Sri Amarjit Singh Lamba, Vijayawada V. The DCIT, Central Circle, Vijayawada

ITSSA 11/VIZ/2005

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9404 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 04-02-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Assessee Lawyers: R PRASAD
• Keywords: Value adopted by valuation officer; Additional evidence; Block assessment
• Section: 132

Judgement Text

PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER IT(SS)A NO.11 /VIZAG/2005 BLOCK PERIOD: 1-4-1990 TO 5-9-2000 AMARJIT SINGH LAMBA, VIJAYAWADA VS. DCIT, CENTRAL CIRCLE, VIJAYAWADA (APPELLANT) PAN NO: AAWPL 3693 C (RESPONDENT) APPELLANT BY: SHRI M.S.R. PRASAD, CA RESPONDENT BY: SHRI SUBRATA SARKAR, CIT( DR) ORDER PER SHRI B R BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 6-12-2004 PASSED BY THE LD CIT-(A) VIJAYAWADA CONFIRMING THE ADDITION OF RS.8,02,000/- RELATING TO THE DIFFERENCE IN THE COST OF CONSTRUCT ION OF THE BUILDING AND IT RELATES TO THE BLOCK PERIOD FROM 1-4-1990 TO 5-9-2000. 2. SUBSEQUENT TO THE FILING OF THE APPEAL BEFORE US , THE ASSESSEE HAS FILED A PETITION FOR ADMISSION OF FOLLOWING ADDITIONAL GROU NDS WITH THE SUBMISSION THAT THESE GROUNDS DO NOT REQUIRE INVESTIGATION INTO THE FACTS, NOR DO THEY BRING ON RECORD ANY FRESH FACT OR ADDITIONAL EVIDENCE FOR TH EIR ADJUDICATION. HAVING REGARD TO THE SUBMISSIONS WE ADMIT THESE ADDITIONAL GROUND S AS THEY ARE LEGAL IN NATURE. 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, SINCE DURING THE COURSE OF SEARCH NO INCRIMINATING OR ADVERSE MATERI AL WAS FOUND AGAINST THE ASSESSEE WITH REGARD TO THE COST OF CON STRUCTION, IN QUESTION, BY THE ASSESSEE THE REFERENCE TO THE VALU ATION OFFICER IN THE ABSENCE OF ANY SUCH INCRIMINATING OR ADVERSE MA TERIAL, IS TOTALLY UNCALLED FOR AND CANNOT FORM BASIS FOR BLOCK ASSESS MENT. PAGE 2 OF 4 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, S INCE SEARCH PROCEEDINGS AGAINST THE ASSESSEE WERE CONCLUDED ON 05-09-2000 ITSELF I.E. THE DATE OF COMMENCEMENT OF THE SEARCH, SUBSEQUENT REFERENCE TO VALUATION OFFICER AND OBTAINING OF VAL UATION REPORT FROM ASSISTANT VALUATION OFFICER ARE TO BE CONSIDERED TO BE MATERIAL AT BEST UNCONNECTED WITH SEARCH PROCEEDINGS AND, THERE FORE, CANNOT BE FOUNDATION FOR BLOCK ASSESSMENT, AS THE SAID MAT ERIAL IS DE HORS SEARCH PROCEEDINGS AND IS ALSO NOT GERMANE OUT OF S UCH SEARCH PROCEEDINGS IN THE ORIGINAL GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED MANY GROUNDS ON THE MERITS OF THE IMPUGNED ADDITION. SINCE THE LEGAL I SSUES RAISED BY THE ASSESSEE IN THE ADDITIONAL GROUNDS GO TO THE VERY ROOT OF THE A SSESSMENT PROCEEDING, WE TAKE UP THE FIRST ADDITIONAL GROUND FOR ADJUDICATIO N. 3. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE D EPARTMENT CARRIED OUT SEARCH OPERATIONS U/S 132 OF THE ACT IN THE RESIDEN CE OF THE ASSESSEE ON 5-9- 2000. CONSEQUENT THERETO, THE ASSESSING OFFICER ISS UED NOTICE U/S 158 BC OF THE ACT CALLING FOR RETURN OF INCOME PERTAINING TO THE BLOCK PERIOD. IN RESPONSE THERETO THE ASSESSEE FILED HER BLOCK RETURN DISCLOS ING NIL INCOME. AT THE TIME OF SEARCH, IT WAS NOTICED THAT THE ASSESSEE HAD CONSTR UCTED A BUILDING DURING THE PERIOD FROM MARCH, 1997 TO AUGUST, 1997. ACCORDING TO THE AO, THE ASSESSEE DID NOT MAINTAIN ANY CONSTRUCTION ACCOUNT NOR DOES THE ASSESSEE HAVE ANY PERSONAL BOOKS WHEREIN THE SAID INVESTMENT WAS FOUND RECORDE D AT THE TIME OF SEARCH. HENCE THE AO REFERRED THE MATTER OF VALUATION TO TH E VALUATION CELL WHO ESTIMATED THE COST OF CONSTRUCTION AT RS.13.85 LAKH S. ACCORDING TO THE AO THE ASSESSEE ADMITTED THE COST OF CONSTRUCTION OF RS.5, 83,000/-. HENCE THE AO TREATED THE DIFFERENCE OF AMOUNT OF RS.8,02,000/- A S UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. THE ASSESSEE COULD N OT SUCCEED IN HER APPEAL PREFERRED BEFORE THE LD CIT (A). HENCE THE ASSESSE E IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. IT IS A WELL SETTLED PROPOSITION THAT A BLOCK ASSESSMENT CAN BE FRAMED UPON THE ASSESSEE PAGE 3 OF 4 ONLY ON THE BASIS OF THE INCRIMINATING MATERIALS FO UND DURING THE COURSE OF SEARCH. THE LD AR HEAVILY PRESSED ON THIS LEGAL PRO POSITION AND ALSO DREW SUPPORT IN THAT CONNECTION FROM THE FOLLOWING CASE LAW: I) CIT V KUSHAL CHAND NIRMAL KUMAR (2003) 263 ITR 77 (MP) II) CIT V. MANOJ JAIN (2006) 200 ITR (DEL) 327 5. THE LD AR SUBMITTED THAT THE REVENUE DID NOT FIN D ANY INCRIMINATING MATERIAL DURING THE COURSE OF SEARCH WITH REGARD TO THE SUPPRESSION OF THE COST OF CONSTRUCTION. HE ALSO SUBMITTED THAT THE ASSESSEE HAD DISCLOSED THE FACT OF CONSTRUCTION OF THE BUILDING IN HER RETURN OF INCOM E FILED PRIOR TO THE DATE OF SEARCH FOR THE ASSESSMENT YEARS 1997-98 AND 1999-20 00. IN SUPPORT OF THIS SUBMISSION, THE LD AR INVITED OUR ATTENTION TO THE COPIES OF THE STATEMENTS AND INCOME TAX RETURN ACKNOWLEDGEMENTS PLACED IN THE PA PER BOOK COMPILED BY THE ASSESSEE. 6. FROM THE SUBMISSIONS OF THE LD AR, WE NOTICE THAT THE ASSESSEE HAD DISCLOSED THE DETAILS OF CONSTRUCTION IN HER RETURN S OF INCOME FILED BEFORE THE DATE OF SEARCH. ON A CAREFUL PERUSAL OF THE ASSESSMENT ORDER, WE NOTICE THAT THE AO HAS NOT CITED ANY INCRIMINATING MATERIAL, WHICH WER E FOUND DURING THE COURSE OF SEARCH WHICH POINT OUT TO THE SUPPRESSION OF THE CO ST OF CONSTRUCTION. IN VIEW OF THE LEGAL PROPOSITION CITED EARLIER, THE BLOCK ASSE SSMENT CANNOT BE FRAMED UPON THE ASSESSEE, IN THE ABSENCE OF ANY INCRIMINATING M ATERIAL. THE DIFFERENCE IN THE COST OF CONSTRUCTION, IF ANY, CAN ONLY BE DEALT BY THE AO DURING THE REGULAR ASSESSMENT PROCEEDINGS. IN VIEW OF THE FOREGOING, T HE ASSESSMENT ORDER FRAMED BY THE AO FOR THE BLOCK PERIOD IS NOT IN ACCORDANCE WITH THE LAW AND IS LIABLE TO BE QUASHED. WE ORDER ACCORDINGLY. PAGE 4 OF 4 7. SINCE WE HAVE DECIDED THE FIRST LEGAL ISSUE RAISED IN THE ADDITIONAL GROUNDS OF APPEAL IN FAVOUR OF THE ASSESSEE, WE FIND IT NOT NECESSARY TO ADJUDICATE OTHER GROUNDS RAISED BY THE ASSESSEE, SINCE THEY WILL BE ONLY ACADEMIC IN NATURE. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30-03-2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 30 TH MARCH, 2010. COPY TO 1 SRI. AMARJIT SINGH LAMBA,A-4, SUDARSAN APARTMENTS , BRINDAVAN COLONY, LABBIPET, VIJAYAWADA 520 002 2 THE DCIT, CENTRAL CIRCLE, VIJAYAWADA 3 THE CIT (A) VIJAYAWADA 4 THE CIT VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM