COMMISSIONER OF INCOME TAX Vs. DEEP ARTS

JUDGEMENT

(1.) Whether Assessing Officer has got jurisdiction to make an assessment under S.158BC read with S.158BD of the Income Tax Act in the absence of search conducted under S.132 of the Act in the premises of the assessee, is the question posed before us. The Tribunal took the view that since no search has been conducted under S.132 of the Income Tax Act in the premises of the assessee in respect of his business it would be illegal to make an assessment under S.158BC read with S.158BD as has been done by the Assessing Officer.

(2.) Assessee, a partnership firm engaged in the business of manufacture and sale of note books, greeting cards, X'mas cards etc. has been assessed to tax from the assessment year 1986-87 onwards. M/s. Don Bosco Industries, Kollam, is the sister concern. Business premises of Don Bosco Industries was searched as per the provisions of S.132 of the Act. Certain books of account and document relating to the assessee were seized from the said business premises, scrutiny of which gave an impression that sales had been grossly understated in the books of accounts. Assessing Officer made cross verification with statements of outstanding amounts etc. available in the agent's file which were seized which gave the impression that there was suppression of sales. Partners of the firm were the spouses of the partners of M/s. Don Bosco Industries. Assessing Officer later completed the assessment by determining the total undisclosed income from the block period at Rs.2,71,270/-.

(3.) Assessee took up the stand that the accounts of the assessee seized from the premises of M/s. Don Bosco Industries cannot constitute a good ground to make an assessment under S.158BC read with S.158BD for the block period in question. Assessee further stated that addition of Rs.76,000/- as bogus credits was not made on the basis of evidence found in the course of search and that even the sum of Rs.19,527/-is in the account book of M/s. Don Bosco Industries and this was pointed out to the assessing officer. Further it is also stated that since there was no search under S.132 of the Act the assessing officer had no jurisdiction to make an assessment under S.158BC read with S.158BD and hence the assessment be cancelled.