legal grounds in nature.
22. The assessee has raised three additional grounds as follows:
(i) There is no proper notice served on the assessee to invoke the jurisdiction under Section 158BD. In the absence of a proper notice, the Assessing Officer is not justified in invoking jurisdiction under Section 158BD.
(ii) On the parity of reasoning and rationale contained under Section 148 of the Income-tax Act, 1961,, it is necessary to record reasons under Section 158BD also to make a block assessment under that section and therefore the issuance of notice itself is illegal and the consequent assessment is void and requires to be annulled.
(iii) The information and materials used by the Assessing Officer to complete the impugned block assessment under Section 158BD had in fact already been furnished to the Asstt. Director of Investigation, Madurai as early as on 15-5-1995 itself, who sought relevant information from the assessee. In the course of search, no documents, materials or information other than those documents, materials or information furnished to the Asstt. Director of Investigation, Madurai on 15-5-1995 have been recovered. Therefore, there is no "undisclosure" as far as the case of the assessee is concerned and therefore the impugned assessment is void ab initio.
23. Shri S. Venkatesan, the learned Chartered Accountant appearing for the assessee submitted that the legal grounds raised by the assessee may be considered at the first instance. Shri Venkatesan contended that the impugned block assessment is invalid for want of proper notice, for want of proper jurisdiction, for want of recording proper reasoning and also for the reason that whatever materials have been used by the Assessing Officer in the impugned block assessment have already been disclosed to the department even before the onslaught of search. The learned Chartered Accountant submitted that in this case the notice was served on the assessee to file the block return on 18-3-1997, which is long after one year from the end of the month in which a search had taken place in the case of her co-brother. Notice under Section 158BC is required to be given to make an assessment under Section 158BC. As the said assessment under Section 15 SBC is to be completed within one year from the end of the month in which the warrant of search was executed, the notice under Section 158BC should be served 45 days before or at least 15 days before the completion of the assessment, requiring the assessee to file the return and to process the same thereafter. Therefore, if a notice is served by invoking Section 158BD, such notice need to be served earlier to at least 15 days before the assessment under Section 158BC is completed. According to the learned Chartered Accountant, this is a necessary inference to be drawn from the provisions of Section 158BC, although for framing the assessments for cases under Section 158BD provisions have been made for a different time limit. In this case, no such notice with a period of at least 15 days was served on the assessee from the date in which the corresponding Section 158BC assessment should have been completed. In this context, the learned Chartered Accountant relied on the decisions of the Hon'ble Supreme Court reported in Y. Narayana Chetty v. ITO [1959] 35 ITR 388, CIT v. Thayuballi Mulla Jeevaji Kapasi [1967] 66 ITR 147 and CIT v. Kurban Hussain Ibrahimji Mithiborwala [1971] 82 ITR 821.
24. Shri Lav Saxena, the learned Commissioner of Income-tax appearing for the Revenue contended that what is sought to be explained by the learned Chartered Accountant is only a legal gymnastics. The learned Commissioner pointed out that in the scheme of block assessment no time is prescribed for issue of notice. Limitation is provided for completing the assessment. Separate provisions of limitations are given, one for 158BC assessment and one for 158BD assessment. In the present case, the notice was served on the assessee on 18-3-1997. The impugned assessment was made through the order passed on 26-3-1998. The assessee was given almost a period of one year from the date of issue of notice and from the date of completion of assessment. Therefore, there is no question in this case that no proper notice was issued. Therefore, there is no basis for the allegation of the learned Chartered Accountant that the Assessing Officer has erred in assuming jurisdiction to complete the impugned assessment under Section 158BD.
25. We considered the legal ground raised by the assessee very carefully. The order of assessment in the case of Section 15SBC assessment is to be passed within one year from the end of the month in which the last of the search warrant is executed. Where searches or requisitions have been made, the period of limitation will start from the end of the month in which the last of such consequential operation was concluded. The law also specifies issue of notice with reference to Section 158BC assessment. The Assessing Officer may serve a notice on the searched person requiring him to furnish within 15 days or 45 days, as the case may be, a return in the prescribed form and verified in the same manner as a return under Section 142(!)(;), setting forth his total income, including undisclosed income, for the block period. Likewise, in the case of Section 158BD assessment, where the Assessing Officer find that any undisclosed income belongs to any person other than the person in whose case the search was conducted, the Assessing Officer having jurisdiction over such other person shall proceed against him. In that case, the limitation for completion of assessment shall start from the date of service of notice on that person. A reading of the above schemes show that for the purpose of completing a block assessment, special provisions are made in the statute and there is no justification for making any inference, as argued by the learned Chartered Accountant. The law has prescribed a time limit for completing the assessment under Section 158BC and also the law has specified the time limit to complete the assessment under Section 158BD in clear terms. The law has not specified any specific time period to issue a notice either in the case of 158BC assessment or 158BD assessment. But of course the provisions of law have adhered to the principles of natural justice and require the Assessing Officer to serve a notice on the parties by giving at least a period of 15 days to file the block returns. As the matters are so clear in the scheme of block assessment, we find that the inferential arguments made by the learned Chartered Accountant on the question of issue of notice and assumption of jurisdiction are by and large logical or academic. Accordingly, the first additional and legal ground raised by the assessee that there was no proper notice and there was no proper assumption of jurisdiction is rejected.
