The ACIT, Central Circle-2, Baroda V. M/s. Shree Sadguru Foods, Bharuch

ITA 2075/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6326 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 16-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K PATEL
• Keywords: Income from undisclosed sources; Opportunity of being heard; Block assessment; Revised return
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.2075/AHD/2010 A. Y.: 2007-08 THE A. C. I. T., CENT. CIRCLE-3, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA VS M/S. SHREE SADGURU FOODS, 147/17,GIDC, PHASE II, BHARUCH, PA NO. AAWFS 5976 P (APPELLANT) (RESPONDENT) APPELLANT BY SHRI A. K. PATEL, DR RESPONDENT BY SHRI MUKUND BAKSHI, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV , AHMEDABAD DATED 19-03-2010, FOR ASSESSMENT YEAR 2007-08, ON T HE FOLLOWING GROUNDS: 1. THE CIT(A) HAS ERRED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN DIRECTING TO REDUCE TH E UNDISCLOSED INCOME OF RS.21,00,000/- FROM THE ASSESSED INCOME OF RS.17,25,820/- FOR AY 2007-08 RESULTING ASSESSED INCOME FOR THE AY 2007-08 WOULD BE A LOSS OF RS.3,74,180/- AS AGAINST RETURNE D INCOME OF RS.17,25,820/-. 2. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT OF RETURNED INCOME BY THE ASSESSING OFFICER CONSIDERING THE JUDGMENT OF HONBLE SUPREME COURT DATED 02.03.2006 IN THE CASE OF ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 2 GOETZ (I) LTD. VS. CIT REPORTED IN 284 ITR 323 (SC). 2. THE FACTS OF THE CASE ARE THAT RETURN OF INCOME WAS FILED ON 29-10-2007 DECLARING TOTAL INCOME OF RS.17,25,820/- . THE AO AFTER GIVING OPPORTUNITY OF BEING HEARD AND CONSIDERING T HE MATERIAL FOUND DURING THE COURSE OF SURVEY/SEARCH ACCEPTED THE RET URNED INCOME FILED U/S 139(1) OF THE IT ACT AND ASSESSED THE INC OME AT RS.17,25,820/- I.E. INCOME DECLARED IN THE RETURN F ILED IN RESPONSE TO NOTICE U/S 139(1) OF THE IT ACT. 2.1 THE ASSESSEE CHALLENGED THE ORDER OF THE AO BEF ORE THE LEARNED CIT(A). THE LEARNED CIT(A) WRONGLY NOTED IN THE IMPUGNED ORDER THAT THE AO MADE CERTAIN ADDITIONS TO THE RET URNED INCOME. AGGRIEVED BY THESE ADDITIONS, THE ASSESSEE PREFERRE D APPEAL BEFORE HIM. THEREAFTER, THE LEARNED CIT(A) CONSIDERED THE WRITTEN SUBMISSION OF THE ASSESSEE IN WHICH THE ASSESSEE BR IEFLY EXPLAINED THAT THE AMOUNT OF UNDISCLOSED INCOME OF RS.21,00,0 00/- HAS BEEN CONSIDERED TWICE. IT WAS EXPLAINED THAT THE AO PASS ED THE ORDER WITHOUT CONSIDERING THE SUBMISSION OF THE ASSESSEE. THE WRITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE APP ELLATE ORDER IN WHICH IT WAS EXPLAINED THAT SEARCH ACTION WAS CARRI ED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE FIRM ON 17-01- 2007. SIMULTANEOUSLY, SURVEY WAS CONDUCTED AT THE BUSINES S PREMISES ALSO. IN THE COURSE OF SEARCH PROCEEDINGS, CERTAIN INCRIMINATING DOCUMENTS CONTAINING THE PARTICULARS OF PURCHASES A ND SALES OF PRODUCTS DEALT BY THE ASSESSEE FIRM WERE FOUND AND SEIZED AS PER ANNEXURE A-2 TO A-10. ON VERIFICATION AND PERUSAL O F THESE ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 3 DOCUMENTS, THE MAIN PERSON OF THE GROUP SHRI PANKAJ HARIYANI ON CONFIRMATION WITH THE PARTNERS OF THE ASSESSEE FIRM CONFIRMED THAT SUCH NOTES AND DOCUMENTS