K.P Zeenath, Calicut V. ACIT, Calicut

ITSSA 4/COCH/2006

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8745 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-12-2010
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 15-09-2010
• Assessment Year: misc
• Appeal Filed On: 16-01-2006
• Court: TRIBUNAL
• Department Lawyers: S C SONKAR
• Assessee Lawyers: A V MURLIDHARAN
• Keywords: Valuation report; Block assessment; Documents seized
• Section: 69; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N. VIJAYKUMARAN, J.M. AND SHRI SANJAY ARORA, A.M. .. I.T.(S&S)A NO. 04/C/2006 BLOCK ASSESSMENT PERIOD FROM 01.04.1990 TO 21.09.20 00 K.P. ZEENATH BAITH-UL-FATHIMA KRISHNA NAGAR COLONY P.O. KOLATHARA CALICUT (PAN: AJOPK 0646D) VS. THE ASSTT. C.I.T COMPANY CIRCLE II(1), KOZHIKODE (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.V. MURLIDHARAN, ADV. DEPARTMENT BY : SHRI S.C. SONKAR, CIT-DR O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE ARISING OUT OF T HE ORDER DATED 28.12.2005 BY THE COMMISSIONER OF INCOME TAX (APPEALS)-I, CALICUT (`C IT(A) FOR SHORT) FOR THE BLOCK PERIOD COMMENCING 1.4.1990 TO 21.9.000, THE DATE OF SEARCH. 2. THE ASSESSEES APPEAL CONTESTS ITS ASSESSMENT VI DE ORDER U/S. 158BC R/W S. 158BD OF THE INCOME-TAX ACT, 1961 [IN SHORT, `THE ACT] D ATED 30.11.2004; HAVING BEEN DISMISSED ON THE LEGAL GROUNDS, AS ALSO CONFIRMED S UBSTANTIALLY ON FACTS, BY THE FIRST APPELLATE AUTHORITY. VIDE ITS LEGAL GROUNDS, THE A SSESSEE IMPUGNS THE VALIDITY OF THE BLOCK ASSESSMENT PROCEEDINGS IN ITS CASE, QUESTIONING THE ISSUE OF NOTICE U/S. 158BD R/W S. 158 PAGE 2 OF 11 I.T.S.SA. NO. 04/C/2006 BC, BOTH ON THE GROUND OF ABSENCE OF ANY MATERIAL F OUND IN SEARCH RELATING THE ASSESSED UNDISCLOSED INCOME OR GENERALLY WITH REGARD TO ANY SOURCE OF INCOME, AS WELL ON THE BASIS THAT AS SHE WAS A MINOR DURING SOME OF THE PREVIOUS YEARS FOR WHICH THE UNDISCLOSED INCOME STANDS ASSESSED. 3. A BRIEF RECOUNT OF THE FACTS WOULD BE NECESSA RY BEFORE WE COULD CONSIDER, ISSUE WISE, THE MERITS OF THE ASSESSEES CASE. A SEARCH U/S. 13 2 OF THE ACT WAS CONDUCTED ON 21.9.2000 AT THE BUSINESS AND RESIDENTIAL PREMISES OF ONE, SHRI K.P. BEERAN (OF M/S. RIYAZ JEWELLERY, KOZHIKODE), THE ASSESSEES FATHER. THE DOCUMENTS SEIZED THEREAT INCLUDED A SALE DEED FOR THE PURCHASE BY THE ASSESS EE OF A PLOT OF LAND ADMEASURING 13.9 CENTS AT CHERUVANNUR ON 26.9.1998, I.E., FALLING WI THIN THE BLOCK PERIOD. THE DOCUMENTED PRICE OF THE SAME WAS AT ` 1 LAKH. THE SEIZED MATERIAL ALSO REVEALED PURCHASE OF TWO PLOTS OF LAND BY THE ASSESSEES FATHER (EACH MEASUR ING 10.5 CENTS) AT CHERUVANNUR PER AGREEMENT/S ENTERED INTO IN MAY,1999 AT A CONSIDERA TION OF ` 60,100/- PER CENT, EVEN AS SALE DEEDS IN THEIR RESPECT WERE REGISTERED SUBSEQU ENTLY ON 12.7.1999 FOR ` 1.55 LAKHS ONLY, WITH THE PURCHASER THE ASSESSEES FATHER ADMITTING (PER THE CASH FLOW STATEMENT FILED IN EXPLANATION OF THE INVESTMENTS) TO HAVE PA ID A PURCHASE CONSIDERATION OF `. ` 6,46,075/- FOR ONE OF THE TWO PLOTS. THE SAID PLOT S WERE ADJACENT TO THE ASSESSEES LAND. BEING LOCATED AT THE SAME PLACE, AND PURCHASED AROU ND THE SAME TIME, I.E., AS THE PLOTS PURCHASED BY HER FATHER, THE ASSESSEE WAS ALSO INFE RRED TO HAVE UNDERSTATED THE PURCHASE CONSIDERATION, RESULTING IN UNDISCLOSED INCOME BEIN G IMPUTABLE TO HER WITH REFERENCE TO THE SAID PURCHASE OF LAND. ACCORDINGLY, NOTICE U/S . 158BD R/W S. 158BC OF THE ACT WAS ISSUED. 4.1 THE ASSESSEES FIRST CONTENTION IS THAT THE SEARCH DID NOT YIELD ANY MATERIAL OR INFORMATION TO SHOW THAT SHE HAD ANY SOURCE OF INCO ME. SHE WAS ACTUALLY A MINOR DURING THE RELEVANT PERIOD, WITH NO KNOWN SOURCE OF INCOME . AS SUCH, THE ISSUANCE OF NOTICE U/S. 158 BD OF THE ACT WAS BAD IN LAW. THE ADDITIONAL G ROUND RAISED BY THE ASSESSEE BEFORE US RAISING THIS ISSUE, IS AS UNDER: PAGE 3 OF 11 I.T.S.SA. NO. 04/C/2006 CONSIDERING THE FACT THAT THE APPELLANT HAS NO KNOW N SOURCE OF INCOME AND IN VIEW OF THE FACT THAT THE APPELLANT WAS MINOR UP TO 7.1.2000 AND IN THE ABSENCE OF THE CONDITIONS PRESCRIBED FOR ISSUANCE OF NOTICE U/ S. 158BD OF THE INCOME-TAX ACT, 1961 THE ASSESSMENT MADE ON THE APPELLANT U/S. 158B C OF THE ACT IS ARBITRARY AND ILLEGAL. 4.2 THIS ISSUE, WE FIND HAD ALSO BEEN RAISED BEFORE THE LD. CIT(A), WHO HELD THE PROCEEDINGS AS VALID. THE FACT-ISSUE OF ASSESSEE BE ING A MINOR HAVING NOT BEEN RAISED BEFORE THE ASSESSING OFFICER, IN HIS VIEW THERE WAS , THEREFORE, NO ERROR ON THE PART OF THE AO IN NOT ADDRESSING THAT ASPECT OF THE MATTER. FU RTHER, THAT BEING THE CASE, THE DECISION IN THE CASE OF NTPC VS. CIT REPORTED AT 229 ITR 383 (SC) WOULD NOT APPLY. ALS O, THE ASSESSEE WAS ADMITTEDLY A MAJOR ON THE DATE OF SEAR CH AND, AS SUCH, THE NOTICE U/S. 158 BD R/W S. 158 BC OF THE ACT, INITIATING ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT OF UNDISCLOSED INCOME FOR THE BLOCK PERIOD ENDING ON T HAT DATE, STOOD RIGHTLY ISSUED ON HER. 4.3 AS WOULD BE APPARENT FROM THE FOREGOING, IN OUR VIEW, THE ASSESSEES LEGAL GROUND MERITS ADMISSION; THE PRIMARY FACTS ON WHICH THE SA ME IS BASED BEING ON RECORD AND, EQUALLY IMPORTANT, UNDISPUTED. AS RIGHTLY POINTED OUT BY THE ASSESSEE EVEN BEFORE THE LD. CIT(A), THE FACT OF THE ASSESSEE BECOMING A MAJOR O N 7.1.2000 IS BORNE OUT BY THE ASSESSEES DATE OF BIRTH, WHICH FINDS MENTION IN TH E RETURN OF INCOME IN FORM 2B AS DULY VERIFIED AND FILED BY THE ASSESSEE. AS SUCH, WE ARE UNABLE TO SUBSCRIBE TO THE VIEW OF THE LD. CIT(A) THAT THE DECISION IN THE CASE OF NTPC V. CIT (SUPRA) WOULD NOT APPLY, PRECLUDING THE ASSESSEE FROM RAISING THIS GROUND BE FORE HIM. ON THE MERITS OF THE ISSUE, THE ASSESSEE WAS ADMITTEDLY A MAJOR ON THE DATE OF SEARCH, SO THAT THE ASSESSMENT FOR THE BLOCK PERIOD U/C. XIV-B OF THE ACT HAD TO BE FRAMED ON HER BY THE ISSUE OF NOTICE IN HER NAME. THE FACT OF THE ASSESSEE BEING A MINOR FOR A PART OF THE BLOCK PERIOD, AND FOR WHICH THE ASSESSEE ADVERTS TO THE MENTION OF HER DATE OF BIRTH ON THE RETURN FORM ITSELF, WOULD NOT OPERATE TO DISQUALIFY OR IMBUE THE NOTICE, ISSU ED ON A MAJOR, WITH LEGAL INFIRMITY. FURTHER, THE DEFINITION OF AN `ASSESSEE UNDER THE ACT (SEC. 2(7)) DOES NOT EXCLUDE A MINOR. IT IS ONLY DURING THE ASSESSMENT PROCEEDING S THAT IF SOME INCOME IS FOUND TO BE PAGE 4 OF 11 I.T.S.SA. NO. 04/C/2006 ASSESSABLE FOR THE PERIOD FOR WHICH THE ASSESSEE IS A MINOR, THAT THE SAME, WHERE NOT REPRESENTING AN INCOME ARISING OR ACCRUING ON ACCOU NT OF ANY PERSONAL LABOUR OR APPLICATION OF KNOWLEDGE, SKILL, ETC., THAT IT SHAL L BE INCLUDED IN THE HANDS OF HIS PARENT WHOSE INCOME IS HIGHER. AS SUCH, WE FIND NO INFIRM ITY WITH THE ISSUE OF NOTICE U/S. 158BD R.W.S 158BC ON THE ASSESSEE, AND THE ASSESSME NT COULD NOT BE SAID TO BE INFIRM ON THAT COUNT. 4.4 THE SECOND CONTENTION RAISED BY THE ASSESSEE IS QUA THE SATISFACTION TO BE RECORDED WITH REFERENCE TO THE MATERIAL FOUND DURING SEARCH SUGGESTING HER UNDISCLOSED INCOME FOR THE BLOCK PERIOD. IT IS CLAIMED THAT THE REQUIRED P ROCEDURE IN THIS RESPECT HAS NOT BEEN OBSERVED, SO THAT THE ASSESSMENT IS NOT MAINTAINABL E ON THAT SCORE. THE RECOUNT OF THE FACTS, AS RECORDED HEREINBEFORE (REFER PARA 3 ABOVE ), AND FOR WHICH THE ASSESSING OFFICER HAS REPRODUCED THE ASSESSMENT ORDER IN THE CASE OF ASSESSEES FATHER, I.E., THE PERSON SEARCHED, WOULD CONFIRM WITHOUT DOUBT THAT THE ASSE SSING OFFICER OF THE ASSESSEES FATHER HAD SUFFICIENT MATERIAL AND REASONS TO INFER UNDISC LOSED INCOME OF THE ASSESSEE. THAT THIS SATISFACTION EMANATES FROM THE MATERIAL FOUND IN SE ARCH OR THE EVIDENCE OR INFORMATION AVAILABLE WITH THE CONCERNED ASSESSING OFFICER RELA TING TO THOSE MATERIALS, WOULD BE EVIDENT FROM A BARE READING OF PARA 12 OF THE BLOCK ASSESSMENT ORDER IN THE CASE OF SHRI BEEREN, THE PERSON SEARCHED AS WELL AS THE ASSESSEE S FATHER, WHICH STANDS REPRODUCED BY THE AO AT PAGES 2, 3 OF HIS ASSESSMENT ORDER. NO P ARTICULAR FORMAT STANDS PRESCRIBED OR STIPULATED BY THE STATUTE FOR THE RECORDING THE SAT ISFACTION BY THE ASSESSING OFFICER OF THE PERSON SEARCHED; THE TWIN CRITERION FOR A VALID INI TIATION OF PROCEEDINGS U/S. 158 BD BEING THAT THERE MUST BE MATERIALS FOUND IN SEARCH OR EVI DENCE/S OR INFORMATION REFERABLE TO THOSE MATERIALS WITH THE AO OF THE PERSON SEARCHED OR REQUISITIONED TO FORM A PRIMA FACIE OPINION THAT THERE IS SOME INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD AND, FURTHER, WHICH STANDS NOT DISCLOSED OR WOULD NOT BE DISCLOSED TO T HE REVENUE, I.E., `UNDISCLOSED INCOME, BY DEFINITION. IN THE PRESENT CASE THIS SATISFACTIO N IS IMPELLING AND MANIFEST IN THE ASSESSMENT ORDER OF THE PERSON SEARCHED. REFERENCE IN THIS CONTEXT IS DRAWN TO THE DECISION BY THE TRIBUNAL IN THE CASE OF SUBAN JAVEED V. CIT (ASSTT.) , 122 ITD 307 (BANG.). PAGE 5 OF 11 I.T.S.SA. NO. 04/C/2006 THE SATISFACTION HAS ONLY TO BE A PRIMA FACIE ONE, AND INFERABLE TO THE SAID MATERIALS. WHETHER THE SAME SHALL RESULT IN THE AS SESSMENT OF UNDISCLOSED INCOME OR THE ASSESSEE WOULD FURNISH A SATISFACTORY EXPLANATION W ITH REGARD THERETO, AND WHICH COULD AGAIN BE SO EITHER FOR THE WHOLE OR A PART OF THE INCOME UNDER REFERENCE, IS A MATTER SUBSEQUENT, WHICH WOULD DEPEND ON THE RELATIVE MERI TS OF THE CASE, AND CANNOT DECIDE THE QUESTION OF VALIDITY OR OTHERWISE OF THE ISSUE OF N OTICE U/S. 158BD AND, THUS, OF THE INITIATION OF THE PROCEEDINGS THEREBY, FOR WHICH TH E SOLE CRITERIA IS THE EXISTENCE OF A PRIMA FACIE SATISFACTION ON THE PART OF THE AO OF THE PERSON S EARCHED, AND WHICH WE HAVE FOUND AS SO. REFERENCE IN THIS CONTEXT IS MADE TO THE DECISION IN THE CASE OF HARVEY HEART HOSPITALS LTD. VS. CIT (ASSISTANT) (2010) 130 TTJ (CHENNAI) 700. THIS IS TRITE LAW, AND FOR WHICH REFERENCE MAY BE DRAWN TO A HOST OF D ECISIONS BY THE HIGHER COURTS OF LAW, RENDERED IN THE CONTEXT OF THE REASSESSMENT PROCEED INGS, WHICH ALSO PRESCRIBE THE PROCEDURE OF RECORDING ALBEIT IN WRITING - BY THE AO CONCERNED OF HIS REASONS TO BELIEVE AS TO THE ESCAPEMENT OF INCOME PRIOR TO THE ISSUE O F NOTICE U/S. 148, WITH THE SUFFICIENCY OF THE REASONS BEING NOT SUBJECT TO JUDICIAL REVIEW (REFER: RAYMONDS WOOLEN MILLS LTD. V. ITO , 236 ITR 34 (SC); PHOOL CHAND BAJRANG LAL V. ITO , 203 ITR 456 (SC); CENTRAL PROVINCES MANGANESE ORE CO. LTD. V. ITO (1991) 191 ITR 662 (SC) ). THE CONTENTION THAT NO MATERIAL OR INFORMATION STANDS RECOVERED OR COLLECTED IN SEARCH TO SHOW OF THE ASSESSEE HAVING UNDISCLOSED INCOME DURING THE BLOCK PERIOD, UNDER THE CIRCUMSTANCES, CANNOT BE ACCEPTED, BEING CONTRARY TO THE FACTS ON RECORD. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE ASSESSEES GRIEVANCE IN THIS REGARD. 5.1 THE NEXT GRIEVANCE PROJECTED IS THAT THE ASSESSEE WAS A MINOR AND DID NOT HAVE ANY KNOWN SOURCE OF INCOME DURING THE RELEVANT PERI OD. WE HAVE ALREADY CLARIFIED EARLIER THAT HER INCOME, ASSESSABLE AS UNDISCLOSED INCOME, TO THE EXTENT NOT ARISING FROM ANY PERSONAL LABOUR OR APPLICATION OF SKILL, ETC., WOULD STAND TO BE INCLUDED IN THE HANDS OF HER PARENT WHOSE INCOME FOR THE RELEVANT YEAR(S) IS HIGHER. THE ASSESSEES EXPLANATION DOES NOT REVEAL OF HER UNDERTAKING ANY ACTIVITY DUR ING THE RELEVANT YEARS, BEING THE PREVIOUS YEARS RELEVANT TO ASSESSMENT YEARS 1999-20 00 AND 2001-02 (SHE ATTAINING PAGE 6 OF 11 I.T.S.SA. NO. 04/C/2006 MAJORITY ON 7.1.2000). THE INCOME ASSESSED IN THE ASSESSEES HAND IS BY INVOKING S. 69. THE SAME IS ONLY AN INCOME UNDER THE PROVISIONS OF THE ACT, AND AS MUCH INCOME AS ANY OTHER [REFER: CIT V. GANPATRAI GAJANAND , 108 ITR 403 (ORISSA)]. THE FURTHER CONTENTION OF THE ASSESSEE HAVING NO KNOWN SOURCE OF INCOME DU RING THE RELEVANT PERIOD IS, IN VIEW OF THE DEEMING NATURE OF S. 69, OF LITTLE CONSEQUEN CE. THE SAID PROVISION, IT NEEDS TO BE APPRECIATED, DOES NOT REQUIRE FOR ITS APPLICATION, A FINDING TO THE EFFECT THAT ASSESSEE HAD SOME KNOWN SOURCE OF INCOME FOR THE RELEVANT PERIOD OR PRIOR THERETO. IF THAT BE SO, THIS ARGUMENT COULD VALIDLY BE TAKEN BY ANY `MAJOR ASSE SSEE AS WELL. 5.2 HERE, IT MAY ALSO BE RELEVANT TO ADVERT TO THE DECISION IN THE CASE BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. NOORJEHAN (P.K.) (1997) 237 ITR 570 (SC), ALSO RELIED UPON BY THE ASSESSEE. WE HAVE CAREFULLY PERUSED TH E SAME, AND ALSO EXAMINED THE ISSUE OF ITS APPLICABILITY IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE SAID DECISION CLARIFIES THAT THE WORD USED IN SECTION 69 BEING M AY AND NOT SHALL, THE DEEMING OF UNEXPLAINED INCOME THEREUNDER COULD NOT FOLLOW AUTO MATICALLY OR AS A MATTER OF COURSE, I.E., WHENEVER THE ASSESSEE IS FOUND WANTING IN FUR NISHING A SATISFACTORY EXPLANATION WITH REGARD TO THE INVESTMENT/S. THAT IS, THE SAME, OR T HE NON-SATISFACTORY EXPLANATION, CONFERS A JURISDICTION ON THE AO, WHICH IS TO BE EXERCISED JUDICIOUSLY, REGARD BEING MADE TO ALL THE SURROUNDING FACTS AND CIRCUMSTANCES OF THE CASE . IN THAT CASE, THE ASSESSMENT YEARS BEING 1968-69 AND 1969-70, ALL THE AUTHORITIES BELO W WERE IN AGREEMENT AS TO THE UNSATISFACTORY STATUS OF THE ASSESSEES EXPLANATION TOWARD HER INVESTMENT/S. HOWEVER, GIVEN THE CIRCUMSTANCES SHE WAS PLACED IN, SHE COUL D NOT HAVE, BY ANY STRETCH OF IMAGINATION, EVEN BY WORKING FOR A DECADE, EARN THE REQUISITE AMOUNT BEING CREDITED TO HER, SO AS TO HAVE MADE THE IMPUGNED INVESTMENT(S). IN OTHER WORDS, THE SAID DECISION STOOD BASED ON THE PECULIAR FACTS OF THE CASE, AND RESTED ON THE TRIBUNALS FINDING OF A COMPLETE AND TOTAL ABSENCE OF ANY RESOURCES WITH TH E ASSESSEE FOR THE INVESTMENT. IN THE INSTANT CASE, IN CONTRADISTINCTION, THE ASSESSEE IS A MINOR DURING THE PERIOD OF PURCHASE OF PLOT OF LAND AND ITS REGISTRATION. SHE IS, THEREFO RE, INCOMPETENT TO CONTRACT, AND THE SAID PURCHASE AND ALL THE RELATED ACTIVITIES HAVE BEEN C ARRIED OUT BY HER FATHER, SHRI PAGE 7 OF 11 I.T.S.SA. NO. 04/C/2006 K.P.BEERAN, THE PERSON SEARCHED. THE DOCUMENTED PR ICE IS ` 1 LAKH, SO THAT THE ASSESSEE ADMITTEDLY HAD RESOURCES TO THAT EXTENT. IF SHE CO ULD HAVE ACCESS TO OR GENERATE RESOURCES FOR ` 1 LAKH, WHY, WE MAY ASK, NOT A HIGHER AMOUNT?, ASSUMI NG THE SAME IS FOUND OR DETERMINED AS THE CORRECT PURCHASE PRICE. 5.3 PURCHASE OF PROPERTY BY AN EARNING MEMBER OF TH E FAMILY IN THE NAME OF HIS NEAR AND DEAR ONES, PARTICULARLY WIFE AND UNMARRIED DAUG HTER, IS A COMMON PRACTICE/PHENOMENA IN THE INDIAN SOCIETY. IN FACT, THE LAW, I.E., THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988, WHICH PRECLUDES ANY PERSON FROM ENTERING INTO A BENAMI TRANSACTION (I.E., WHERE THE PROPERTY IS TRANSFERRE D TO ONE PERSON FOR A CONSIDERATION PAID OR PROVIDED BY ANOTHER), BESTOWS LEGAL BENEDICTION TO SUCH A PRACTICE, EXCLUDING THE PURCHASE OF PROPERTY IN THE NAME OF ONES WIFE AND UNMARRIED DAUGHTER FROM ITS PURVIEW/AMBIT. WHAT WOULD, THEREFORE, BE MORE RELE VANT FOR THE PURPOSE IN THE PRESENT CASE, IS TO SEE WHETHER THE ASSESSEES FATHER HAD A NY SOURCE/S OF INCOME OR NOT. THE COURT IS REQUIRED TO LOOK AT THE REALITY OF THE CIRCUMSTA NCES OR THE TRANSACTION, I.E., AT ITS SUBSTANCE, AND NOT ITS FORM. NO DOUBT, THE REVENUE HAS NOT PROCEEDED AGAINST THE ASSESSEES FATHER IN THE MATTER, AND WHICH MAY HAVE BEEN DETRIMENTAL TO ITS CASE. HOWEVER, SECTION 64(1A) ANSWERS THE SITUATION, EFFE CTIVELY PRECLUDING THE ADOPTION OF A PLEA AS BEING RAISED. THAT IS, A MINORS INCOME, W HERE NOT ARISING OUT OF ANY PERSONAL LABOUR OR APPLICATION OF KNOWLEDGE, SKILL, ETC., AS IN THE PRESENT CASE, IS TO BE INCLUDED IN THE COMPUTATION OF THE TOTAL INCOME OF THE PARENT W HOSE INCOME IS HIGHER. IN OTHER WORDS, THE LAW ITSELF TAKES CARE OF THE SITUATION O F THE TYPE ARISING, WITH A STATUTORY PRESUMPTION AS REGARDS A MINORS INCOME, WHO IS LEG ALLY INCOMPETENT TO CONTRACT, THAT THE SAME ARISES ON ACCOUNT OF INPUTS - MATERIAL OR OTHE RWISE FROM HIS PARENT, AND WHICH, THEREFORE, IS ASSESSABLE IN HIS HANDS, I.E., EXCEPT WHERE SHOWN AS ARISING OUT OF THE MINORS PERSONAL EFFORTS. 5.4 CONTINUING FURTHER, WE MAY ALSO CLARIFY; THE LA W IN THE MATTER BEING TRITE, THAT THE DEEMING PROVISIONS, VIZ., SECTIONS 68, 69, ETC., ON LY EMBODY THE SALUTARY PRINCIPLES OF PAGE 8 OF 11 I.T.S.SA. NO. 04/C/2006 COMMON LAW JURISPRUDENCE AND, FURTHER, ONCE THE CON DITION(S) PRECEDENT FOR THE APPLICATION OF THE SECTION(S) IS MET, THE ASSESSING OFFICER IS UNDER NO FURTHER OBLIGATION TO SHOW THAT THE INCOME IS FROM A PARTICULAR SOURCE OR EARNED IN A PARTICULAR YEAR. REFERENCE IN THIS CONTEXT MAY BE DRAWN TO THE DECISIONS IN TH E CASE OF A.GOVINDARAJULU MUDALIAR V. CIT (1958) 34 ITR 807 (SC); KALE KHAN MOHAMMED HANIF VS. CIT (1963) 50 ITR 1(SC); CIT VS. DEVI PRASAD VISHWANATH PRASAD (1969) 72 ITR 194 (SC); CHUHARMAL VS. CIT (1988) 172 ITR 256 (SC), TO CITE A FEW. 6. THE NEXT ISSUE THAT WE MAY ADDRESS IS THE ASSE SSEES PLEA THAT THE ASSESSMENT OF UNDISCLOSED INCOME CANNOT BE MADE ON AN ESTIMATE BA SIS. TOWARD THIS, WE FIND THAT THERE IS IN LAW NO, AND RATHER CANNOT BE A, LEGAL BAR ON THE POWER OF THE AO TO FRAME AN ASSESSMENT, WHICH IS PLENARY; THE ONLY REQUIREMENT BEING THAT THE SAME IS TO BE BASED ON RELEVANT MATERIALS, AND BY DRAWING COGENT INFERENCE S THERE-FROM. TRUE, ITS OPEN TO THE ASSESSEE TO CONTEST THE ADDITIONS/DISALLOWANCES AS MADE ON MERITS, I.E., ON QUANTUM, CLAIMING THE SAME TO BE EXCESSIVE, BUT THAT IS A D IFFERENT MATTER ALTOGETHER, WHICH WOULD REQUIRE TO BE DECIDED ON ITS OWN MERITS, AS WOULD B E THE CASE IN ANY REGULAR ASSESSMENT. THE PROVISIONS OF LAW, AS WELL AS THE PRINCIPLES GO VERNING THE ASSESSMENT OF INCOME REMAIN THE SAME, WHETHER THE ASSESSMENT IS OF DISCL OSED OR UNDISCLOSED INCOME. REFERENCE IN THIS CONTEXT IS DRAWN TO THE DECISIONS IN THE CASE OF HOTEL KUMAR PALACE VS. CIT , 283 ITR 110 (P&H); RAJNIK AND CO. VS. CIT (ASSISTANT) , 251 ITR 651 (A.P.); CIT VS. RAJENDAR PRASAD GUPTA , 248 ITR 350 (RAJ.). 7.1 THE NEXT ISSUE RAISED BY THE ASSESSEE IS QUA QUANTUM, PER ITS GROUND NOS. 4, 5 & 7. THE ASSESSEE IN THIS REGARD HAS NOT POINTED OUT ANY INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW BEFORE US. THE PRIMARY FACTS ARE UNDISPUTED. THE ASSESSEE PURCHASED 13.9 CENTS OF LAND ON 26.9.1998 FOR A STATED CONSID ERATION OF ` 1 LAKH. THE ASSESSEES FATHER PURCHASED AN ADJACENT PLOT, MEASURING 10.5 C ENTS, IN MAY, 1999 AT THE RATE OF ` 60,100/- PER CENT, THOUGH THE SAME STOOD REGISTERED FOR ` 1.55 LAKHS ONLY. UNDER THE CIRCUMSTANCES, WE ARE UNABLE TO SEE AS TO HOW THE A SSESSEES ADJACENT PLOT COULD BE PAGE 9 OF 11 I.T.S.SA. NO. 04/C/2006 VALUED AT ` 7194/- PER CENT, WHICH WOULD IMPLY A PRICE INCREASE OF 83 5% INSIDE ONE YEAR. SO, HOWEVER, A PRICE INCREASE OF 10% PER ANNUM CAN BE ASSUMED AS NORMAL. THE REVENUE HAS ALSO NOT FURNISHED THE GUIDELINE VALUE OF THE PROPERTY UNDER REFERENCE, I.E., UNDER THE STAMP ACT. WE, ACCORDINGLY, DIRECT FOR TH E ADOPTION OF A PURCHASE PRICE AT ` 54,000/- PER CENT AS AGAINST AT ` 60,100/- ADOPTED BY THE REVENUE. 7.2 WITH REGARD TO THE COST OF CONSTRUCTION, WHICH STARTED IMMEDIATELY AFTER THE PURCHASE OF LAND, OF A RESIDENTIAL BUILDING AND SHO P(S) THEREAT, WE FIND THAT THE AO HAS ADOPTED THE VALUE AS PER THE VALUATION REPORT SUBMI TTED BY THE ASSESSEE, I.E., AT ` 12.33 LAKHS, EXCLUDING THE COST OF LAND VALUED AT ` 1 LAKH. THE ONLY ADDITION(S) MADE BY HIM IS ON ACCOUNT OF THE REJECTION OF THE EXPLANATION/S FU RNISHED BY THE ASSESSEE TOWARD THE SAME (ALL OF WHICH ARE FOR PERIOD UP TO THE DATE OF SEAR CH), EXCEPT WHERE THE ASSESSEES CLAIM WAS SUPPORTED BY SOME MATERIALS, AND QUA WHICH WE FIND SOME RELIEF AS HAVING BEEN ALLOWED BY THE LD. CIT(A), FURTHER OBSERVING THAT N O CREDIBLE EVIDENCE STANDS SUPPLIED BY THE ASSESSEE EVEN AT THE APPELLATE STAGE. WITH REG ARD TO THE HOUSE WARMING EXPENSES (GROUND # 7), WHICH STAND ASSESSED AT ` 50,000/-, AS AGAINST NIL BY THE ASSESEE, WE FIND TH E SAME STANDS NOT AGITATED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY. THERE IS NEITHER ANY GROUND RAISED IN ITS RESPECT BEFORE HIM NOR, THEREFORE, ANY ADJUDICATION BY HIM. EVEN BEFORE US, THE ASSESSEE, WHOSE CASE AS W E OBSERVE REMAINS ONLY OF BALD ASSERTION/S, I.E., DE HORS ANY FACTUAL INPUTS, DID NOT RAISE THIS ISSUE AT TH E TIME OF HEARING. UNDER THE CIRCUMSTANCES, WE ARE UNABLE TO SEE AS TO HOW THE SAME IS MAINTAINABLE BEFORE US. THE ASSESSEE, WE FIND, HAS RELIED ON THE DECIS ION IN THE CASE OF BIMA SINGH VS. CIT , 308 ITR 171 (PATNA), TO THE EFFECT THAT WHERE THE I NVESTMENT AS DISCLOSED, AND AS VALUED BY THE DVO, REFLECTS A MEAGER DIFFERENCE, THERE IS NO CAUSE FOR MAKING ANY ADDITION. THE RELIANCE IS MISPLACED, FOR THE REASON, AS ALSO OBSE RVED EARLIER, THE AO HAS ADOPTED THE VALUE AS FURNISHED BY THE ASSESSEE ITSELF, SO THAT THERE IS NO ADDITION ON THIS ACCOUNT. 8. THE ASSESSEES NEXT AND LAST GROUND RELATES TO T HE LEVY OF SURCHARGE ON THE ASSESSED TAX, WHICH, AGAIN, STANDS NOT RAISED BEFORE THE LD. CIT(A), THOUGH BEING LEGAL, STANDS PAGE 10 OF 11 I.T.S.SA. NO. 04/C/2006 ADMITTED. THE SAME IS ON THE BASIS THAT SECTION 113 OF THE ACT, WHEREBY THE LEVY OF SURCHARGE STOOD EXTENDED TO ASSESSMENTS U/S. 158BC, PER FINANCE ACT, 2001 WITH EFFECT FROM 1.6.2002, IS ONLY PROSPECTIVE IN NATURE, AND W OULD THUS NOT BE APPLICABLE IN THE PRESENT CASE; THE BLOCK PERIOD ENDING ON 21.09.2000 . THE MATTER HAS SINCE BEEN CLARIFIED BY THE HONBLE APEX COURT VIDE ITS DECISIONS IN THE CASE OF CIT V . SURESH N.GUPTA , 297 ITR 322 (SC) AND CIT VS. RAJIV BHATARA , 310 ITR 105 (SC); HOLDING THE PROVISO TO SECTION 113 TO BE CLARIFICATORY AND CURATIVE IN NAT URE, SO THAT IT WOULD THEREFORE BE APPLICABLE TO ALL ASSESSMENTS MADE UNDER CHAPTER XI V-B AS PER THE RATES SPECIFIED IN THE RELEVANT FINANCE ACT, I.E., THAT APPLICABLE TO THE DATE OF SEARCH. THERE IS WE OBSERVE NO DISPUTE WITH REGARD TO THE RATE OF THE SURCHARGE, W HICH IN ANY CASE IS ONLY A MATTER OF RECORD, BUT ONLY WITH REGARD TO ITS APPLICABILITY. THE ASSSESSEES CONTENTION IS THAT THE MATTER DECIDED BY THE APEX COURT IN SURESH N.GUPTA (SUPRA) HAS BEEN REFERRED BY IT TO A LARGER BENCH IN CIT V. VATIKA TOWNSHIP (P.) LTD . (2010) 314 ITR 338 (SC). WE DO NOT SEE AS TO HOW, NEVERTHELESS, ANY DIFFERENT VIEW OF THE MATTER BY THE TRIBUNAL IS POSSIBLE, I.E., AS LONG AS THE DECISION REFERRED TO STANDS NO T STAYED BY THE HONBLE APEX COURT ITSELF. FURTHER, A FAVOURABLE VIEW BY THE APEX COURT, BEING THE LAW OF THE LAND, WOULD LEAD TO A RECTIFICATION. THE ISSUE REMAINS DECIDED BY IT, AND THUS BY US, IN FAVOUR OF THE REVENUE. WE HOLD ACCORDINGLY. 9. AS SUCH, THE ONLY MISTAKE COMMITTED BY THE ASS ESSING OFFICER; AS IT APPEARS, ON ACCOUNT OF HE BEING NOT COGNIZANT OF THE MINORITY S TATUS OF THE ASSESSEE, AND WHICH IN OUR OPINION SHOULD HAVE BEEN, ON THE ISSUE HAVING BEEN RAISED BEFORE HIM, SET RIGHT BY THE FIRST APPELLATE AUTHORITY, IS THAT THE INCOME FOR T HE YEARS FOR WHICH THE ASSESSEE IS A MINOR, OUGHT TO HAVE BEEN CLUBBED IN THE HANDS OF HER PARE NT WHOSE INCOME IS HIGHER. THE SAME, IS PRESCRIBED SO AS TO SUBJECT THE RELEVANT INCOME OF THE MINOR TO THE MAXIMUM RATE OF TAX UNDER THE CIRCUMSTANCES, AND BY IMPLICATION ESCHEW DECLARATION OF INCOMES IN THE HANDS OF MINORS AT LITTLE OR NO COST OF TAX. AND WHICH WO ULD BE OF LITTLE OR NO CONSEQUENCE IN THE CONTEXT OF THE PRESENT CASE OF ASSESSMENT OF UNDISC LOSED INCOME, WHICH IS ASSESSABLE ONLY AT A PRESCRIBED FLAT RATE OF TAX. HOWEVER, THE PRO VISION QUA CLUBBING OF INCOME OF MINORS PAGE 11 OF 11 I.T.S.SA. NO. 04/C/2006 (S. 64(1A)), BEING A SUBSTANTIVE PROVISION, IS NEVE RTHELESS, TO BE GIVEN EFFECT TO. WE WOULD THEREFORE CONSEQUENTIALLY DIRECT THAT THE ASS ESSEES UNDISCLOSED INCOME UP TO THE DATE OF HER MINORITY BE, FOR THE PURPOSE OF ITS ASS ESSMENT UNDER THE ACT, INCLUDED IN THE COMPUTATION OF UNDISCLOSED INCOME OF HER FATHER, WH O ALSO STANDS ASSESSED IN RESPECT OF UNDISCLOSED INCOME FOR THE RELEVANT BLOCK PERIOD. W E DIRECT FOR MODIFICATION OF THE ASSESSMENT ACCORDINGLY. 10. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. SD/- SD/- (N. VIJAYKUMARAN) (SANJAY ARORA ) JUDICIAL MEMBER ACCOUNTANT MEMBER COCHIN, DATED THE 15.12.2010 VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE. BY ORDER (ASSISTANT REGISTRAR)