Shri Manharlal V.Shah, Ahmedabad V. The ACIT., Cent.Circle-2(3), Ahmedabad

ITSSA 89/AHD/2007

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9391 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-04-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-03-2010
• Assessment Year: misc
• Appeal Filed On: 14-05-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUMAR HRISHIKESH
• Assessee Lawyers: K I THAKKAR
• Keywords: Block assessment
• Section: 133A; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N.S. SAINI, A M) IT (SS) A NO.89/AHD/2007 BLOCK PERIOD: 01-04-1990 TO 08-12-2000 SHRI MANHARLAL V. SHAH, D/10, BHAGWATI APARTMENT, MEMNAGAR, AHMEDABAD PA NO.ACEPS 6534M VS THE J. C. I. T., CENTRAL CIRCLE- 2 (3), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K. I. THAKKAR, AR RESPONDENT BY KUMAR HRISHIKESH, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A)-III, AHMEDABAD DATED 30 -03-2007 FOR THE ABOVE BLOCK PERIOD. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/ S 132 OF THE IT ACT WAS CARRIED OUT IN THE SHAH FINANCE GROUP OF CASES ON 08-12-2000. DURING THE SEARCH AT THE PREMISES OF M/S. VIR FINAN CE, RS.3,00,000/- WAS FOUND WITH A PERSON NAMED SHRI MANHARBHAI G. PA TEL, WHO HAD BEEN PRESENT AT THAT PREMISES. SHRI MANHARBHAI G. PATEL IN HIS STATEMENT BEFORE THE AUTHORIZED OFFICER CLAIMED THAT HE IS A PARTNER OF THE ASSESSEE AND THAT THE MONEY BELONGED TO THE ASSESSEE. HOWEVE R, IN THE STATEMENT RECORDED U/S 131 ON THE SAME DAY, 08-12-2000, THE A SSESSEE REFUSED TO HAVE GIVEN ANY AMOUNT TO SAID SHRI MANHARBHAI G. PA TEL. HE HAS DENIED TO HAVE GIVEN ANY AMOUNT TO SHRI MANHARBHAI G. PATE L. LATER ON, A IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 2 FURTHER STATEMENT OF THE ASSESSEE WAS RECORDED ON 2 0-12-2000, IN WHICH THE ASSESSEE ADMITTED TO HAVE GIVEN THE AMOUNT OF R S.3,00,000/- TO HIS PARTNER TO OBTAIN CHEQUES/DD FROM M/S. VIR FINANCE SO THAT THE SAME COULD BE INVESTED IN THEIR PARTNERSHIP FIRM BY THE NAME SUN BORAX INDUSTRIES. THE AO, THEREFORE, NOTED THAT THE ABOVE EVIDENCES AND SEQUENCES OF FACTS CLEARLY INDICATED THAT THE ASSES SEE HAS EARNED UNDISCLOSED INCOME IN THE RELEVANT BLOCK PERIOD WHI CH HAD NOT BEEN DISCLOSED TO THE INCOME TAX DEPARTMENT AND THE SAME WARRANTED ASSESSMENT U/S 158BD OF THE IT ACT. NOTICE WAS ACCO RDINGLY ISSUED TO THE ASSESSEE TO FILE RETURN FOR THE BLOCK PERIOD IN PRESCRIBED FORM. THE ASSESSEE FILED RETURN OF INCOME FOR THE BLOCK PERIO D IN FORM NO.2B ON 17-01-2003 ON TIME AND DECLARED UNDISCLOSED INCOME OF RS.50,000/-. THE ASSESSEE EXPLAINED BEFORE THE AO THAT THE ASSES SEE OWNED UP THE AMOUNT OF RS.3,00,000/- SEIZED FROM THE PREMISES OF M/S. VIR