WERE BELONGING TO THE ASSE SSEE FIRM WHICH WAS IN RELATION TO THE TRANSACTIONS OF ACCOUN TED AS WELL AS UNACCOUNTED SALES AND PURCHASES. HE HAS ADMITTED UN DISCLOSED INCOME OF THE ASSESSEE ON THE BASIS OF THESE DOCUME NTS/RECORDS AND WORKED OUT THE SAME TO RS.20,00,000/-. HE HAS ADMIT TED UNDISCLOSED INCOME OF THE ENTIRE GROUP AT RS.2,53,00,000/- DETA ILS OF WHICH IS NOTED IN THE IMPUGNED ORDER WHICH INCLUDES RS.25,00 ,000/- UNDISCLOSED INCOME IN THE CASE OF THE ASSESSEE FIRM AND OFFERED TO PAY TAX THEREON. CONSEQUENT TO THE SAME, THE ASSESS EE PREPARED THE PROFIT & LOSS ACCOUNT OF THE YEAR UNDER CONSIDERATI ON AND AFTER CONSIDERING THE INCOME CALCULATED ON THE BASIS OF T HE SEIZED MATERIAL, WHICH AMOUNTED TO RS.21,00,000/-, THE ASSESSEE FIRM INCLUDED AN AMOUNT OF RS.25,00,000/- IN THE PROFIT & LOSS ACCOU NT BEING INCOME DECLARED IN THE SURVEY PROCEEDINGS. THE ASSESSEE AL SO REALIZED THAT INCOME AS NOTED IN THE SEIZED MATERIAL PERTAINED TO ASSESSMENT YEARS 2005-06 AND 2006-07 AND THE AMOUNT OF INCOME UNDISCLOSED OF RS.1,34,000/- AND RS.19,35,000/- RESPECTIVELY. HOWE VER, TO RECOVER ANY FURTHER LEAKAGE OR QUANTIFICATION, THE AMOUNT W AS ROUNDED OFF TO RS.25,00,000/- AND SINCE THE PROFIT & LOSS ACCOUNT OF THE EARLIER YEARS WAS ALREADY PREPARED AND FILED WITH THE INCOME TAX DEPARTMENT, THE ASSESSEE INCLUDED SUCH AMOUNT IN THE PROFIT & LOSS ACCOUNT IN THE YEAR UNDER CONSIDERATION. ON INCLUSION OF SUCH AMOU NT IN THE PROFIT & LOSS ACCOUNT, INCOME DETERMINED IN THE YEAR UNDER C ONSIDERATION WAS FOUND TO BE RS.17,25,820/- WHICH WAS DECLARED IN T HE RETURN FILED U/S 139(1) OF THE IT ACT ON 29-10-2007 ALONG WITH COMPU TATION OF INCOME. ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 4 2.2 IN RESPONSE TO NOTICE U/S 153A OF THE IT ACT, T HE ASSESSEE FILED RETURN OF INCOME ON 27-12-2007 FOR THE PRECEDING AS SESSMENT YEARS 2005-06 AND 2006-07 AND IN THE RETURN FILED, THE AS SESSEE FIRM DETERMINED THE INCOME BASED ON THE SEIZED MATERIAL AND BY SEGREGATING THE SEIZED MATERIAL IN ABOVE TWO YEARS THE ASSESSEE CLAIMED THE UNDISCLOSED INCOME OF RS.1,34,000/- PER TAINING TO ASSESSMENT YEAR 2005-06 AND UNDISCLOSED INCOME OF R S.19,38,000/- PERTAINING TO ASSESSMENT YEAR 2006-07. IT WAS, THER EFORE, EXPLAINED THAT ON FILING THESE RETURNS IT WAS REALIZED THAT R S.21,00,000/- HAS BEEN OFFERED FOR TAXATION IN THE PRECEDING ASSESSME NT YEARS. SINCE RETURN FOR ASSESSMENT YEAR 2007-08 WAS ALREADY FILE D, THEREFORE, NOTE WAS APPENDED TO THE RETURNS FILED FOR ASSESSMENT YE AR 2005-06 THAT IN VIEW OF THE ABOVE EXPLANATION ONLY THE UNDISCLOS ED INCOME FOR ASSESSMENT YEAR 2007-08 WOULD BE RS.4,00,000/-. DIS TRIBUTION WAS ALSO GIVEN OF TOTAL UNDISCLOSED INCOME OF RS.25,00, 000/- AS UNDER: ASSESSMENT YEAR AMOUNT 2005-06 RS. 1,50,000/- 2006-07 RS.19,50,000/- 2007-08 RS. 4,00,000/- TOTAL RS.25,00,000/- IT WAS EXPLAINED THAT WHILE FILING RETURN FOR ASSES SMENT YEAR 2007-08, THE ASSESSEE FIRM HAS INADVERTENTLY OFFERED UNDISCL OSED INCOME OF RS.25,00,000/- INSTEAD OF RS.4,00,000/- AS STATED A BOVE. IT WAS, THEREFORE, REQUESTED TO CONSIDER AS LOSS RETURN FOR ASSESSMENT YEAR 2007-08 INSTEAD OF POSITIVE INCOME. IT WAS FURTHER SUBMITTED THAT ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 