26. The second additional and legal ground raised by the assessee is that the Assessing Officer has not recorded the reasons before issue of the notice under Section 158BD and if the reasons recorded in the assessment order were to be construed as the reasons so recorded, such reasons are vague and therefore not germane to assume valid jurisdiction under Section 158BD of the Income-tax Act, 1961. On this additional ground also, we heard both sides in detail. The contention of Shri Venkatesan, the learned Chartered Accountant is that whatever assets and income attributed against the assessee had in fact, accepted by the assessee and therefore there is no provocation at all for the Assessing Officer to interconnect the assets and income of the assessee with that of the assets and income of her co-brother. At the first instance itself the assessee has owned up all the assets and income in question and therefore there was no such circumstance in which the Assessing Officer could say that the search made in the case of the assessee's co-brother has resulted in unearthing of certain materials and information that would go to show undisclosed income in the hands of the assessee. We are not able to accept this argument also. There was a search in the case of assessee's co-brother as well as there was a search in the case of her husband. As the assessee was staying with her husband, naturally, it resulted in the search of her residential place also. It is on the basis of the details said to be collected by the search party that the Assessing Officer has come to a conclusion that the assessee was answerable under the provisions of Chapter XIVB. In these facts and circumstances of the case, we cannot say that the Assessing Officer had no reasons to proceed against the assessee under Section 158BD of the Income-tax Act, 1961. The findings arrived at by the Assessing Officer as a result of his belief might be justified or unjustified, but what the Assessing Officer must be sure of himself is that there should be aprima facie case that the assessee had to be proceeded against under Chapter XIVB. In the present case, the Assessing Officer is justified in making out such a prima facie reasoning. This position is further amplified by the simple fact that the assessee herself has returned an undisclosed income of Rs. 2,31,098 through the return filed by her in Form 2B on 26-5-1997. Where the assessee herself declares an amount of undisclosed income in response to a notice under Section 158BC, there is not much substance in the argument that the Assessing Officer has riot recorded proper reasons to proceed against the assessee. Therefore, the additional ground regarding the recording of reasons also is rejected.
27. The third and the last additional ground in the nature of a legal ground raised by the assessee is that all the particulars and information utilised by the Assessing Officer for framing the impugned block assessment were already furnished and informed to the Income-tax Department even before the search action. Therefore, the argument of the assessee is that to that extent there cannot be a case of undisclosed income against the assessee.
