CIT-AMRITSAR V. M/S CHABAL KALAN COOP L&C SOCIEITY LTD. AMRITSAR

ITA/168/2009

AI Insights

The case involves an appeal by the Revenue against the decision of the Income Tax Appellate Tribunal, Amritsar, which had favored the assessee, M/s Chabal Kalan Co-op. L & C Society Ltd. The core issue was whether the income disclosed during regular assessment proceedings could be re-evaluated or considered as undisclosed income in the subsequent block assessment under Chapter XIV-B of the Income-tax Act, 1961, following a search operation. The Tribunal had found that the materials and income disclosed during the regular assessments precluded any additional findings of undisclosed income in the block assessment. The High Court of Punjab and Haryana dismissed the Revenue's appeal, agreeing with the Tribunal's findings.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 720702 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 22-07-2009
• Assessment Year: misc
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: NAVEENDER SINGH
• Keywords: Block assessment; Incriminating documents; Regular assessment; Search and seizure; Undisclosed income
• Section: 147; 144; 143(3); 132; 158BC; 260A; 158BA

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income Tax Appeal No. 168 of 2009 (O&M) Date of decision: 22.7.2009 CIT-1, Amritsar. ......Appellant Vs. M/s Chabal Kalan Co-op. L & C Society Ltd, Goal Bagh, Amritsar. ...Respondent CORAM:- HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MRS.JUSTICE DAYA CHAUDHARY PRESENT: Ms.Naveender P.K.Singh, Senior Standing Counsel, for appellant. **** ADARSH KUMAR GOEL, J. (Oral) 1. The Revenue has preferred this appeal under Section 260A of the Income-tax Act, 1961 (for short, “the Act”), against the order of the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar dated 19.9.2008 passed in I.T.(SS)A No. 10 (ASR)/ 2000 for the block period 1.4.1987 to 9.10.1997 served on the appellant on 23.9.2008, proposing to raise the following substantial question of law: 1. “Whether or not the Hon'ble ITAT was correct in holding that the assessment completed under Section 143(3) /144/147 cannot be reopened in the proceedings under Chapter XIV-B in spite of the facts that large number of incriminating documents were brought on record as a result of search and also admitted by the appellant.” 2. “Whether or not the Hon'ble ITAT was right in ignoring and not appreciating the evidence which was available in the shape of incriminating documents/books of accounts such as mentioned at Income Tax Appeal No. 168 of 2009 [2] page No.3 of the assessment order passed by the A.O. under Section 143(3)/158 BC.” 2. The assessee was in the business of crushing of boulder stones and also running Hot Mix Plants, apart from business of transport and running of petrol pumps. Search was conducted under Section 132 of the Act and loose papers were found at various premises of the assessee. Notice under Section 158BC was issued and block assessment was made by the Assessing Officer on the basis of estimated net profit, which was upheld by the CIT(A). The Tribunal accepted the appeal of the assessee and held that when regular assessment was pending and the material found in search had already been reflected/disclosed by the assessee in regular assessment proceedings block assessment was not permissible. Regular assessment was made after considering all the points. Relevant observations of the Tribunal are as under: “ In our opinion, the Assessing Officer is not entitled to question the deductions or exemptions claimed in the regular block assessment since it is a subject matter of regular assessment. As discussed earlier, the assessee has already filed return of income for the various years covered in the block period and assessment completed under Section 143(3) and the assessee having been imparted information relating to the regular income in a normal way, it would not be proper to the Department to consider the turnover disclosed in the regular return for the purpose of making block assessment under Chapter XIV -B of the Act. Hence, the assessment completed Income Tax Appeal No. 168 of 2009 [3] under Section 143 or 144 or 147 cannot be reopened in the assessment proceedings under Chapter XIV-B. Consequently, those elements of income which already stand disclosed in the relevant assessment year falling within block period cannot be included while computing undisclosed income under this Act. Block assessment is in addition to regular assessment proceedings for the previous year included in the block period. Hence, the undisclosed income in the block assessment cannot be made unless there was evidence found during the course of search to make such addition. If the turnover had been duly reflected and disclosed in the course of regular assessment proceedings by the assessee, the same cannot be said to be undisclosed income of the assessee and the same cannot be assessed under Chapter XIV-B of the Act.” xx xx xx xx xx xx xx xx “In view of the matter, we are of the opinion that the income disclosed on account of payment of advance tax/TDS cannot be treated as undisclosed income for the purpose of Block assessment and the AO is required to verify whether the assessee's income for the A.Y.1997-98 & 1998-99 is subject to advance tax/TDS, the same is to be excluded for the purpose of determination of undisclosed income. On the other Income Tax Appeal No. 168 of 2009 [4] hand, if only part of the income out of contract receipts is subject to advance tax/TDS, the proportionate exemption is to be given to this, if the contract receipts are not recorded in the regular books of accounts maintained by the assessee. For this limited purpose of verification, the issue relating to assessment4 years 1997-98 & 1998-99 is set aside to the file of AO to decide the same afresh .” 3. We have heard learned counsel for the Revenue. 4. Findings of the Tribunal clearly are that the material found in search was taken into account during regular assessment and there was no undisclosed income, which may be subjected to block assessment under section 158BA. 5. What is challenged by learned counsel for the Revenue is the finding that there was no disclosed income. That being a question of fact, in absence of finding of the Tribunal being perverse, cannot be re-examined by this Court. The questions of law proposed cannot be held to be substantial question of law. 6. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE (DAYA CHAUDHARY) July 22, 2009 JUDGE raghav Note: Whether this case is to be referred to the Reporter ........Yes/No Income Tax Appeal No. 168 of 2009 [5] Income Tax Appeal No. 168 of 2009 [6] "