FINANCE AND HAS DECLARED THE SAME IN THE REGULAR RETURN FIL ED FOR ASSESSMENT YEAR 2001-02. IT WAS ALSO CLARIFIED THAT THE AMOUNT WAS DECLARED IN THE REGULAR RETURN WITH BONA FIDE BELIEF THAT THE SAME WOULD BE SUBJECT TO REGULAR TAXATION AS SURVEY U/S 133A HAD BEEN CARRIE D OUT AT THE PREMISES OF THE ASSESSEE. IT WAS EXPLAINED THAT THE AMOUNT OF RS.50,000/- WAS DECLARED IN THE RETURN FOR THE BLOC K PERIOD WHICH IS OVER AND ABOVE THE AMOUNT OF RS.3,00,000/- DECLARED IN T HE REGULAR RETURN. THE AO HOWEVER, NOTED THAT THE ASSESSEE IN HIS STAT EMENT U/S 131 OF THE IT ACT RECORDED ON 20-12-2000 CATEGORICALLY ADMITTE D THAT HE HAD EARNED RS.3,49,500/- IN THE BLOCK PERIOD OUTSIDE HIS REGUL AR BOOKS OF ACCOUNT AND THAT THE AMOUNT OF RS.3,00,000/- GIVEN TO SHRI MANHARBHAI G. PATEL WAS OUT OF THIS UNDISCLOSED INCOME ONLY. THE ASSESS EE GAVE COMPUTATION OF UNDISCLOSED INCOME ON THREE ITEMS CONSISTING OF RS.3,32,455/-, RS.12,800/- AND RS.4,345/- (TOTAL RS.3,49,500/-). T HE AO, THEREFORE, NOTED THAT SINCE THE ASSESSEE ADMITTED TO HAVE EARN ED UNDISCLOSED INCOME OF RS.3,50,000/- DURING THE BLOCK PERIOD, TH EREFORE, TOTAL UNDISCLOSED INCOME IN THE BLOCK PERIOD HAS TO BE AS SESSED AT IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 3 RS.3,50,000/- AND SHALL HAVE TO BE SUBJECTED TO TAX U/S 113 OF THE IT ACT. THEREFORE, WHATEVER DECLARED IN THE REGULAR AS SESSMENT CANNOT BE ACCEPTED. THE AO ALSO NOTED THAT IT IS CLEAR THAT U NDISCLOSED INCOME WAS UNEARTHED DURING THE SEARCH. THEREFORE, ASSESSMENT HAS TO BE FRAMED OF THE ENTIRE AMOUNT DURING THE BLOCK PERIOD. UNDISCLO SED INCOME WAS ACCORDINGLY COMPUTED AT RS.3,50,000/-. THE ASSESSEE RAISED ISSUE OF JURISDICTION, CHARGING OF SURCHARGE AND ADJUSTMENT OF DEMAND AGAINST THE AMOUNT RECOVERED DURING THE SEARCH BEFORE THE L EARNED CIT(A). THE LEARNED CIT(A) HOWEVER, DISMISSED THE APPEAL OF THE ASSESSEE. IT MAY BE NOTED HERE THAT THE ASSESSEE DID NOT CHALLENGE THE ADDITION OF RS.3,50,000/- ON ACCOUNT OF UNDISCLOSED INCOME COMP UTED IN THE BLOCK PERIOD BEFORE THE LEARNED CIT(A). 4. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRE SS GROUND NO.4 FOR CHARGING OF SURCHARGE IN VIEW OF THE JUDGMENT OF TH E HONBLE SUPREME COURT IN THE CASE OF SURESH M. GUPTA 297 ITR 322 IN WHICH IT WAS HELD THAT PROVISO TO SECTION 113 OF THE IT ACT IS CLARIFICATO RY IN NATURE . IN THIS VIEW OF THE MATTER GROUND NO.4 OF THE APPEA L OF THE ASSESSEE IS DISMISSED BEING NOT PRESSED. GROUND NO.1 AND 5 OF T HE APPEAL IS GENERAL IN NATURE AND CALLS FOR NO SPECIFIC FINDING AND ARE ACCORDINGLY DISMISSED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE ON GROUND N O.2 OF THE APPEAL SUBMITTED THAT THE BLOCK ASSESSMENT ORDER PASSED BY THE AO IS WITHOUT JURISDICTION AND HAS TO BE CANCELLED. THE ASSESSEE ALSO RAISED ADDITIONAL GROUND OF APPEAL CHALLENGING THE JURISDICTION OF TH E AO/ ACIT, CENTRAL CIRCLE-2 (3), AHMEDABAD BEING NOT THE ASSESSING OFF ICER HAVING JURISDICTION OVER THE ASSESSEE AS REQUIRED U/S 158 BD OF THE IT ACT. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PB 1 0 WHICH IS THE COPY OF THE ACKNOWLEDGEMENT FOR FILING OF REGULAR RETURN OF INCOME FOR ASSESSMENT YEAR 2001-02 AND SUBMITTED THAT THE SAME WAS FILED WITH RANGE VI. HE HAS THEREFORE, SUBMITTED THAT TRANSFE R OF HIS CASE FROM IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 4 WARD 6 (2) TO CENTRAL CIRCLE 2 (3) IS WITHOUT JURIS DICTION AND AS SUCH THE AO HAS NO JURISDICTION TO PASS ANY BLOCK ASSESSMENT ORDER IN THE MATTER. THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER, ADMIT TED THAT THE ASSESSEE HAS NOT CHALLENGED JURISDICTION OF THE AO, BEFORE THE AO OR ANY OTHER SENIOR INCOME TAX AUTHORITIES EITHER DURING T HE COURSE OF BLOCK ASSESSMENT PROCEEDINGS OR UP TILL COMPLETION OF THE BLOCK ASSESSMENT. THE LEARNED COUNSEL CONTENDED THAT SINCE THE JURISD ICTION DID NOT VEST IN THE ACIT, CENTRAL CIRCLE 2(3), AHMEDABAD AND IT IS A LEGAL ISSUE, THEREFORE, BLOCK ASSESSMENT ORDER MAY BE QUASHED. O N THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHOR ITIES BELOW AND SUBMITTED THAT THE ASSESSEE DID NOT CHALLENGED THE JURISDICTION OF THE AO AT ANY POINT OF TIME AND THAT AS PER PRACTICE OF TH E DEPARTMENT WHEN SEARCH IS CONDUCTED IN A PARTICULAR CASE THEN ALL T HE CASES ARE CENTRALIZED FOR THE PURPOSE OF BETTER SCRUTINY OF THE CASES. TH E LEARNED DR SUBMITTED THAT THE CASE OF THE ASSESSEE WAS ACCORDINGLY RIGHT LY TAKEN UP FOR BLOCK ASSESSMENT BY THE PRESENT ASSESSING OFFICER. THE LE ARNED DR, THEREFORE, SUBMITTED THAT THE OBJECTION OF THE ASSESSEE NEEDS TO BE DISMISSED AND ADDITIONAL GROUND OF APPEAL MAY NOT BE ENTERTAINED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. IT IS ADMITTED FACT THAT THE A SSESSEE NEVER CHALLENGED THE JURISDICTION OF THE AO FRAMING THE BLOCK ASSESS MENT ORDER AGAINST HIM AT ANY POINT OF TIME INCLUDING THE COMPLETION O F BLOCK ASSESSMENT ORDER. THE AO ISSUED NOTICE TO THE ASSESSEE FOR FIL ING OF THE RETURN FOR THE BLOCK PERIOD IN THE PRESCRIBED FORM AND THE ASSESSE E VOLUNTARILY FILED THE RETURN FOR THE BLOCK PERIOD IN PRESCRIBED FORM NO.2 B AND DISCLOSED UNDISCLOSED INCOME AT RS.50,000/-. IT WOULD, THEREF ORE, PROVE THAT THE ASSESSEE ACCEPTED THE JURISDICTION OF THE AO AND AL SO DECLARED UNDISCLOSED INCOME CONNECTED WITH THE SEARCHED MATT ER. SECTION 124 OF THE IT ACT PROVIDES THE PROVISIONS