28. The learned Chartered Accountant argued on this point at length. He submitted that the Deputy Director of Income-tax (Investigation), Madurai had sent a statutory letter under Section 131 of the Income-tax Act to the assessee on 1-3-1995. The assessee was asked to submit the particulars regarding her income-tax and wealth-tax assessments, sources of income, detailed activities carried out under the name "Sri Bala & Co." and copies of Bank accounts. The assessee has filed a detailed reply dated 11-3-1995 in response to Section 131 letter issued by the D.D.I. Shri Venkatesan submitted that the assessee has furnished all the relevant information sought for by the D.D.I, the assessee has stated in her letter that so far she has not been assessed to Income-tax or Wealth-tax. In respect of the activities of Sri Bala & Co., the assessee stated that she has been appointed as a Power Agent pursuant to the sale agreement of Kodaikanal property entered into with Indian Evangelical Lutheran Church Trust Association. The sale consideration stated was Rs. 302 lakhs. The consideration was to be paid within 27 months by instalments. The assessee could sell the property in piece-meal to raise the money necessary for paying the above consideration. The assessee had paid an initial advance of Rs. 10 lakhs. But as contemplated, the assessee could not proceed to sell the land in piece-meal, as suits were filed by tenants. She informed the D.D.I, that she could not sell the property by that time. She has also explained the source for the initial payment of Rs. 10 lakhs. The assessee has stated that she availed a loan of Rs. 9 lakhs from her relative Mrs. Dharmambal, who has pledged her house property to raise the fund. The assessee has stated that the balance amount of Rs. 1 lakh was raised by her by pledging jewellery. The assessee has also stated that the source of income from property is by hiring out rooms on daily basis and also from agricultural activities. The assessee has also enclosed a cop)' of the sale agreement dated 26-4-1991, copy of the registered Power of Attorney dated 2-6-1991 and copies of the bank accounts with Central Co-operative Bank Ltd., Kodaikanal, Indian Bank, Anna Nagar, Madras. Thereafter, the A.D.I., Madurai again sought for details from the assessee and finally posted her case to 15-5-1995. After a series of exchange of letters between the assessee and the authorities, the assessee filed a detailed reply to the Asstt. Director of Income-tax (Inv.), Madurai explaining all the business activities carried on by the assessee, sources for various investments, sources of various income, details of loan credits, etc. etc. The learned Chartered Accountant contended that all the materials now used by the Assessing Officer to complete the impugned block assessment have already been well furnished by the assessee to the A.D.I.-II, Madurai as early as on 15-5-1995 through her reply filed before that officer. The learned Chartered Accountant invited our attention to the said reply filed by the assessee running to ten pages available from pages 27 to 37 of the paper book,' Vol. I, filed before us.
29. The learned Chartered Accountant invited our attention to the individual information filed through the above letter. The assessee has furnished the details of investments made by her in land, M/s. Bharani Yolkam Internationals, Bharani Real Estate, Sri Bala & Co., MBS Granites, Sri Krishna Silks, etc. totalling to Rs. 43,30,825. The assessee has also furnished the details of corresponding sources to the extent of Rs. 45,07,425. The sources were in the form of income from Bharani Yolkam Internationals for the period from 1985 to 1995, jewel loans, agricultural income from two acres of agricultural land at Velayutham-palayam during the period 1988 to 1993, loan from Mrs. Dharmambal, proceeds of the sale of thorn trees, guest house receipts from Sri Bala & Co. for the period from 1992 to 1995, share of agricultural income from 10 acres of agricultural land owned by the firm M/s. MBS Granites for the period 1992 to 1994, loans availed from business associates through assessee's husband and receipt on account of the sale of land belonging to Bharani Real Estate. The learned Chartered Accountant pointed out that as against a total investment of Rs. 43,30,825, the assessee has explained the source for Rs. 45,07,425 as early as on 15-5-1995, whereas the search was only on 19-1-1996. The learned Chartered Accountant further pointed out that the assessee has furnished the details of investments made by the assessee in landed properties, plot-wise, and also the corresponding sources for making such investments. The learned Chartered Accountant pointed out that the assessee has furnished the details of investments in her various business concerns with corresponding sources, details of expenditure in running her business, the names of those persons who have provided loans to the assessee, the particulars of commission received by the assessee for the block period, the names and addresses of all the creditors, particulars of agricultural income, etc. etc. The learned Chartered Accountant submitted that once the assessee having furnished all these details to the Asstt. Director of Investigation of the Income-tax Department, there is no justification in utilising the very same information and materials in a block assessment against the assessee, only for the reason that searches were conducted in the residential houses of assessee's husband and her co-brother.
30. The learned Chartered Accountant invited our attention to the definition of the term "undisclosed income" given in Chapter XIVB. The definition of "undisclosed income" in Section 158B(&) is as follows:
'undisclosed income' includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purpose of this Act.
31. Shri Venkatesan submitted that only such items would be considered as undisclosed income, which have not been disclosed for the purposes of this Act or would not have been disclosed for the purposes of this Act. As far as the assessee is concerned, she has already disclosed the relevant materials and information for the purposes of this Act. The learned Chartered Accountant submitted that "for the purposes of this Act" do not mean that for the purposes of assessment alone. Information furnished by an assessee in response to a notice issued by the concerned authority under the Income-tax Act under any of the provisions of the Income-tax Act will amount to disclosure for the purposes of this Act. The details have been furnished by the assessee in this case through her letter dated 15-5-1995 to the A.D.I., Madurai, in response to his notice under Section 131 of the Income-tax Act. The provisions of Section 131 of the Income-tax Act gave powers to the Income-tax authorities discovery, production of evidence etc. A requisition made under Section 131 is a statutory requisition made by a competent Income-tax authority. Information and details furnished by an assessee in response to such a statutory requisition made under Section 131 is for the purposes of this Act and any resultant disclosure made by the assessee in the course of reply to the requisition issued under Section 131 is absolutely a disclosure made by the assessee for the purposes of this Act. Therefore, except a few items, all other items considered by the Assessing Officer for the purposes of making the impugned block assessment have already been furnished by the assessee to the competent Income-tax Authority well before the date of search, which amounted to a valid disclosure for the purposes of this Act. Things being so, the income or investments made by the assessee in respect of those materials already disclosed cannot be treated as undisclosed income in the hands of the assessee and could not be made subject matter of a block assessment.