5 THERE IS NO OTHER MATERIAL ON RECORD TO REJECT THE CONTENTION OF THE ASSESSEE AND THAT TAX CAN BE CHARGED ONLY ON REAL I NCOME AND ONCE INCOME IS ALREADY OFFERED IN THE PRECEDING ASSESSME NT YEARS, THE AO SHOULD HAVE ASSESSED THE INCOME AT LOWER AMOUNT THA N THE RETURNED INCOME. IT WAS, THEREFORE, PRAYED BEFORE THE LEARNE D CIT(A) THAT INCOME WHICH IS ALREADY TAXED IN THE PRECEDING ASSE SSMENT YEARS MAY NOT BE TAXED IN THE ASSESSMENT YEAR UNDER APPEA L IN A SUM OF RS.21,00,000/-. 3. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS O F THE ASSESSEE ALLOWED THE CLAIM OF THE ASSESSEE. HIS FIN DINGS IN PARA 2.2 TO 3.0 ARE REPRODUCED AS UNDER: 2.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. COUNSEL AND THE FACTS OF THE CASE. I HAVE G ONE THROUGH THE DECISIONS RELIED UPON BY THE LD. COUNSE L. I HAVE ALSO CONSIDERED THE COMPUTATION OF INCOME FOR THE A. Y. 2005-06 AND A. Y. 2006-07 AND NOTES APPENDED THEREIN AND THE ASSESSMENTS SO FRAMED (COPIES OF TH E SAME WERE FILED BY THE LD. COUNSEL). IT IS EVIDENT FROM THE ASSESSMENT ORDERS OF A. Y. 2005-06 THAT INCOME AS DISCLOSED BY THE APPELLANT HAD BEEN ACCEPTED BY THE ASSESSING OFFICER. 2.3 I HAVE ALSO CONSIDERED THE REVISED COMPUTATION FOR THE A.Y. 2007-08 ALONG WITH THE SUBMISSION SO FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS EVIDENT FROM THE RECO RD THAT THE APPELLANT HAD ADMITTED THE UNACCOUNTED INCOME O F RS.25.00 LACS DURING THE COURSE OF SEARCH AND THE S AME WAS CONSIDERED AS ADDITIONAL INCOME IN THE PROFIT A ND LOSS ACCOUNT AS SHOWN IN THE CREDIT SIDE OF THE PROFIT A ND LOSS ACCOUNT. THE RETURN OF INCOME FOR THE A. Y. 2007-08 WAS FILED ON 29.10.2007 WAS THUS INCLUSIVE OF THE UNDIS CLOSED ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 6 INCOME OF RS.25.00 LAKHS SO ADMITTED DURING THE COU RSE OF SEARCH. HOWEVER, LATER ON IT WAS NOTICED THAT SO ME OF THE DOCUMENTS ON THE BASIS OF WHICH THE UNDISCLOSED INCOME WAS ADMITTED DURING THE COURSE OF SEARCH FOR RS.25.00 LAKHS RELATES TO THE A. Y. 2005-06 AND A. Y. 2006-07. THE DETAILS OF THESE DOCUMENTS HAVE BEEN F ILED BY THE LD. COUNSEL IN HIS SUBMISSION WHICH IS REPRO DUCED FOR READY REFERENCE AS UNDER: FOR THE A.Y. 2005-06 PARTICULARS CREDIT DEBIT ANNEXURE A-3 1,55,745 1,61,695 ANNEXURE A-4,5,8,9 12,98,182 11,57,457 TOTAL 14,53,927 13,19,152 EXCESS OF INCOME OVER EXPENSE 1,34,775 FOR THE A.Y. 2006-07 PARTICULARS CREDIT DEBIT ANNEXURE A-8 AND A- 7 PART 21,35,191 20,45,857 ANNEXURE A-6 28,81,220 27,90,373 ANNEXURE-7 27,33,838 23,74,512 ANNEXURE A-10 34,96,774 20,97,838 TOTAL 1,12,47,023 93,08,580 EXCESS OF INCOME OVER EXPENSE 19,38,443 2.4 THE ASSESSING OFFICER WAS ALSO IN THE KNOWLEDGE THAT THESE DOCUMENTS WERE RELATING TO THE A. Y. 200 5-06. IT IS EVIDENT FROM HER SHOW CAUSE NOTICE DATED 20.0 9.2009 IN WHICH IT WAS MENTIONED THAT DEBITS AND CREDITS O F TRANSACTIONS FOR THE F. Y. 2004-05 WERE JOTTED DOWN IN ANNEXURES A/2 TO A/10. IT IS THUS CLEAR THE ENTRIES RECORDED IN ANNEXURE A-3 AND A-4 WERE RELATING TO T HE A. Y. 2005-06 AND THE ENTRIES RECORDED IN ANNEXURE A-6 ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 7 TO A-10 WERE RELATING THE A. Y. 2006-07. THE APPELL ANT HAD ACCORDINGLY DECLARED THE INCOME