FOR ASSIGNING JU RISDICTION TO THE ASSESSING OFFICERS. ACCORDING TO SUB CLAUSE (1) THE JURISDICTION TO THE AO IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 5 HAS BEEN VESTED AS PER SECTION 120 OF THE IT ACT. N O MATERIAL IS PRODUCED BEFORE US BY THE ASSESSEE THAT THE AO WAS NOT VESTE D WITH THE JURISDICTION OVER THE ASSESSEE TO FRAME THE BLOCK A SSESSMENT ORDER AS PER SECTION 120 OF THE IT ACT. SECTION 124 (2) OF THE I T ACT PROVIDES THAT WHERE A QUESTION ARISES UNDER THIS SECTION AS TO WH ETHER AN ASSESSING OFFICER HAS JURISDICTION TO ASSESS ANY PERSON, THE QUESTION SHALL BE DETERMINED BY THE DIRECTOR GENERAL OR THE CHIEF COM MISSIONER OR THE COMMISSIONER AS THE CASE MAY BE OR BY THE BOARD. SU B CLAUSE (3) TO SECTION 124 OF THE IT ACT PROVIDES THAT NO PERSON S HALL BE ENTITLED TO CALL IN QUESTION THE JURISDICTION OF THE ASSESSING OFFIC ER AFTER EXPIRY OF ONE MONTH FROM THE DATE ON WHICH NOTICE U/S 142 OF THE IT ACT IS SERVED OR AFTER COMPLETION OF THE ASSESSMENT WHICHEVER IS EAR LIER. HONBLE ALLAHABAD HIGH COURT IN THE CASE OF HINDUSTAN TRANS PORT CO. VS IAC AND ANOTHER 189 ITR 326 (ALL), CONSIDERING THE OBJECTIO NS TO THE JURISDICTION OF THE ASSESSING OFFICER HELD THAT OBJECTION CANNOT BE RAISED AFTER ASSESSMENT IS COMPLETED. IN THIS CASE, THE ASSESSMENT YEAR UNDER CONSIDERATION WAS 1985-86 AND THE HONBLE ALLAHABAD HIGH COURT CONSIDERING THE PROVISIONS OF SECTION 124 OF THE IT ACT HAS CONSIDERED THE FOLLOWING POINTS:- (I) WHAT IS THE NATURE OF THE POWER OF TRANSFER CONFERR ED BY THE ACT? (II) HOW THE ACT ITSELF VIEWS A DEFECT OF THE NATUR E INVOLVED IN THE PRESENT CASE? WE MAY MENTION THAT THE PROVISIONS OF SECTION 124( 5) OF THE IT ACT AS WERE APPLICABLE IN ASSESSMENT YEAR 1985-86 ARE A LMOST SIMILAR TO THE PROVISIONS CONTAINED IN SECTION 124(3) OF THE IT AC T AFTER AMENDMENT WHICH ARE APPLICABLE TO THE APPEAL UNDER CONSIDERAT ION. THE HONBLE ALLAHABAD HIGH COURT FURTHER HELD THAT BEING AN ENACTMENT AIMED AT COLLECTING REVENUE, THE LEGISLATURE DID NOT INTEND COLLECTION OF REVENUE TO BE BOGGED DOWN ON ACCOUNT OF TECHNICAL P LEA OF IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 6 JURISDICTION. IT HAS, THEREFORE, PRESCRIBED THE LIM IT UP TO WHICH THE PLEA OF JURISDICTION MAY BE RAISED. AS PROVIDED IN SECTION 124 (5) (A), THE RIGHT IS LOST AS SOON AS THE ASSESSMENT HA S BEEN COMPLETED. EVEN WHERE THE RIGHT IS EXERCISED BEFORE THE ASSESS MENT IS COMPLETED, THE QUESTION IS TO BE DECIDED BY THE COM MISSIONER OR BY THE BOARD. COURTS DO NOT COME INTO THE PICTURE. FRO M THE ABOVE PROVISIONS OF THE ACT, IT IS APPARENT THAT THE ACT DOES NOT TREAT THE ALLOCATION OF FUNCTIONS TO VARIOUS AUTHORITIES OR O