COMMISSIONER OF INCOME TAX Vs. ANNAPOORNAMMA CHANDRASHEKAR

JUDGEMENT

(1.) As common questions arise for consideration in ail these four appeals, preferred by the Revenue against the order of the Tribunal, they are taken up together, disposed of by this common order. The premises of Trishul Enterprises and one Sri T.S. Chandrashekar were searched on 12th Feb., 1996 under s. 132 of the IT Act, 1961 (hereinafter referred to as 'the Act' for short). In the course of search documents implicating the assessees herein were seized. On that basis proceedings were initiated under s. 158BD of the Act. However, the notice served on the assessees was under s. 158BC. After service of notice the assessees produced the documents which were in their possession and contended that there is no undisclosed income. However, the assessing authority proceeded to frame the assessment order in respect of all the four assessees for the block period from 1985-86, 1994-95 and 1st April, 1995 to 12th Feb., 1996 setting out the undisclosed income for the aforesaid years and issued a demand for payment of tax at 60 per cent of the undisclosed income under s. 113 of the Act. Aggrieved by the said order the assessees preferred appeals before the Tribunal. The Tribunal on reappreciation of the entire evidence on record held that the notice issued under s. 158BC is void ab initio and consequently the assessment orders passed in a proceeding which commenced by issue of such notice is also illegal and therefore set aside the order of the assessing authority on the ground that there is no undisclosed income during the block period. Aggrieved by the said order of the Tribunal the Revenue has preferred these appeals.

(2.) The learned senior counsel appearing for the Revenue assailing the impugned order contended that though the proceedings initiated is under s. 158BD the said provision as such did not contemplate a notice to be issued to the assessee. The said provision expressly provides that the procedure prescribed under s. 158 is to be followed. Therefore, the provisions of Chapter XIV-B apply and therefore this s. 158BC which is applicable, which deals with computation of undisclosed income, the notice issued under s. 158BC is the notice which had to be issued. Therefore the order passed by the Tribunal holding that the notice is void and the order passed in pursuance of such notice is also void, is illegal and requires to be set aside. On merits he contended that a sum of Rs. 61,25,385 opening balance shown in the statement of accounts furnished by the assessees was not established by acceptable evidence and therefore by virtue of s. 69 it is deemed to be an undisclosed income and the Tribunal committed a serious error in setting aside the said finding. In the case of land sold to the bank officers co-operative society is concerned, in the case of Smt. Annapoornamma it is admitted that there is an agreement of sale, the rate at which the land is agreed to be sold is mentioned and calculating that 58 per cent of the total land is what is agreed to be sold at the rate of Rs. 37 per square feet, the assessee has not shown the income from the aforesaid transaction. Therefore the assessing authority has arrived at a sum of Rs. 2,08,96,259 as the income which was not disclosed and therefore he was justified in levying the tax on the said amount. In so far as sale of property to bank officers co-operative housing society is concerned the said income was not reflected in the returns filed prior to the date of search and no documents were produced to substantiate their claim, Therefore, in the absence of any such material the assessing authority was justified in holding that the said amount also represents undisclosed income. In so far as income derived from M/s Sripriya Developers is concerned, the same is also not disclosed and therefore the assessing authority brought it to tax. In respect of the diary seized and on that basis assessment is made, it constitutes a document disclosing the undisclosed income from the seized material and the Tribunal was not justified in interfering with the said finding. Therefore he contends that both on merits as well as on question of law, the Tribunal was not justified in setting aside the order passed by the assessing authority.

(3.) Per contra, the learned counsel appearing for the assessee supported the impugned order.