OF RS.1,50,000/ - FOR THE A. Y. 2005-06 AND RS. 19,50,000/- FOR THE A.Y. 2006- 07 IN HIS RETURNS FILED ON 27.12.2007. THE UNDISCLO SED INCOME RS.21.00 LAKHS WAS THUS RELATED TO THE A. Y. 2005-06 AND A. Y. 2006-07AND UNDISCLOSED INCOME OF RS.4.00 LAKHS WAS ONLY RELATING TO THE A. Y. 2007-0 8. THE RETURN OF INCOME FOR THE A. Y. 2007-08 WAS FILED ON 29.10.2007 WHEREAS THE RETURNS OF INCOME FOR THE A. Y. 2005-06 AND A. Y. 2006-07 WERE FILED ON 27.12.2007. THE APPELLANT HAD THUS CORRECTED THE MISTAKE WITHIN A P ERIOD OF TWO MONTHS. 2.5 THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD BROUGHT TO THE NOTICE OF THE ASSES SING OFFICER VIDE HIS WRITTEN SUBMISSION, THE BREAK UP O F THE UNDISCLOSED INCOME OF RS.25,00,000/- AS UNDER: ASSTT. YEARS AMOUNT (RS.) 2005-06 1,50,000/- 2006-07 19,50,000/- 2007-08 4,00,000/- 25,00,000/- 2.6 IT IS EVIDENT FROM THE RECORD THAT THE APPELLAN T HAD ALSO BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER VIDE HIS SAME WRITTEN SUBMISSION THAT THE APPELLANT HAD INADVERTENTLY OFFERED UNDISCLOSED INCOME OF RS.25,00,000/- IN THE RETURN FILED FOR TH4E A. Y. 2 007-08 INSTEAD OF RS.4,00,000/- AS STATED ABOVE. THE APPEL LANT HAD DULY OFFERED THE BALANCE AMOUNT OF RS. 21,00,00 0/- IN THE RETURNS OF INCOME FILED FOR THE A. Y. 2005-06 A ND A. Y. 2006-07. THE APPELLANT HAD REQUESTED THE ASSESSING OFFICER IN WRITING TO CONSIDER THE INCOME FOR THE A . Y. 2007-08 AT A LOSS OF RS.3,74,180/- (RS.17,25,820/- DISCLOSED MINUS EXCESS INCOME OFFERED OF RS.21,00,0 00/- ). HOWEVER, THE ASSESSING OFFICER HAD NOT CONSIDERE D THE ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 8 WRITTEN REQUEST OF THE APPELLANT WITHOUT ASSIGNING ANY REASONS. SHE HAD TOTALLY IGNORED THE SUBMISSION OF THE APPELLANT SO FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THIS ACT OF THE ASSESSING OFFICER CANN OT BE SAID TO BE AS PER LAW. SHE WAS AUTHORIZED TO ALLOW OR TO DISALLOW THE CLAIM OF THE APPELLANT ON SPECIFIC REA SONING BUT SHE WAS NOT AUTHORIZED TO IGNORE THE CLAIM OF T HE APPELLANT. SHE WAS WELL CONVERGENT WITH THE FACT TH AT UNDISCLOSED INCOME OF RS.1,50,000/- AND RS.19,50,00 0/- OUT OF THE UNDISCLOSED INCOME OF RS.25,00,000/- ADM ITTED DURING THE COURSE OF SEARCH RELATES TO A. Y. 2005-0 6 AND A. Y. 2006-07 AND ASSESSED BY HER AS SUCH FOR THESE YEARS VIDE HER ORDER U/S 153A R. W. S. 143(3) DATED 24.12.2008, THE ORDER FOR WHICH WAS ALSO PASSED ON 24.12.2008. 2.7 CONSIDERING THE FACTS OF THE CASE, I AM OF THE VIEW THAT UNDISCLOSED INCOME OF RS.4,00,000/- (RS.25,00, 000/- - RS.21,00,000/-) ONLY WAS ASSESSABLE FOR THE A. Y. 2007- 08. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO REDUCE THE UNDISCLOSED INCOME OF RS.21,00,000/- FROM THE ASSESSED INCOME OF A. Y. 2007-08. THE RESULTANT ASSESSED INCOME FOR THE A. Y. 2007-08 WILL THUS BE FOR A LOSS OF RS.3,74,180/- (RS.17,25,820/- - RS. 21,00,0 00/-). THE ASSESSING OFFICER IS DIRECTED TO ASSESS THE INC OME AT A LOSS OF RS.3,74,180/-. THE ONLY GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 3. IN THE RESULT, THE APPEAL IS ALLOWED. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT RETURNED INCOME IS ACCEPTED BY THE AO, THEREFO RE, THERE WAS NO GRIEVANCE REMAINS WITH THE ASSESSEE. THE LEARNED CI T(A) WRONGLY NOTED THAT THE AO MADE CERTAIN ADDITIONS TO RETURNE D INCOME, THEREFORE, THE ASSESSEE AGGRIEVED AGAINST THE ADDIT IONS PREFERRED THE APPEAL. THE LEARNED DR SUBMITTED THAT THE ALLEGED R EPLY OF THE ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 9 ASSESSEE CONSIDERED BY THE LEARNED CIT(A) IS NOT DI SCUSSED IN THE ASSESSMENT ORDER AND THERE IS A DOUBT WHETHER THE S AME WAS EVEN FILED BEFORE THE AO AT THE ASSESSMENT STAGE OR NOT. THE LEARNED DR SUBMITTED THAT NO NOTICE HAS BEEN GIVEN TO THE AO A T THE APPELLATE STAGE BEFORE REDUCING THE RETURNED INCOME. THE LEAR NED DR SUBMITTED THAT THE LEARNED CIT(A) ACCEPTED THE CONT ENTION OF THE ASSESSEE WITHOUT VERIFYING THE FACTS. 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND SUBMITTED THAT THE ASSESSEE DID NOT FILE ANY REVISE D RETURN FOR ASSESSMENT YEAR UNDER APPEAL. HE HAS HOWEVER, SUBMI TTED THAT WRITTEN CLAIM WAS MADE BEFORE THE AO AT THE ASSESSM ENT STAGE EXPLAINING THE ABOVE FACTS. COPY OF THE SAME IS FIL ED AT PB-5 TO PB-10 OF THE PAPER BOOK. HE HAS SUBMITTED THAT THOUGH NO DATE OR STAMP OF REVENUE DEPARTMENT IS APPENDED IN THE REPLY BUT IT IS PART OF THE RECORD. COPIES OF THE ASSESSMENT ORDERS DATED 24-12 -2008 FOR ASSESSMENT YEAR 2005-06 AND 2006-07 ARE ALSO FILED IN THE PAPER BOOK. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE FA CTS NOTED ABOVE ARE NOT IN DISPUTE THAT THE ASSESSEE FIELD RE TURN OF INCOME AT RS.17,25,820/- WHICH WAS ACCEPTED AS IT IS BY THE A O AFTER SCRUTINY VIDE ORDER U/S 143(3) OF THE IT ACT DATED 24-12-200 8. NO ADDITION WAS MADE TO THE RETURNED INCOME, THEREFORE, THE LEARNED CIT(A) WRONGLY NOTED IN THE IMPUGNED ORDER THAT THE AO HAD MADE CE RTAIN ADDITIONS TO THE RETURNED INCOME. THEREFORE, AGGRIEVED AGAINS T THE SAID ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 10 ADDITIONS, THE ASSESSEE PREFERRED THE APPEAL. SINCE NO ADDITION HAS BEEN MADE TO THE RETURNED INCOME, THEREFORE, OBSERV ATION OF THE LEARNED CIT(A) IN THE APPELLATE ORDER ARE FACTUALLY INCORRECT. BEFORE PROCEEDING FURTHER, WE WOULD LIKE TO NOTE THE LEGAL POSITION ON THE MATTER IN ISSUE. THE HONBLE DELHI HIGH COURT ION T HE CASE OF CIT VS BHARAT GENERAL INSURANCE CO. LTD., 81 ITR 303 HELD AS UNDER: (II) THAT THE FACT THAT THE ASSESSEE HAD ITSELF INCLUDED THE INCOME IN THE RETURN FOR THE ASSESSMEN T YEAR 1958-59 WAS OF NO EFFECT: THERE WAS NO ESTOPPELS AN D THE ASSESSEE HAVING ITSELF CHALLENGED THE VALIDITY OF T AXING THE DIVIDEND FOR THAT ASSESSMENT YEAR IT MUST BE TAKEN THAT IT HAD REALIZED FORM THE POSITION WHICH IT HAD WRONGLY TAKEN WHILE FILING THE RETURN. IT IS INCUMBENT ON THE INCOME-TAX DEPARTMENT TO FIN D OUT WHETHER A PARTICULAR INCOME WAS ASSESSABLE IN T HE PARTICULAR YEAR OR NOT. MERELY BECAUSE THE ASSESSEE WRONGLY INCLUDES THE INCOME IN ITS RETURN FOR THE P ARTICULAR YEAR, IT CANNOT CONFER JURISDICTION ON THE DEPARTME NT TO TAX THAT INCOME IN THAT YEAR EVEN THOUGH LEGALLY SUCH I NCOME DID NOT PERTAIN TO THAT YEAR. 6.1 THE ITAT NAGPUR BENCH IN THE CASE DCIT VS SANMU KHDAS WADHWANI, 85 ITD 734 HELD IN PARA 12 AS UNDER: IT IS OBSERVED THAT A SIMILAR ISSUE IN THE CONTEXT OF REGULAR ASSESSMENT AROSE FOR CONSIDERATION BEFORE THE HONB LE DELHI HIGH COURT IN THE CASE OF CIT V. BHARAT GENER AL INSURANCE CO. LTD. [1971] 81 ITR 303 WHEREIN IT WAS HELD BY THEIR LORDSHIPS THAT EVEN IF AN ASSESSEE DECLARE S AN INCOME IN THE RETURN, THE ASSESSING OFFICER CANNOT ASSESS IT MERELY ON THAT BASIS AND HE HAS TO CONSIDER ITS TAXABILITY IN THE LIGHT OF OTHER CIRCUMSTANCES DE HORS THE ADM ISSION MADE IN THE RETURN. IN THE CASE OF NARAYAN V. GOPAL AIR 1960 SC 235, THE HONBLE SUPREME COURT HAS HELD THA T ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 11 AN ADMISSION IN THE RETURN IS NOT CONCLUSIVE AND IT WOULD BE DECISIVE ONLY IF NOT SUBSEQUENTLY WITHDRAWN OR P ROVED TO BE ERRONEOUS. IT IS WELL-ESTABLISHED THAT THE OB JECT OF AN ASSESSMENT IS TO DETERMINE THE CORRECT INCOME AND CONSEQUENTLY THE CORRECT TAX LIABILITY. IN OUR OPIN ION, THIS SETTLED POSITION EQUALLY HOLDS GOOD IN THE MATTER O F BLOCK ASSESSMENT ALSO SINCE THE SCOPE OF UNDISCLOSED INCO ME ASSESSABLE IN THE BLOCK ASSESSMENT IS SPECIFICALLY PROVIDED AND THE PROCEDURE FOR DETERMINATION OF SUC H INCOME IS ALSO CLEARLY LAID DOWN. IN THESE CIRCUMST ANCES, ANY AMOUNT WHICH IS NOT ASSESSABLE AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD CANNOT BE ASSESSED AS S UCH MERELY FOR THE REASON THAT THE SAME WAS DECLARED BY THE ASSESSEE IN THE RETURN FOR BLOCK PERIOD AND THERE C ANNOT BE SUCH ESTOPPELS AGAINST THE STATURE. IT, THEREFOR E, FOLLOWS THAT IF THE ASSESSEE COMMITS A PATENT MISTA KE OF FACT OR LAW WHILE FILING HIS RETURN OF UNDISCLOSED INCOME UNDER SECTION 158BC, HE CANNOT BE ASSESSED ON SUCH INCORRECT INCOME MERELY ON THE BASIS OF ADMISSION M ADE IN THE RETURN. 6.2 THE ITAT PUNE BENCH IN THE CASE OF DCIT VS LAB INDIA INSTRUMENTS PVT. LTD., 277 ITR (AT) 39 HELD AS UNDE R: HELD, DISMISSING THE APPEALS, (I) THAT THE LEGISLA TURE INTENDED TO DISENTITLE THE ASSESSEE TO MAKE ANY CLA IM OF DEDUCTION AFTER EXPIRY OF THE PERIOD SPECIFIED UNDE R SECTION 139(5), IT COULD DO SO BY MAKING A SPECIFIC PROVISION IN THIS REGARD. THEREFORE, IN THE ABSENCE OF SUCH A PROVISION, THE ASSESSEE WAS ENTITLED TO MAKE ANY CLAIM OF DEDUCTION/EXEMPTION IN THE COURSE OF THE ASSESSM ENT PROCEEDING AND CONSEQUENTLY THE ASSESSING OFFICER W AS DUTY BOUND TO ADJUDICATE UPON SUCH CLAIM, EVEN THOU GH IT WAS FILED AFTER THE PRESCRIBED PERIOD UNDER SECTION 139(5). THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN ENTERTA INING SUCH CLAIM OF THE ASSESSEE. ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 12 6.3 THE HONBLE SUPREME COURT IN THE CASE OF CIT VS SHELLY PRODUCTS AND ANOTHER, 261 ITR 367 HELD AS UNDER: REFUND SELF-ASSESSMENT ADVANCE TAX -ASSESSEE FI LING RETURN AND PAYING TAX BY SELF-ASSESSMENT ASSESSME NT ORDER MADE BY ASSESSING OFFICER HELD VOID AB INITIO ASSESSEE NOT ENTITLED TO REFUND OF ADVANCE TAX PAID AND TAX PAID ON SELF-ASSESSMENT EXCESS TAX PAID BY ASSESSEE OUT OF ABUNDANT CAUTION OR OWING TO ERROR OR NON-TAXABILITY HAS TO BE REFUNDED INCOME-TAX AC T, 1961, SS. 140A, 143(3), 144A, 144B, 240. 6.4 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS JAI PARABOLIC SPRINGS LTD., 306 ITR 42 CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS CIT 284 ITR 323 HELD AS UNDER: HELD, DISMISSING THE APPEAL, THAT THERE WAS NO PRO HIBITION ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDIT IONAL GROUND WHICH ACCORDING TO THE TRIBUNAL AROSE IN THE MATTER AND FOR THE JUST DECISION OF THE CASE. THERE WAS NO INFIRMITY IN THE ORDER OF THE TRIBUNAL. 