FFICERS AS ONE OF SUBSTANCE. IT TREATS THE MATTER AS ONE OF THE PROCE DURE AND A DEFECT OF PROCEDURE DOES NOT INVALIDATE THE END ACTION. TH E ANSWER TO THE FIRST QUESTION, THEREFORE, IS THAT THE POWER IS ADM INISTRATIVE AND PROCEDURAL AND IS TO BE EXERCISED IN THE INTEREST O F EXIGENCIES OF TAX COLLECTION AND THE ANSWER TO THE SECOND QUESTIO N IS THAT, UNDER THE ACT, A DEFECT ARISING FROM ALLOCATION OF FUNCTI ONS IS A MERE IRREGULARITY WHICH DOES NOT AFFECT THE RESULTANT AC TION. WE MAY FURTHER NOTE THESE ARE THE ONLY PROVISIONS UNDER THE ACT WHICH PROVIDE FOR JURISDICTION TO THE ASSESSING OFF ICER TO FRAME ASSESSMENTS UNDER THE IT ACT. CONSIDERING THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS JURISDIC TION TO ISSUE NOTICE AGAINST THE ASSESSEE TO FRAME THE ASSESSMENT FOR TH E BLOCK PERIOD. WE, THEREFORE, DO NOT FIND ANY DEFECT OF THE JURISDICTI ON OF THE ASSESSING OFFICER TO FRAME BLOCK ASSESSMENT IN THE MATTER. AS SESSEE CANNOT BE PERMITTED TO DISPUTE JURISDICTION OF THE AO AT THIS STAGE. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION TO ADMIT THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE. THE ADDITIONAL GROUND OF THE APPEA L IS ACCORDINGLY DISMISSED UN-ADMITTED. ACCORDINGLY, GROUND NO.2 OF THE APPEAL IS ALSO DISMISSED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT THE AO HAS NOT ISSUED ANY NOTICE U/S 158 BC OF THE IT A CT AGAINST THE IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 7 ASSESSEE FOR FRAMING ASSESSMENT FOR THE BLOCK PERIO D. HE HAS SUBMITTED THAT ONLY NOTICE U/S 158BD OF THE IT ACT WAS ISSUED ON 10-12-2002. HE HAS SUBMITTED THAT SINCE THE AO DID NOT PROCEED U/S 158BC OF THE IT ACT AND THAT NO SATISFACTION HAS BEEN RECORDED BY THE A O OF THE PERSONS SEARCHED TO TRANSFER THE SEIZED MATERIAL TO THE AO OF THE ASSESSEE, THEREFORE, THE BLOCK ASSESSMENT ORDER IS NULL AND V OID. HE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF MANISH MAHESWARI 289 ITR 341 IN WHICH THE HONBLE SUPREME COURT CONSIDERING THE PROVISIONS OF SECTION 158BD OF THE IT ACT LAID DOWN THE CONDITION FOR INVOKING JURISDICTION U/S 158BD OF THE IT ACT (I) S ATISFACTION MUST BE RECORDED BY THE AO THAT ANY UNDISCLOSED INCOME BELO NGED TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT OF WHOM SEARCH W AS MADE U/S 132 OF THE IT ACT, (II) THE BOOKS OF ACCOUNTS OR DOCUMENTS OR ASSETS SEIZED HAD BEEN HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSONS AND (III) THE AO HAS PROCEEDED U/S 158BC OF THE IT ACT AGAINST SUCH OTHER PERSONS. THE LEARNED COUNSEL FOR THE ASSESSEE , THEREFORE, SUBMITTED THAT BLOCK ASSESSMENT ORDER MAY BE QUASHE D. THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER, ADMITTED THAT THE ASSESSEE HAS NO MATERIAL TO SHOW THAT NO SATISFACTION HAS BEEN RECO RDED BY THE AO OF THE PERSONS SEARCHED. HE HAS HOWEVER, FILED COPY OF THE NOTICE DATED 10-12-2002 ISSUED BY THE AO U/S 158BD OF THE IT ACT CALLING THE ASSESSEE TO FILE RETURN FOR THE BLOCK PERIOD IN THE PRESCRIBED FORMAT. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE DID NOT RAISE THIS GROUND IN THE GROUNDS OF APPEAL BEFORE THE TRIBUNAL AS WELL AS TH E SAME GROUND WAS NOT RAISED BEFORE THE LEARNED CIT(A). THEREFORE, TH E ASSESSEE SHOULD NOT BE PERMITTED TO RAISE THIS ISSUE AT THE SECOND APPE LLATE STAGE WITHOUT THERE BEING ANY FINDING OF FACTS BY THE AUTHORITIES BELOW AS WELL AS IN THE ABSENCE OF ANY ADEQUATE MATERIAL ON RECORD. IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 8 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. WE AGREE WITH THE CONTENTION O F THE LEARNED DR THAT THE ASSESSEE DID NOT RAISE THIS ISSUE BEFORE THE LE ARNED CIT(A). THIS GROUND IS ALSO NOT RAISED IN THE GROUNDS OF APPEAL BEFORE THE TRIBUNAL. THEREFORE, THIS ITSELF IS SUFFICIENT TO REJECT THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. HOWEVER, WE MAY NOTE HERE THAT THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BROUGHT ANY MATERI AL ON RECORD TO SHOW THAT NO SATISFACTION HAS BEEN RECORDED BY THE AO OF THE PERSONS SEARCHED. IN THE ABSENCE OF ANY MATERIAL ON RECORD AND IN THE ABSENCE OF THIS ISSUE RAISED BEFORE ANY AUTHORITIES, IT IS DIF FICULT TO APPLY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F MANISH MAHESWARI (SUPRA). WE MAY ALSO NOTE THAT SECTION 158BC OF THE IT ACT PROVIDES FOR PROCEDURE FOR BLOCK ASSESSMENT. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT DISPUTE THAT SINCE NO SEARCH WAS CONDUCTED IN THE CASE OF THE ASSESSEE AND THAT SEIZED MATERIAL I.E. CASH WAS FOU ND DURING THE COURSE OF SEARCH IN THE CASE OF SHAH FINANCE GROUP, BELONG ING TO ASSESSEE, THEREFORE, THE CASE OF THE ASSESSEE SHALL HAVE TO B E CONSIDERED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 158BD BEI NG UNDISCLOSED INCOME OF ANY OTHER PERSON. THE ASSESSEE VOLUNTARIL Y FILED RETURN OF INCOME FOR THE BLOCK PERIOD IN PURSUANCE OF THE NOT ICE U/S 158BD OF THE IT ACT DATED 10-12-2002 AND DECLARED UNDISCLOSED IN COME OF RS.50,000/-. IT WOULD, THEREFORE, CLEARLY PROVE TH AT THE ASSESSEE ADMITTED UNDISCLOSED INCOME BASED UPON THE SEARCH C ONDUCTED IN THE CASE OF SHAH FINANCE GROUP OF CASES. IT IS WELL SET TLED THAT BY NON MENTIONING OF RELEVANT PROVISION OF LAW WOULD BE OF NO CONSEQUENCE BECAUSE OVER ALL FACTS AND CIRCUMSTANCES OF THE CAS E SHALL HAVE TO BE CONSIDERED. THE AO ULTIMATELY PROCEEDED AGAINST THE