32. In support of his extensive arguments and contentions, the learned Chartered Accountant relied on the following decisions:
1. Parakh Foods Ltd. v. Dy. CIT [1998] 64 ITD 396 (Pune)
2. J.K. Narayanan (HUF)v. Asstt. CIT [1999] 69 ITD 104 (Mad.)(TM)
3. L. Saroja v. Asstt. Commissioner [2001] 76 ITD 344 (Mad.)
33. Relying on Parkah Foods Ltd.'s case (supra), the learned Chartered Accountant submitted that where the assessee has disclosed primary facts relating to the particulars of receipts and expenses, even before the search, then such income cannot be assessed as undisclosed income within the scope of Section 158B(&) merely on the ground that adverse inference is drawn by the Assessing Officer. The learned Chartered Accountant contended that in such circumstances, the Assessing Officer may perhaps assess the income either by way of regular assessment or reassessment as the case may be, in accordance with law. In the case of J.K. Narayanan (HUF) (supra), the learned Chartered Accountant submitted that for some income to be considered as undisclosed income, it will be required that the said income was not or would not have been disclosed by the assessee to the department. He submitted that wherever the assessee has disclosed the particulars of assets and income to the department even before the search, such income could not be considered as undisclosed in nature. In the case of L. Saroja (supra), the learned Chartered Accountant contended that undisclosed income means the income which is liable to be taxed, but which has not been taxed as a result of non-disclosure by the assessee. Where the assessee has already disclosed, no case of undisclosed income arises.
34. Shri Lav Saxena, the learned Commissioner appearing for the Revenue contended that filing of information by the assessee through her letter dated 15-5-1995 addressed to the Asstt. Director of Income-tax (Inv. II), Madurai is not a disclosure as contemplated in Chapter XIVB of the Income-tax Act. The learned Commissioner relied on a recent decision of the Hon'ble Madras High Court in B. Noorsingh v. Union of India [2000] 154-Taxation-470 (W.P. No. 2706 of 1997 & WMP Nos. 4539 & 4540 of 1997). Relying on the said decision, the learned Commissioner pointed out that disclosure means, disclosure made by an assessee by filing returns of income or wealth. In the present case, the assessee has not filed returns or income or wealth till the date of search carried out in the residential premises of her husband and her co-brother. Therefore, it cannot be held that the assessee has disclosed the particulars regarding assets and properties owned by her and the sources available with the assessee for acquiring those assets and properties and particulars of sources of income to the Income-tax Department. A disclosure becomes a disclosure for the purposes of block assessment only if the assessee had filed returns of income prior to the date of search and initiation of block assessment proceedings. The learned Commissioner submitted that the law has provided opportunities to the assessee for filing the returns of income, as stated in various provisions contained in Section 139 of the Income-tax Act. The assessee has not furnished the returns. The assessee might have replied to the queries made by the Asstt. Director, but such compliance made by the assessee cannot be considered as equivalent to disclosure of assets and income made by the assessee.
35. The learned Commissioner submitted that the assessee was bound to file her returns of income for so many preceding assessment years, but she having failed to file the returns, the department called for certain particulars regarding her assets, properties and sources of income. On appraisal of all these materials, the department felt that this is a case where the assessee is evading the payment of tax. It is in such circumstances, the search was undertaken, even though the warrants were issued against other persons, but the assessee was implicated under Section 158BD on the ground of various particulars and information gathered against her. The learned Commissioner contended that the tune of argument of the assessee is that the block assessment is made as if a penalty for delay in filing the returns of income.
Block assessment is not such a penalty for delay in filing of the returns. Block assessment is made as a result of search and for the purpose of assessing the undisclosed income in the hands of an assessee. The learned Commissioner submitted that the assessee having not filed her returns of income for the relevant assessment years, she cannot take shelter under the argument that she had already disclosed all the relevant materials and information to the Income-tax Department, so that she should not be proceeded against through the impugned block assessment. The Commissioner submitted that the decision relied on by him in B. Noorsingh's case (supra) is an authority on the subject and as per the ratio of the said decision, the Tribunal has to hold that there was no such disclosure made by the assessee, as contended and canvassed by the learned Chartered Accountant appearing for her.
36. We heard both sides in detail and considered the issue very carefully. A Block Assessment under Chapter XIVB of the Income-tax Act is contemplated to assess the undisclosed income of an assessee as a result of search under Section 132 or a requisition under Section 132A, or on account of implication of another person by virtue of the operation of Section 158BD. What can be assessed in a block assessment is only the undisclosed income. And now, what is undisclosed income? As Chapter XIVB provides for special procedure for assessment of search cases, the amplitude of the expression "undisclosed income" need to be understood as per the definition of the term given in the said Chapter. A reading of the definition of "undisclosed income" in Section 158B(£>), which is reproduced in paragraph 30 above, makes the point clear, inasmuch as that income or property, which has not been disclosed for the purposes of this Act, or income or property which would not have been disclosed for the purposes of this Act.
37. Disclosed for the purposes of this Act definitely means, disclosed for the purposes required by the various provisions contained in the Income-tax Act, 1961. Disclosed for the purposes of the Income-tax Act, 1961 does not mean, disclosed for the purposes of making an assessment alone. There is no such a restriction given in the definition of "undisclosed income", so as to presume that particulars furnished by an assessee through filing a return of income alone constitute disclosing the particulars for the purposes of this Act. The assessee might be furnishing details and particulars regarding his property and income in compliance of the requirements made by appropriate authorities invoking different provisions of the Income-tax Act, 1961. In the present case, the assessee has furnished the details regarding her business, investments in such businesses, sources of income etc. Through her letter dated 15-5-1995 in compliance of the notice issued by the A.D.I., Madurai under Section 131 of the Income-tax Act. Disclosing certain details and particulars in compliance of a requisition made by an appropriate authority under Section 131 of the Income-tax Act amounts to disclosure of such particulars and details for the purposes of the Income-tax Act, 1961.
38. In this context, we have to seriously consider the implication of the judgment delivered by the Hon'ble Madras High Court in the case of B. Noorsingh (supra). In that case, the petitioner had actually challenged the constitutional validity of Section 158BB(1)(c) of the Income-tax Act, 1961. The block assessment made under Chapter XIVB will be in addition to the regular assessment in respect of each previous year included in the block period; that the total income undisclosed relating to the block period shall not include the income assessed in any regular assessment as the income of such block period and that the income under that Chapter shall not be included in the regular assessment of any previous year included in the block period. It is in this factual context that the Hon'ble Madras High Court held that it is open to Parliament to classify the tax payers on a rational basis and also to treat the different classes of tax payers differently. It is in this context that the Hon'ble High Court held that it is also permissible for the Parliament to further classify in a rational and non-arbitrary manner the assessees in relation to their conduct. The Court held that there is no fundamental right in an assessee to commit breaches of law. The right that can be asserted by one who has chosen to violate the law is the right to be treated in a manner similar to that in which other similar offenders are treated. Chapter XIVB accords similar treatment to all persons belonging to the class to whom that Chapter is to apply. The Court held, therefore, that there is no discrimination therein among those who suffer such searches. Upholding the validity of Chapter XIVB, the Court further examined the meaning of 'disclosure' in the light of the particular plea advanced by the said petitioner in that case. The plea of the petitioner was that he having paid the advance tax during the relevant previous year, it cannot be concluded that he had no intention to disclose the income to the department. It is in such a logical contemplation that the Hon'ble Court held that payment of advance tax itself does not establish an intend to disclose the income. The Hon'ble Court was in fact examining the difficult question of finding out the intention of the petitioner in that case. The petitioner was searched. He was taking shelter under the defence that he had paid advance tax. It was in that circumstance the Hon'ble Court held that the disclosure is to be made by filing the return. That observation of the Hon'ble Court cannot be disassociated from the intimate factual matrix of that case. The observation of the Hon'ble Court that the disclosure is to be made by filing the return is not a ratio laid down by the Hon'ble Court, but a supporting observation made by the Court in examining the real intention of the petitioner. Therefore, we do not think that the Hon'ble High Court of Madras has interpreted the expression "undisclosed income" in the said case by exposing the meaning of "disclosed for the purposes of this Act."
