Shri Vijaybhai Ramanlal Topiwala, Surat V. The CIT., Cent.-I, Ahmedabad

ITSSA 118/AHD/2005

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9209 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-05-2010
• Assessment Year: misc
• Appeal Filed On: 13-04-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIDDHARTHA MU KHERJEE
• Assessee Lawyers: T R MODY
• Keywords: Bonafide belief; Block assessment
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.(S.S.)A. NO. 118AHD./2005 ASSESSMENT YEAR : BLOCK ASSESSMENT 1990-1991 TO 199 9-2000 VIJAYBHAI RAMANLAL TOPIWALA, SURAT -VS.- COM MISSIONER OF INCOME TAX, (PAN : AAQPP 3024 R) CENTRAL-1, AHMEDABAD (APPELLANT) (RESPONDENT) & I.T.(S.S.)A. NO. 230AHD./2005 ASSESSMENT YEAR : BLOCK ASSESSMENT 1990-1991 TO 199 9-2000 VIJAYBHAI RAMANLAL TOPIWALA, SURAT -VS.- ASS ISTANT COMMISSIONER OF INCOME TAX, (PAN : AAQPP 3024 R) CENTRAL CIRCLE-2, SURAT (APPELLANT) (RESPONDENT) & I.T.(S.S.)A. NO. 248AHD./2005 ASSESSMENT YEAR : BLOCK ASSESSMENT 1990-1991 TO 199 9-2000 ASSISTANT COMMISSIONER OF INCOME TAX, -VS.- VIJAY BHAI RAMANLAL TOPIWALA, SURAT CENTRAL CENTRAL-2, SURAT (PAN : AAQPP 3024 R ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.R. MODY DEPARTMENT BY : SHRI SIDDHARTHA MUKHERJEE, CIT, D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THE FIRST TWO APPEALS BEING IT(SS)A. NOS. 118 & 23 0/AHD/2005 FILED BY THE ASSESSEE AND THE APPEAL BEING IT(SS)A. NO. 248/AHD/2005 BY T HE REVENUE WERE HEARD TOGETHER, ARGUED BY THE COMMON LD. REPRESENTATIVES, THEREFORE, THESE ARE DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE IT(SS)A. NO. 118/AHD/2005 F ILED BY THE ASSESSEE. THIS APPEAL IS AGAINST THE ORDER DATED 26.03.2004 OF LD. CIT, CENT RAL-I, AHMEDABAD UNDER SECTION 263 OF THE 2 IT(SS)A NO.118, 230 & 248/AHD/200 5 INCOME TAX ACT, 1961 FOR THE BLOCK ASSESSMENT PERIO D 1990-1991 TO 1999-2000. THE VARIOUS GROUNDS RAISED IN THIS APPEAL ARE AS UNDER :- (1) THE ACTION INITIATED UNDER SECTION 263 IS BAD IN LAW AND WITHOUT JURISDICTION AS THE ORDER PASSED BY THE DY. CIT, CENTRAL CIRCLE- 2, SURAT, IS NOT PREJUDICIAL OR AGAINST THE INTEREST OF THE REVENUE. (2) THE ASSESSING OFFICER HAS PASSED THE ORDER UNDE R SECTION 158BC(C) AFTER APPLICATION OF HIS MIND. (3) THE LD. CIT FAILED TO APPRECIATE THE TRUE CONCE PT OF THE SUBMISSION MADE TO HIM DURING THE COURSE OF HEARING. (4) HE OUGHT TO HAVE ACCEPTED THAT SUBJECT TO MY GR OUNDS OF APPEALS RAISED BEFORE THE ITAT IN QUANTUM APPEAL, THE LD. ASSESSING OFFIC ER HAD RIGHTLY DETERMINED THE UNDISCLOSED INCOME OF THE BLOCK PERIOD ON THE BASIS OF RECEIPT AND INVESTMENT OF THE RELEVANT YEAR BY TAKING THE HIGHER FIGURE BETWE EN THESE TWO AND TREATED THE SAME AS UNDISCLOSED INCOME OF THAT PARTICULAR YEAR. YOUR APPELLANT THEREFORE, PRAYS THAT LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ACTION INITIATED UNDER SECTION 263 MAY PL EASE BE TREATED AS BAD IN LAW AND WITHOUT JURISDICTION. 3. AT THE OUTSET, SHRI T.R. MODY, LD. COUNSEL APPEA RING ON BEHALF OF THE ASSESSEE POINTED OUT THAT THERE IS A DELAY OF 318 DAYS IN FILING THIS AP PEAL. THE LD. COUNSEL OF THE ASSESSEE EXPLAINED THAT IN THIS CASE, THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 158BC(C) FOR THE BLOCK PERIOD STARTING FROM ASSESSMENT YEAR1990-91 T O 1999-2000 ENDING ON 29.07.1999. AGAINST THE SAID ORDER, AN APPEAL WAS FILED, WHICH IS PENDI NG BEFORE THE TRIBUNAL. SUBSEQUENTLY, ON 31.3.2004, THE ASSESSEE RECEIVED THE ORDER FROM THE LD. CIT, CENTRAL-I, AHMEDABAD WHEREIN DIRECTIONS WERE GIVEN TO THE A.O. TO EXAMINE THE MA TER AND DEPENDING UPON THE FINDING HE IS TO FOLLOW EITHER OF THE COURSES OF TREATMENT OF THE IT EM COVERED IN THE SAID INSTRUCTIONS. IN THE APPLICATION OF THE CONDONATION OF DELAY, IT WAS CON TENDED THAT THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT TILL THE FINDING IS GIVEN, AND THE INSTRUCTIONS ARE ACTED UPON, THERE IS NO ORDER WHICH CAN CAUSE A PREJUDICE AND HENCE, THE ASSESSEE CAN THEN FILE APPEAL AGAINST THE SAME. SUBSEQUENTLY, WHILE EXAMINING THE FACTS AS PER THE DIRECTIONS, THE ASSESEE CAME TO KNOW THAT THOUGH THE ORDER OF THE LD. CIT, CENTRAL-I, AHMEDAB AD WAS IN THE NATURE OF INSTRUCTIONS, THE APPEAL WAS REQUIRED TO BE FILED BECAUSE THE ORDER U NDER SECTION 263 IS ALSO AN APPEALABLE ORDER. THEREAFTER, AN APPEAL AGAINST THE ORDER UNDER SECTI ON 263 WAS FILED, WHICH IS LATE BY 318 DAYS. IN 3 IT(SS)A NO.118, 230 & 248/AHD/200 5 THE APPLICATION FOR CONDONATION OF DELAY, IT WAS CO NTENDED THAT DELAY OF 318 DAYS FOR FILING THE APPEAL AGAINST THE ORDER OF LD. CIT, CENTRAL-I, AHM EDABAD UNDER SECTION 263 OCCURRED BECAUSE THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT TIL L THE FINDING IS GIVEN AND INSTRUCTIONS ARE ACTED UPON, THERE IS NO ORDER WHICH CAN CAUSE A PREJUDICE AND HENCE, THE ASSESSEE CANNOT FILE THE APPEAL AGAINST THE SAID ORDER. THE LD. COUNSEL OF THE ASSE SSEE CONTENDED THAT DELAY OF 318 DAYS BE CONDONED AND THE APPEAL OF THE ASSESSEE BE ADMITTED BECAUSE IT HAS OCCURRED DUE TO MISTAKEN BELIEF ON THE PART OF THE ASSESSEE. FOR THIS, HE RE LIED ON THE JUDGMENT DATED 19.02.1987 OF THE HON'BLE SUPREME COURT IN THE CASE OF COLLECTOR, LAN D ACQUISITION VS.- MST. KATIJI & ORS. IN CIVIL APPEAL NO. 460 OF 1987. 4. ON THE OTHER HAND, SHRI SIDDHARTHA MUKHERJEE, LD . CIT, D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY OPPOSED TO THE APPLICATION FOR C ONDONATION OF DELAY. HE POINTED OUT THAT THERE IS NO DOUBT AND DEBATE ABOUT THE DIRECTIONS G IVEN BY THE LD. CIT, CENTRAL-I, AHMEDABAD IN HIS ORDER UNDER SECTION 263. THE SAID DIRECTIONS AR E BINDING ON THE ASSESSING OFFICER. THEREFORE, THE ASSESSEE COULD HAVE EASILY FILED THE APPEAL WEL L IN TIME. 5. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND PERUSED THE MATERIAL PLACED BEFORE US. TH E DIRECTIONS GIVEN BY THE LD. CIT, CENTRAL-I, AHMEDABAD VIDE ORDER DATED 26.03.2004 UNDER SECTION 263 OF THE INCOME TAX ACT (ON PAGE 5 AT PARA 8) ARE AS UNDER :- THEREFORE, IN THE EXERCISE OF THE POWERS VESTED IN ME U/S. 263 OF THE ACT, I RESTORE THE AFORESAID MATTERS TO THE ASSESSING OFFI CER. HE IS DIRECTED TO FIND OUT AS TO WHETHER THERE WAS A NEXUS BETWEEN THE UNDISCLOSE D SALARY RECEIPTS OF THE ASSESSEE DETERMINED BY HIM AT RS.51,000/- DURING TH E PERIOD 1.4.1999 TO 29.7.1999 AND THE UNDISCLOSED INVESTMENTS OF THE AS SESSEE DETERMINED AT RS.6,67,396/- DURING THAT PERIOD. IF NO NEXUS CAN B E ESTABLISHED BY THE ASSESSING OFFICER BETWEEN THE TWO, THE SUM OF RS.51,000/- SHO ULD BE ADDED TO THE UNDISCLOSED INCOME OF THE ASSESSEE. FURTHER THE ASS ESSING OFFICER SHOULD ALSO ASCERTAIN AS TO WHETHER THE UNDISCLOSED INCOME OF R S.1,24,514/- DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME FOR THE BLOCK PERI OD COULD BE COVERED BY THE AMOUNTS OF UNDISCLOSED INVESTMENTS AND RECEIPTS WOR KED OUT BY HIM IN THE ORDER OF ASSESSMENT. IF HE (THE ASSESSING OFFICER) IS UNA BLE TO GIVE SUCH A FINDING, THE SUM OF RS.1,24,514/- SHOULD ALSO BE ADDED TO THE UN DISCLOSED INCOME OF THE ASSESSEE. 4 IT(SS)A NO.118, 230 & 248/AHD/200 5 IN ORDER TO APPRECIATE THE AFORESAID DIRECTION, ONE HAS TO GO THROUGH THE FACTUAL MATRIX LEADING TO THE ORDER OF LD. CIT, CENTRAL-I, AHMEDABAD TO ISSUE THE AFORESAID DIRECTION. THE ASSESSMENT FOR THE BLOCK PERIOD WAS COMPLETED UNDER SECTION 158BC( C) OF THE INCOME TAX ACT ON 31.07.2001 AT A TOTAL INCOME OF RS.70,50,950/-. EVEN AFTER GIVING THE EFFECT TO THE ORDER OF LD. CIT(A) DATED 20.3.2002, THE TOTAL UNDISCLOSED INCOME OF THE ASSE SSEE REMAINED UNCHANGED AT RS.70,50,950/-. 6. FOR THE AFORESAID BLOCK PERIOD, THE ASSESSEE FIL ED THE RETURN FOR THE BLOCK PERIOD ON 25.11.1999 DECLARING UNDISCLOSED INCOME OF RS.30,00 ,000/-. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAD WORKED OUT THE AMOUNT OF THE UNDISCLOSED INVESTMENTS IN THE CASE OF THE ASSESSEE AT RS.21,87,987/-. FURTHER, THE AO HAD WOR KED OUT THE UNDISCLOSED INVESTMENT MADE IN THE BANK ACCOUNTS DURING THE BLOCK PERIOD AT RS.19, 87,477/-. IN THE ASSESSMENT ORDER, THE AO HAD WORKED OUT THE UNDISCLOSED RECEIPTS OF SALARY INCOM E OF THE ASSESSEE AT RS.51,000/- FOR THE FINANCIAL YEAR 1999-2000 (UPTO THE DATE OF SEARCH). IN PARA 13 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MENTIONED BOTH THE AMOUNTS OF UNDISCLOSED INVESTMENTS WORKED OUT BY HIM (IN PARAS 4 TO 11 OF THE ASSESSMENT ORDER) AS A LSO THE AMOUNTS OF UNACCOUNTED SALARY RECEIPTS WORKED OUT BY HIM (IN PARA 12 OF THE ASSESSMENT ORD ER). HE HAS HELD THAT THE HIGHER OF THE AMOUNTS WORKED OUT BY HIM, FINANCIAL YEAR-WISE, EIT HER BY WAY OF UNDISCLOSED INVESTMENT OR BY WAY OF UNACCOUNTED RECEIPTS, WERE TO BE ADDED TO TH E UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FOR THE BLOCK PERI OD. THE ASSESSING OFFICER HAS NOT GIVEN ANY REASONS AS TO WHY ONLY THE HIGHER OF THE TWO AMOUNT S WORKED OUT BY HIM FOR A FINANCIAL YEAR, WERE TO BE ADDED AS THE UNDISCLOSED INCOME OF THE A SSESSEE. ACCORDING TO LD. CIT, CIRCLE-I, AHMEDABAD, THIS ACTION OF ASSESSING OFFICER WAS NOT CORRECT. APART FROM THIS, THE LD. CIT OBSERVED THAT AGAINST THE ADDITIONS DETERMINED BY T HE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INVESTMENTS AND UNDISCLOSED RECEIPTS, H E HAD ALLOWED SET OFF OF AN AMOUNT OF RS.1,24,514/- REPRESENTING THE DISCLOSURE MADE BY T HE ASSESSEE FOR ANY OTHER DISCREPANCY IN THE RETURN OF INCOME. FOR THIS ALSO, THE ASSESSING OFFI CER HAS NOT GIVEN ANY REASON IN THE ORDER OF ASSESSMENT. ACCORDING TO LD. CIT, THIS ACTION OF AS SESSING OFFICER WAS ALSO NOT CORRECT. ACCORDING TO LD. CIT, IF THE SUMS OF RS.21,87,987/- AND RS.19,87,477/- REPRESENTING UNDISCLOSED INVESTMENTS AND RS.51,000/- REPRESENTING UNDISCLOSE D SALARY RECEIPTS, WORKED OUT BY THE ASSESSING OFFICER, HAD BEEN ADDED TO THE UNDISCLOSE D INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AT RS.30,00,000/-, WITHOUT ALLOWIN G ANY SET OFF FOR THE SUM OF RS.1,24,514/-, THE 5 IT(SS)A NO.118, 230 & 248/AHD/200 5 TOTAL UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BL OCK PERIOD WOULD HAVE BEEN ASSESSED TO TAX AT RS.72,26,464/-. AS AGAINST THIS, THE TOTAL UNDISCLO SED INCOME FOR THE BLOCK PERIOD HAS BEEN DETERMINED IN THE AFORESAID ORDER OF ASSESSMENT AT RS.70,50,950/-. 7. UNDER SECTION 5 OF THE LIMITATION ACT OF 1963, T HE TRIBUNAL MAY ADMIT AN APPEAL OR PERMIT THE FILING OF AN APPEAL AFTER THE EXPIRY OF PRESCRIBED PERIOD IF IT IS SATISFIED THAT THERE WAS SUFFICIENT CAUSE FOR NOT PRESENTING IT WITHIN THAT PERIOD. REGARDING CONTENTION OF DELAY IN FILING THE APPEAL, IT HAS BEEN HELD IN SEVERAL RECENT JUDG MENTS OF THE HON'BLE SUPREME COURT STARTING WITH MST. KATIJI, BALAKRISHNAN VS.- KRISHNAMURTHI, ETC. THAT IN THE PURSUIT OF JUSTICE, TECHNICALITIES SHOULD BE AVOIDED AND AN ATTEMPT MUS T BE MADE TO DECIDE THE SUBSTANTIVE ISSUES RAISED IN THE APPEAL. THE EXPRESSION SUFFICIENT C AUSE EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUB-SERVES THE ENDS OF JUSTICE. IN THIS JUDGMENT, THE HON'BLE SUPREME COUR T HELD AS UNDER :- (1) ORDINARILY, A LITIGANT DOES NOT STAND TO BENEF IT BY LODGING AN APPEAL LATE. (2) REFUSING TO CONDONE DELAY CAN RESULT IN A MERIT ORIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTI CE BEING DEFEATED. AS AGAINST THIS, WHEN DELAY IS CONDONED, THE HIGHEST T HAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. (3)EVERY DAYS DELAY MUST BE EXPLAINED DOES NOT M EAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOURS DELAY , EVERY SECONDS DELAY? THE DOCTRINE MUST BE APPLIED IN A RATIONAL C OMMON SENSE AND PRAGMATIC MANNER. (4) WHEN SUBSTANTIAL JUSTICE AN TECHNICAL CONSIDERA TION ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERV ES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJ USTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. (5) THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONE D DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MA LA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT , HE RUNS A SERIOUS RISK. (6) IT MUST BE GRASPED THAT THE JUDICIARY IS RESPEC TED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BU T BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 6 IT(SS)A NO.118, 230 & 248/AHD/200 5 PRIMA FACIE, IT APPEARS THAT THE ASSESSEE WAS OF TH E BONA FIDE BELIEF THAT NO CAUSE OF ACTION IS ARISING FOR FILING AN APPEAL UNLESS INSTRUCTIONS GI VEN BY THE LD. CIT IN HIS ORDER UNDER SECTION 263 ARE ACTED UPON. OBVIOUSLY THIS WAS NOT CORRECT. HOW EVER, LOOKING FROM THE ASSESSEES POINT OF VIEW, PRIMA FACIE IT APPEARS THAT DELAY HAS OCCURRE D BECAUSE OF THIS MISTAKEN VIEW. AS A MATTER OF FACT, NO PRUDENT MAN WOULD FILE THE APPEAL LATE ONCE THE ORDER IS AGAINST HIM. WE ARE, THEREFORE, OF THE VIEW THAT THERE IS A SUFFICIENT C AUSE FOR CONDONING THE DELAY OF 318 DAYS. THE DELAY IS, THEREFORE, CONDONED AND THE APPEAL OF THE ASSESSEE IS ADMITTED. 8. ON MERIT, THE LD. COUNSEL OF THE ASSESSEE DREW O UR ATTENTION TO THE REPLY DATED 22.03.2004 FURNISHED BEFORE THE LD. CIT, IN RESPONSE TO THE SH OW-CAUSE NOTICE UNDER SECTION 263. THE SAID REPLY IS RE-PRODUCED BY THE LD. LEARNED COMMISSIONE R OF INCOME TAX, CENTRAL-I, AHMEDABAD IN THE IMPUGNED ORDER ON PAGE 3, WHICH READS AS UNDER :- (I) THE ORDER OF ASSESSMENT FOR THE BLOCK PERIOD PASSED ON 31.07.2001 WAS BAD IN LAW IN THE ABSENCE OF SERVICE OF STATUTO RY NOTICE WITHIN THE PRESCRIBED TIME LIMIT. THEREFORE, SUCH AN ORDER SHOULD NOT BE REVISED U/S. 263 OF THE ACT. (II) THE METHOD EMPLOYED BY THE ASSESSING OFFICER FOR DE TERMINING THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE WAS CORREC T, IN THE ABSENCE OF ANY COGENT EVIDENCE. THE MATERIAL FOUND DURING T HE SEARCH PROCEEDINGS FROM THE ASSESSEE AND THE CONTENTS OF H IS STATEMENT MADE U/S. 132(4)OF THE ACT WERE TO BE LINKED WITH E ACH OTHER TO FIND OUT HIS UNDISCLOSED INCOME. THEREFORE, THERE WAS NO QUESTION OF GIVING ANY REASONS BY THE ASSESSING OFFICER AS TO W HY HE EMPLOYED SUCH A METHOD TO ARRIVE AT THE UNDISCLOSED INCOME O F THE ASSESSEE. THE ASSESSING OFFICER HAD TAKEN THE ALLEGED SALARY RECEIPTS DURING FINANCIAL YEAR 1999-2000 (UPTO THE DATE OF SEARCH I .E. 29.07.1999) AMOUNTING TO RS.51,000/- TO JUDGE THE INVESTMENTS T HEREFROM DURING THAT YEAR SO THAT HE COULD BRING TO TAX THE UNDISCL OSED INCOME OF THAT PARTICULAR YEAR. (III) THE