6.5 THE HONBLE DELHI HIGH COURT CONSIDERING THE AB OVE DECISION NOTED THAT THE ABOVE DECISION WAS LIMITED TO THE PO WER OF THE AO TO ENTERTAIN CLAIM FOR DEDUCTION OTHERWISE THAN BY THE REVISED RETURN AND DID NOT IMPINGE ON THE POWERS OF THE TRIBUNAL. AS S UCH THERE IS NO BAR ON THE POWER OF THE LEARNED CIT(A) BEING THE FIRST APPELLATE AUTHORITY TO CONSIDER CLAIM OF THE ASSESSEE. 7. THE LEARNED CIT(A) CONSIDERED THE REVISED COMPUT ATION FOR ASSESSMENT YEAR 2007-08 UNDER APPEAL WHICH IS STATE D TO BE FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS. THE ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 13 LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT COP Y OF THE SAME IS FILED AT PAGE 5 OF THE PAPER BOOK. THE SAME LETTER DID NOT BEAR ANY DATE AND STAMP OF THE REVENUE DEPARTMENT. THE AO DI D NOT MENTION ANY FACT REGARDING THIS LETTER IN THE ASSESSMENT OR DER. THE AFORESAID LETTER IS FILED IN SEVERAL ASSESSMENT YEARS STARTIN G FROM 2001-02 TO ASSESSMENT YEAR 2007-08. NOTHING IS CLARIFIED AS TO IN WHICH ASSESSMENT YEAR IT WAS FILED BEFORE THE AO FOR CONS IDERATION. THE LEARNED CIT(A) DID NOT MENTION ANYWHERE IN THE IMPU GNED ORDER IF HE HAS VERIFIED FILING OF THIS LETTER FROM THE RECORD OF THE AO. THE LEARNED CIT(A) BEFORE TAKING INTO CONSIDERATION SUCH REQUES T OF THE ASSESSEE WHICH DO NOT FIND MENTION IN THE ASSESSMENT ORDER, EITHER SHOULD HAVE VERIFIED THE FACTS FROM THE RECORD OR SHOULD H AVE CALLED FOR REMAND REPORT FROM THE AO. BUT THE LEARNED CIT(A) D ID NOT DO SO AND MERELY REPRODUCED THE SUBMISSION OF THE ASSESSEE IN THE APPELLATE ORDER AND ACCEPTED THE SAME. IT IS NOT CLEAR FROM T HE SUBMISSION OF THE ASSESSEE AS TO HOW THE ASSESSEE HAS CALCULATED THE UNDISCLOSED INCOME OF RS.25,00,000/- IN ALL THE THREE ASSESSMEN T YEARS UNDER REFERENCE. IT IS ALSO NOT CLARIFIED WHETHER THE BIF URCATION OF THE ASSESSEE FOR UNDISCLOSED INCOME FOR SEVERAL YEARS W AS CORRECT AS PER THE SEIZED MATERIAL. IT IS ALSO NOT CLARIFIED AS TO WHAT WAS THE BASIS FOR BIFURCATING THE UNDISCLOSED INCOME FOR SEVERAL YEAR S ON THE BASIS OF SEIZED MATERIAL. COMMENTS OF THE AO ON SUCH BIFURCA TION OF THE UNDISCLOSED INCOME HAVE ALSO NOT BEEN OBTAINED. IT IS ALSO NOT CLARIFIED AS TO WHAT HAPPENED IN GROUP CASES REGARD ING DECLARATION OF THE UNDISCLOSED INCOME. SINCE, NO FACTUAL VERIFICAT ION HAVE BEEN MADE OF THE FACTS, THEREFORE, IT WAS NECESSARY TO C ALL FOR THE REMAND REPORT FROM THE AO BEFORE REDUCING THE RETURNED INC OME. WE FIND ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 14 SUPPORT FROM THE FACT THAT RETURN FOR ASSESSMENT YE AR 2007-08 UNDER APPEAL HAS BEEN FILED ON 29-10-2007 DECLARING TOTAL INCOME OF RS.17,25,820/- BUT FOR THE PRECEDING ASSESSMENT YEA RS 2005-06 AND 2006-07 RETURNS HAVE BEEN FILED LATER ON, ON 27-12- 2007 I.E. AFTER FILING OF THE RETURN FOR THE YEAR UNDER CONSIDERATI ON. WHEN THE ASSESSEE FILED THESE RETURNS AFTER REALIZING THE MI STAKE IN CALCULATING THE UNDISCLOSED INCOME FOR ALL THE YEARS, THERE WAS NO REASON FOR THE ASSESSEE NOT TO HAVE FILED REVISED RETURN FOR THE A SSESSMENT YEAR UNDER APPEAL I.E. ASSESSMENT YEAR 2007-08. WHEN THE ASSESSEE REALIZED ITS MISTAKE IN CALCULATING THE UNDISCLOSED INCOME FOR ALL THE THREE YEARS, BUT DESPITE AVAILABILITY OF TIME THE R ETURN OF INCOME IS NOT REVISED FOR ASSESSMENT YEAR 2007-08, THEREFORE, QUE STION WOULD ARISE WHETHER IT WAS AN ATTEMPT ON THE PART OF THE ASSESS EE TO BIFURCATE THE INCOME FOR SEVERAL YEARS WITH SOME ULTERIOR MOTIVES . IN SUCH CIRCUMSTANCES, IT WAS INCUMBENT ON THE PART OF THE REVENUE DEPARTMENT TO FIND OUT WHETHER A PARTICULAR INCOME WAS ASSESSABLE IN A PARTICULAR YEAR OR NOT. THE LEARNED CIT(A) WITHOU T VERIFYING THE FACTS ACCEPTED THE CLAIM OF THE ASSESSEE. IT IS EQUALLY F ACT THAT THE AO PASSED THE ASSESSMENT ORDERS FOR ALL THE THREE ASSE SSMENT YEARS ON THE SAME DAY ON 24-12-2008. THEREFORE, IT SHOULD HA VE BEEN PROPER FOR THE AO ALSO TO VERIFY THE FACTS WHETHER THE ASS ESSEE CORRECTLY DISCLOSED THE UNDISCLOSED INCOME OF RS.25,00,000/- FOR ALL THE YEARS AND SHOULD HAVE ALSO VERIFIED THE BASIS OF THE SAME . BUT ALL THE ASSESSMENT ORDERS OF THE AO DO NOT CONTAIN ANY DETA ILS AND IN ALL ASSESSMENT YEARS ACCEPTED THE RETURN OF INCOME AS I T IS. THE LEARNED CIT(A) ALSO DID NOT TAKE INTO CONSIDERATION THE DEC ISION OF THE HONBLE SUPREME COURT IN THE CASE OF SHELLY PRODUCTS AND AN OTHER (SUPRA) ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 15 AND DID NOT CONSIDER THE ISSUE THAT IN THE EVENT OF REDUCING THE RETURNED INCOME WHETHER THE ASSESSEE WOULD BE ENTIT LED FOR REFUND OF THE TAXES PAID ON SELF-ASSESSMENT. CONSIDERING THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT THE MATER REQU IRES RE- CONSIDERATION AT THE LEVEL OF THE AO. WE ACCORDINGL Y, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS IS SUE TO THE FILE OF THE AO WITH DIRECTION TO RE-DECIDE THIS ISSUE IN ACCORD ANCE WITH LAW BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. THE AO IS DIRECTED TO GIVE SPECIFIC FINDI NGS ON THE ABOVE ISSUE INCLUDING THE FOLLOWING: (I) ASSESSEE BE DIRECTED TO EXPLAIN ITS CONDUCT IN NOT FILING REVISED RETURN FOR THE ASSESSMENT YEAR UNDER APPEAL KNOWING WELL THAT BIFURCATION OF UNDISCLOSED INCOME ON THE DATE OF FILING OF THE RETURNS FOR THE PRECEDING ASSESSMENT YEARS 2 005-06 AND 2006-07. (II) THE AO SHALL VERIFY FROM THE RECORD IF ASSESSE E MADE A CLAIM OF BIFURCATION OF UNDISCLOSED INCOME AT THE A SSESSMENT STAGE THROUGH LETTER DATED NIL (PB-5), IF SO, ITS E FFECT AND PASS REASONED ORDER THEREON. (III) THE AO SHALL VERIFY WHETHER BIFURCATION OF IN COME MADE BY THE ASSESSEE IN THREE YEARS IS BASED ON THE DETA ILS CONTAINED ON THE SEIZED MATERIAL. ITA NO.2075/AHD/2010 ACIT, CENTRAL CIRCLE 2, BARODA VS M/S. SHREE SADGUR U FOODS 16 (IV) THE AO SHALL CONSIDER EFFECT ON PAYMENT OF SEL F- ASSESSMENT TAX, IF CLAIM OF THE ASSESSEE IS CONSIDE RED FOR REDUCTION OF RETURNED INCOME. (V) THE AO SHALL PASS REASONED ORDER CONSIDERING OBSERVATION AND GUIDELINES ISSUED IN THIS ORDER. 8. IN THE RESULT, THE DEPARTMENTAL APPEAL IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24-06-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 24-06-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD