Allahabad High Court
The Commissioner Of Income Tax-I ... vs P.N.Sharma on 2 August, 2010
Bench: Devi Prasad Singh, Anil Kumar
1 Court No. - 27 Case :- INCOME TAX APPEAL No. - 219 of 2006 Petitioner :- The Commissioner Of Income Tax-I Aayakar Bhawan Lucknow Respondent :- P.N.Sharma Petitioner Counsel :- D.D.Chopra Respondent Counsel :- Ratnesh Chandra Hon'ble Devi Prasad Singh,J.
Hon'ble Anil Kumar,J.
1. Case called out. Heard Sri D.D. Chopra, learned counsel for the appellant. None appeared for the respondent.
2. Present appeal was admitted at the following substantial question of law:-
"Whether the learned Income Tax Appellate Tribunal was justified in opining that where an evidence was submitted with the department before the date fo search, it cannot be considered for computation of undisclosed income u/s 158BB (1) when the word 'evidence' as appearing in Section 158 BB(1) does not exclude the evidence filed with the department before the date of search and also when the 'evidence' cannot be interpreted to mean only incriminating evidence."
3. Assessee who was working as General Manager with Kuber Group of Companies, faced the search and seizure operation at his residence as well as office premises on 8th May 1997. Pursuant thereto notice under Section 158 BC of the Act was issued and in compliance thereto Assessee filed return for the block period from 1st April, 1987 to 8th May, 1997. The assessment was completed under Section 158 BC of the Act. Being aggrieved Assessee filed an appeal before the Appellate Authority.
4. The CIT appeal, inter-alia, confirmed some of the additions made by Assessing Officer and with regard to other set aside.
The CIT appeal while considering the order passed by AO 2 under Section 158BC/251 of the Act on 24th March, 2003 has confirmed some of the additions and allowed the some deletion, hence both approached the Tribunal.
5. The Tribunal recorded finding that the assessee was working as General Manager with Kuber Group of Companies which is engaged in business of financing. It has further observed that the photocopy of the IVP could not be encashed and the maturity value could be encashed only on the basis of original IVP certificate.
6. Appellant's counsel submit that there is no dispute for adjudication of IVP issue. However dispute relates to the regular return of the income. The Tribunal observed that Assessing Officer cannot go into genuineness of amount disclosed through regular assessment while resorting to block assessment. The assessee has disclosed the facts of the loan to the tune of Rs. 60,000/- in regular return filed much before the date of search. Accordingly, the Tribunal held that action of the Assessing Officer to treat the same as undisclosed income of the assessee prior to search and seizure was not lawful. Whatever has been found by the revenue during block assessment should be dealt separately instead of merging the income disclosed through regular return to the block assessment.
7. Section 158 BC of the Act at the face of record shows that where any search has been conducted under Section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person, then in respect of search initiated or books of account or other documents or any assets requisitioned shall be looked into and for that purpose a notice shall be served on the person requiring him to furnish reply within a period of 15 days.
Thus section 158 BC, the procedure for block assessment co- relate with the period of block assessment in lieu of search and seizure.
8. Section 158 BB of the Act deals with undisclosed income of block period which provides that it shall be aggregated of the total income of the previous years falling within the block period 3 computed, in accordance with the Act on the basis of evidence found as a result of search and seizure or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer relating to such evidence.
Thus, a plain reading of Section 158BB co-relate with the undisclosed income of the block period. It does not cover the income disclosed by the assessee while filing the regular return.
9. Accordingly, the finding recorded by the Tribunal that while proceeding with the block assessment, the Assessing Officer cannot travel beyond the block period i.e. the income disclosed while filling a regular return seems to be correct and proper appreciation of law.
In view of above, the question is answered against the revenue and Tribunal's order is confirmed.
Order Date :- 2.8.2010 Ravi/