ASSESSEE WAS SURE ABOUT THE FIGURE OF UNDISCLOS ED INCOME EARNED BY HIM AT ABOUT RS.29 LACS BUT TO AVOID ANY CONTROV ERSY, HE HAD DECLARED THE AMOUNT OF RS.30 LACS AS HIS UNDISCLOSE D INCOME. ACCORDINGLY, DURING THE FILING OF THE RETURN OF INC OME FOR THE BLOCK PERIOD, HE HAD DECLARED AN AMOUNT OF RS.28,75,486/- AS HIS REAL UNDISCLOSED INCOME AND THE BALANCE OF RS.1,24,514/- WAS DECLARED BY HIM UNDER THE HEAD ANY OTHER DISCREPANCIES. TH EREFORE, THE ACTION OF THE ASSESSING OFFICER IN GIVING SET OFF F OR THE SUM OF 7 IT(SS)A NO.118, 230 & 248/AHD/200 5 RS.1,24,514/- AGAINST THE ADDITIONS MADE BY HIM TO THE UNDISCLOSED INCOME WAS IN ORDER. IN VIEW OF THE ABOVE, THE ASSESSEE CONTENDED THAT T HE ACTION PROPOSED U/S. 263 OF THE ACT SHOULD BE DROPPED. THE LD. COUNSEL OF THE ASSESSEE THEREAFTER TOOK US THROUGH AT PARA 6 ON PAGES 3 & 4 OF THE IMPUGNED ORDER AND CONTENDED AS UNDER :- (I) THE ASSESSING OFFICER HAS RIGHTLY ADOPTED THE METHO D BY TAKING HIGHER FIGURE OF THE TWO AMOUNTS OF ADDITIONS, EITH ER BY WAY OF UNDISCLOSED INVESTMENT OR BY WAY OF UNACCOUNTED REC EIPTS. REFER PAGE LAST PAGE OF THE ASSESSMENT ORDER PAGE 32 OF THE PAPER BOOK. (II) THE AMOUNT OF SALARY RECEIPT OF RS.51,000/- FALLS I N THE FINANCIAL YEAR IN WHICH SEARCH TOOK PLACE AND HENCE THE SAME CANNOT BE TAXED IN THE BLOCK RETURN. (III) EVEN OTHERWISE, THERE IS NO SUCH EVIDENCE OF SALARY RECEIPT IN CASH EXCEPT STATEMENT OF THE ASSESSEE UNDER SECTION 132( 4). MOREOVER, DURING THE SEARCH, CASH OF RS.6,00,000/- WAS FOUND AND THE ASSESSEE DISCLOSED AN AMOUNT OF RS.4,75,000/- IN THE BLOCK R ETURN WHICH COVERS THE SALARY RECEIPT OF RS.51,000/-. CONTINUING HIS ARGUMENT, THE LD. COUNSEL OF THE ASS ESSEE RELYING ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS.- MAX INDIA [2 95 ITR 282 (SC)] CONTENDED THAT WHERE TWO VIEWS ARE PLAUSIBLE AND ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH LEARNED COMMISSIONER OF INCOME TAX(APPEALS) NOT AGREED, IT CANNOT BE TREATED AS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE, UNLESS THE VIEW TAKEN BY ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED T HAT ASSESSING OFFICER RIGHTLY ADOPTED THE METHOD BY FOLLOWING HIGHER FIGURE OF THE AMOUNTS OF ADDITION EITHER BY WAY OF UNDISCLOSED INVESTMENTS OR BY WAY OF UNACCOUNTED RECEIPTS. THER EFORE, THERE IS NO JUSTIFICATION FOR INVOKING THE PROVISIONS CONTAINED IN SECTION 263 OF THE INCO ME TAX ACT, 1961. 9. ON THE OTHER HAND, SHRI SIDDHARTHA MUKHERJEE, CI T, D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LD. COMMI SSIONER OF INCOME TAX, CENTRAL-I, AHMEDABAD. THE LD. D.R. POINTED OUT THAT THE ASSESS ING OFFICER HAS NOT MADE PROPER ENQUIRY. 8 IT(SS)A NO.118, 230 & 248/AHD/200 5 NO PREJUDICE IS CAUSED TO THE ASSESSEE IF ASSESSING OFFICER MAY RE-EXAMINE AS PER DIRECTION GIVEN IN THE IMPUGNED ORDER. HE ACCORDINGLY SUBMITT ED THAT THE LD. CIT RIGHTLY INVOLVED THE POWER UNDER SECTION 263 BECAUSE THE ORDER OF ASSESS ING OFFICER WAS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. 10. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. FROM THE REPLY OF THE SHOW-CAUSE NOTICE SUBM ITTED BY THE ASSESSEE BEFORE THE LD. CIT, WE ARE CONVINCED THAT THE METHOD EMPLOYED BY ASSESSING OFFICER FOR DETERMINING THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE WAS CORRECT. SIN CE THE ASSESSING OFFICER HAS ADOPTED THE CORRECT METHOD, THERE WAS NO QUESTION OF GIVING ANY REASON THAT WHY HE EMPLOYED SUCH A METHOD TO ARRIVE AT UNDISCLOSED INCOME OF THE ASSESSEE. FU RTHER, IT ALSO APPEARS THAT THE ASSESSEE HAD DECLARED THE AMOUNT OF RS.29 LACS AS UNDISCLOSED IN COME EARNED BY HIM BUT UNDER ABANDONED CAUTION, HE DECLARED RS.30 LACS AS HIS UNDISCLOSED INCOME. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS GIVEN SET OFF FOR THE SUM OF RS. 1,24,5 14/- AGAINST THE ADDITIONS MADE BY HIM TO THE UNDISCLOSED INCOME WAS PRIMA FACIE SEEMS TO BE IN O RDER. WE ARE, THEREFORE, OF THE VIEW THAT THE ASSESSMENT ORDER FRAMED BY THE ASSESSING OFFICER UN DER SECTION 158BC(B) WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN T HE MEANING OF SECTION 263 OF THE INCOME TAX ACT, 1961. WE, THEREFORE, FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF MAX INDIA [295 ITR 282 (SC)] (SUPRA) QUASH THE ORDE R OF LD. CIT, CENTRAL-I, AHMEDABAD UNDER SECTION 263 OF THE I.T. ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 11. IT(SS)A. NOS. 230/AHD/2005 & 248/AHD/2005 ARE C ROSS APPEAL AGAINST THE ORDER DATED 09.08.2005 OF LD. COMMISSIONER OF INCOME TAX (APPEA LS)-II, AHMEDABAD FOR THE BLOCK ASSESSMENT PERIOD 1990-91 TO 1999-2000 AND UPTO 29. 07.1999. THIS WAS PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS) IN ASSESSEES A PPEAL AGAINST THE ORDER OF ASSESSING OFFICER UNDER SECTION 158BC READ WITH SECTION 263 O F THE INCOME TAX ACT, 1961 FOR THE BLOCK PERIOD 1990-91 TO 1999-2000 AND UPTO 29.07.1999. 12. SINCE IN ASSESSEES APPEAL IN IT(SS)A. NO. 118/ AHD/2005 (SUPRA), WE HAVE QUASHED THE ORDER UNDER SECTION 263 PASSED BY THE LD. CIT, THER EFORE, THE ORDER OF ASSESSING OFFICER DATED 9 IT(SS)A NO.118, 230 & 248/AHD/200 5 24.03.2005 UNDER SECTION 158BC READ WITH SECTION 26 3 IS ALSO CANCELLED. CONSEQUENTLY, THESE CROSS APPEALS BEING IT(SS)A. NOS. 230/AHD/2005 & 24 8/AHD/2005 ARE RENDERED INFRUCTUOUS. 13. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL OF THE ASSESSEE IN IT(SS)A. NO. 118/AHD/2005 IS ALLOWED AND REMAINING TWO APPEALS B EING IT(SS)A. NOS. 230/AHD/2005 & 248/AHD/2005 ARE RENDERED INFRACTUOUS, THEREFORE, D ISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 25.06.2010 . SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25 / 06 /2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.