39. Therefore, we are afraid that the decision of the Hon'ble High Court of Madras in B. Noorsingh 's case (supra) relied on by the learned Commissioner may not be applicable to the facts of the present case. In the present case we are examining the intention of the assessee as such. We are examining the effect of the actions of the assessee. Even though induced by a requirement made under Section 131 of the Income-tax Act, the fact is that the assessee had disclosed all the material facts in respect of her business, sources of investments, various sources of income, etc. to the Income-tax Department as early as on 15-5-1995, very well before the initiation of search and block assessment proceedings. We cannot say that the disclosure made by the assessee for the purpose of complying with the requirements under Section 131 if not a disclosure" made for the purposes of this Act. Therefore, we are inclined to hold that the furnishing of particulars, details and information by the assessee through her letter dated 15-5-1995 to the Asstt. Director of Income-tax, Investigation-II, Madurai in compliance of the requisition made under Section 131 of the Income-tax Act amounts to disclosure made by her for the purposes of this Act.
40. Having found that the assessee had disclosed the particulars, details and information regarding her business activities, investments, sources thereof and other sources of income, we find that this legal ground raised by the assessee is to be accepted.
Therefore, this additional ground raised by the assessee, which is legal in nature, is allowed, and we are bound to examine to what extent the assessee has disclosed the relevant particulars before the Asstt. Director of Income-tax, Inv. II, Madurai through her letter dated 15-5-1995. The additions made by the Assessing Officer, which are otherwise covered by the said letter dated 15-5-1995 will have to be, therefore, excluded from the computation of undisclosed income in the present case. Those items which are not reflected in her letter dated 15-5-1995 alone can be considered for imputing a case of undisclosed income in the hands of the assessee.
41. The assessee has furnished the details of her investments in lands and in various business concerns, totalling to Rs. 43,30,825. The particulars related to investments in land, M/s. Bharani Yolkam Internationals, Bharani Real Estate, Sri Bala & Co., MBS Granites and Sri Krishna Silks, etc. The assessee has also furnished the details of the sources of funds necessary for making the above investments to the extent of Rs. 45,07,425. The sources included income from M/s. Bharani Yolkam Internationals by way of commission, jewel loans, agricultural income, loan from Mrs. Dharmambal, income from sale of thorn trees, guest house income from Kodaikanal property belonging to Sri Bala & Co., share in the agricultural income of 10 acres of land owned by MBS Granites, loans from business associates collected through assessee's husband, receipt on account of sale of land in the account of Bharani Real Estate, etc. etc. She has furnished the details of lands situated at various places in Trichy, Tanjore, Karur, Velayudhampalayam, etc. The assessee has furnished the details of the partners of the firm in which the assessee is also a partner. She has filed the details of commission receipts and income estimated therefrom. The assessee has furnished the names and addresses of all loan creditors. She has provided the details of jewellery loan availed by her during the relevant period.
42. The various items of undisclosed income worked out by the Assessing Officer obviously related to the various investments and sources thereof as explained by the assessee, stated in the above paragraphs, through her letter dated 15-5-1995. Therefore, it is crystal clear that the assessee has disclosed to the department her commission income from M/s. Bharani Yolkam International. The additional income worked out by the Assessing Officer from M/s. Bharani Yolkam International is purely on an estimate basis, which has no sanctity in a block assessment. The search operation did not yield the seizure of any incriminating materials, which justified an additional estimate of income from Bharani Yolkam International. Therefore, on that ground also the undisclosed income worked out by the Assessing Officer from M/s. Bharani Yolkam International is not sustainable in law.
43. The assessee has furnished the details of agricultural income received by her during the block period. The Assessing Officer did not accept the entire agricultural income disclosed by the assessee as such. He disallowed a portion of such agricultural income and treated the same as non-agricultural in nature, thereby making additions to the undisclosed income. Here also what we find is that the assessee has disclosed those particulars of agricultural income to the Income-tax department through her letter dated 15-5-1995. The disallowance made by the Assessing Officer out of the said agricultural income already disclosed by the assessee has not been made on the basis of any evidence fished out in the course of search. It was made only on an estimate basis. The working out of undisclosed income against agricultural income is not sustainable for this reason also.
44. The Assessing Officer is not justified in treating the various loan amounts as undisclosed income, as the assessee has already furnished the details of those loans to the Income-tax Department through her letter dated 15-5-1995. This is the position with jewellery loan also. For the very same reason of prior disclosure, the Assessing Officer is not justified in treating the income from thorn trees as the undisclosed income of the assessee. The loan received from Sri Palaniswamy at Rs. 2 lakhs was also informed by the assessee through her letter dated 15-5-1995. Therefore, the said amount also cannot be treated as assessee's undisclosed income. The assessee has also disclosed the income from guest house at Kodaikanal, commission from Chenkumar Weavers Co-op. Production and Sales Society Ltd., sale of agricultural land, etc. to the Department through the said letter.
45. On a detailed examination of the particulars furnished by the assessee through her letter dated' 15-5-1995 and the items of undisclosed income considered by the Assessing Officer in the impugned block assessment, what we find is that almost all the items considered by the Assessing Officer have been already covered by the letter dated 15-5-1995. Therefore, they come out of the purview of undisclosed income.
46. Following are the only items which do not find a place in assessee's letter dated 15-5-1995:
1. Opening capital of Rs. 60,000.
2. Cash found at the time of search Rs. 32,150
3. Gifts from relatives Rs. 1,20,700
4. Interest added under Section 64 Rs. 30,375
5. Compensation received from Dr. Suriya Sekhar Rs. 9,50,000.
47. Let us examine whether the above listed items could be considered as undisclosed income or not.
48. The opening capital of Rs. 60,000 claimed by the assessee in her cash flow statements filed before the Assessing Officer has been disbelieved by the Assessing Officer and treated as undisclosed income. The assessee coming from such an affluent family and having her own properties and businesses at different places and different sources of income including agricultural income, it is riot at all exaggerating to claim a reasonable amount of Rs. 60,000 as her opening capital in 1986. The assessee has offered a plausible explanation and the amount of opening capital claimed by the assessee at Rs. 60,000 is quite reasonable. Therefore, we do not find any justification to treat the sum of Rs. 60,000 in the form of opening capital as the undisclosed income of the assessee. It is deleted.
49. The next addition is that of Rs. 30,000 relating to the cash found at the time of search. The amount fund and attributed to the assessee at the time of search was Rs. 32,152. Out of the above amount, the Assessing Officer treated Rs. 30,000 as assessee's undisclosed income. For the very reasons considered for the opening capital of Rs. 60,000, we find that the addition of Rs. 30,000 is not justified. It is deleted.
50. The next addition is that of gift of Rs. 1,20,700 stated by the assessee as received from relatives on various occasions. We are not much convinced by the explanations offered by the assessee in this regard.
The assessee has inserted the amount of gifts year by year in order to facilitate easy cash position as per the cash flow statements furnished before the Assessing Officer. Therefore, we find that the Assessing Officer is justified in treating the total sum of gifts amounting to Rs. 1,20,700 as the undisclosed income of the assessee. This issue is therefore decided against the assessee.
51. The next is addition of interest of Rs. 30,375 clubbed by the Assessing Officer under Section 64 of the Income-tax Act, 1961. The interest is accrued in the account of "assessee's minor son. Therefore, the Assessing Officer has resorted only to the statutory provisions in this regard. Therefore, this amount of Rs. 30,375 has rightly been treated by the Assessing Officer as undisclosed income. It is therefore confirmed. This issue is also decided against the assessee.
52. Ultimately, the only amount remains to be considered is the sum of Rs. 9,50,000 received by the assessee from Dr. Suriya Sekhar by way of compensation for cancellation of an agreement dated 9-2-1992, as per which the assessee had agreed to purchase a property-at Plot No. 4530, Y-201, 5th Avenue, Anna Nagar, Madras-40. The assessee has been residing in the said property paying rent for so many years. In the course of time she entered into an agreement with Dr. Suriya Sekhar, the owner of the property, that she would buy the property. But the agreement could not be carried out to its logical conclusion. The contract could not be performed. Therefore, the assessee approached the Civil Court for relief of specific performance. While the suit was so pending before the competent Civil Court, the parties reached into an out of Court settlement. As per the details produced before us, this out of Court settlement has been endorsed by the Civil Court and a consequential decree was pronounced. The assessee received a sum of Rs. 9,50,000 as compensation from Dr. Suriya Sekhar for relieving the property and also for the breach of contract committed by Dr. Suriya Sekhar. The Assessing Officer treated the amount was the undisclosed income of the assessee even without accepting the contention of the assessee that she had already spent Rs. 4 lakhs for the renovation of the building.
53. It is a fact that the assessee received the sum of Rs. 9,50,000 by way of damages as a result of the out of court settlement arrived at between the parties. The assessee surrendered her right to fight for specific performance in the Court. It is for surrendering that right and relinquishing the possession of the property that the assessee received the damages of Rs. 9,50,000. The right relinquished by the assessee through the out of Court settlement was not a transferable right at all. It was the assessee who entered into an agreement with Dr. Suriya Sekhar for the purchase of the house property. The assessee alone had the right to file a suit in the Civil Court for specific performance. Nobody else had such a right. The right, if at all the assessee had to enforce against Dr. Suriya Sekhar was her personal right, which could not be transferred to any other person. Therefore, on receiving Rs. 9,50,000 by way of damages from Dr. Suriya Sekhar, it is not possible to presume that the assessee received the said amount against the transfer of a property or a right in the property. Even the right the assessee enjoyed to file a suit for specific performance before a Civil Court was contingent in nature. Filing of the suit alone does not guarantee that the assessee would succeed in the case. The decree of the Civil Court may be sometimes favourable or sometimes unfavourable to the assessee. At the time of the out of Court settlement of the issue, the fate and outcome of the suit was quite unknown. It is therefore to be held that even that right enjoyed by the assessee was contingent. It was not an absolute right which could be transferred by the assessee in favour of a third party. The assessee had no tenancy right over the property. Therefore, there is no basis to presume that the assessee had received the sum of Rs. 9,50,000 as a consideration for transfer of any property or right in property or relinquishing any sort of right in property. Therefore, the amount received by the assessee cannot be considered as a receipt liable for capital gains tax. The receipt was actually in the nature of damages, which is capital in nature. The Hon'ble Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. 's case (supra) has held that a receipt by way of damages or compensation is not revenue in nature. Accordingly, the said amount of damages of Rs. 9,50,000 received by the assessee is not revenue receipt liable to be treated as income, nor is it a receipt in the nature of capital gains. It is a non-taxable capital receipt. Therefore, the said addition of Rs. 9,50,000 is also deleted.
54. Moreover, the assessee received the compensation only during the previous year relevant to the assessment year 1996-97. The search was on 19-1-1996. The time for filing the return of income for the assessment year 1996-97 was not expired at the time of search. The assessee had time to file the return till 31-3-1996; whereas the search was on 19-1-1996. The fact that the assessee was residing in the said property and there was a suit pending before the Civil Court in respect of the agreement of sale of that property were already brought to the notice of the Department through the letter filed by the assessee to the A.D.I., Madurai. When this matter is already informed to the department and the time for filing of the return has not been expired, there is no basis to presume that the assessee would not have disclosed the receipt of damages of Rs. 9,50,000 to the department. On this ground also, the receipt of Rs. 9,50,000 does not fit into the definition of undisclosed income provided in Section 158B(i>).
55. We have considered all the aspects of the case, both on law and on facts. The assessee having furnished all the information particulars and details regarding her investments, sources thereof and nature of other incomes enjoyed by her to the Income-tax Department as early as on 15-5-1995 through her reply to the Asstt. Director of Income-tax, Investigation-II, Madurai, in compliance of his notice under Section 131, we have to hold that the Assessing Officer is not justified in computing undisclosed income on the basis of the very same information, particulars and materials. The income computed by the Assessing Officer on the basis of those materials cannot be considered as undisclosed income. Disclosure means, revealation or act of revealing; to make known or divulge. In the present case, by sending a detailed reply to the Asstt. Director of Income-tax (Investigation), the assessee has already revealed, rather disclosed or divulged the particulars and details regarding her investments and sources. Therefore, those items of income treated by the Assessing Officer as undisclosed income will not come under the purview of undisclosed income, as defined in Section 158B(b) of the Income-tax Act, 1961. Regarding the other five items considered in the paragraphs above, we found that all those items cannot be treated as undisclosed income. Only the two items, namely the gift of Rs. 1,20,700 and interest of Rs. 30,375 could be treated as undisclosed income. The remaining three items of opening capital, cash found at the time of search and receipt of damages of Rs. 9,50,000 are deleted from the computation of undisclosed income. The Assessing Officer is directed to recompute the undisclosed income in the following manner:
(1) Undisclosed income returned by the assessee as per Form 2B. Rs. 2,31,098 (2) Amount of gifts not accepted. Rs. 1,20,700 (3) Clubbing of interest under Section 64. Rs. 30,375
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Revised undisclosed income. Rs. 3,82,173
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56. In the result, the appeal filed by the assessee is partly allowed. Order accordingly.