ASSESSEE U/S 158 BC OF THE IT ACT TO COMPUTE UNDISCLOSED INCOME OF T HE ASSESSEE FOR THE BLOCK PERIOD. ITAT AMRITSAR BENCH (SPECIAL BENCH) I N THE CASE OF SMT. MAHESH KUMARI BATRA VS JCIT 95 ITD 152 CONSIDERING THE IDENTICAL QUESTION HELD THAT (I) THE PROVISIONS OF SECTION 158BC ARE PROCEDURAL IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 9 IN NATURE. (II) ANY DEFECT IN THE NOTICE OR WITH RE GARD TO ITS ISSUE CANNOT RENDER THE BLOCK ASSESSMENT PROCEEDINGS TO B E NULL AND VOID. 9. CONSIDERING THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT RAISED THIS POINT BEFORE ANY OF TH E AUTHORITIES AND NO SPECIFIC GROUND IS RAISED IN THE GROUNDS OF APPEAL. THEREFORE, ASSESSEE CANNOT BE ALLOWED TO RAISE NEW ISSUE WITHOUT ANY BA SIS. MERELY BECAUSE SECTION158BC OF THE IT ACT IS NOT MENTIONED IN THE NOTICE IS OF NO CONSEQUENCE. WE, THEREFORE, DO NOT FIND ANY JUSTIFI CATION TO ALLOW THE LEARNED COUNSEL FOR THE ASSESSEE TO RAISE THE ABOVE CONTENTION AGAINST THE BLOCK ASSESSMENT ORDER. WE ACCORDINGLY REJECT T HE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE ON THIS ISSUE. 10. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE ELAB ORATING GROUND NO.3 OF THE APPEAL, CHALLENGING THE ADDITION OF RS. 3,00,000/- IN THE BLOCK ASSESSMENT ORDER SUBMITTED THAT SINCE THE ASSESSEE HAS DECLARED RS.3,00,000/- IN THE REGULAR RETURN FOR THE ASSESSM ENT YEAR 2001-02 VIDE RETURN DATED 30-10-2001, THEREFORE, ADDITION OF RS. 3,00,000/- IS UNJUSTIFIED. THE LEARNED DR HOWEVER, SUBMITTED THAT THE ASSESSEE HAS NOT DISPUTED THE ABOVE ADDITION BEFORE THE LEARNED CIT(A) IN ANY OF THE GROUNDS OF APPEAL ON MERIT. THEREFORE, THE ASSESSEE SHOULD NOT BE ALLOWED TO RAISE THIS ISSUE IN THE PRESENT APPEAL. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL AVAILABLE ON RECORD AND AGREE WITH THE CONTENTION O F THE LEARNED DR THAT THE ASSESSEE HAS NOT CHALLENGED THE ADDITION OF RS. 3,00,000/- IN THE BLOCK ASSESSMENT BEFORE THE LEARNED CIT(A). THEREFO RE, THE ASSESSEE CANNOT BE PERMITTED TO DISPUTE THE ADDITION OF RS.3 ,00,000/- IN THE MATTER. HOWEVER, WE MAY NOTE FURTHER THAT THE ASSES SEE ULTIMATELY ADMITTED THE AMOUNT OF RS.3,00,000/- GIVEN TO SHRI MANHARBHAI G. PATEL WHO WAS PRESENT AT THE TIME OF SEARCH IN THE PREMIS ES OF SHAH FINANCE IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 10 GROUP CASES. IT IS, THEREFORE, A FACT THAT SHRI MAN HARBHAI G. PATEL WAS FOUND IN POSSESSION OF UNACCOUNTED CASH OF RS.3,00, 000/- AT THE TIME OF SEARCH ON 08-12-2000 IN THE SEARCH PREMISES. HE HAS EXPLAINED THAT RS.3,00,000/- WAS GIVEN BY THE ASSESSEE. THE MONEY, THEREFORE, BELONGED TO THE ASSESSEE. THE ASSESSEE IN HIS STATEMENT DATE D 20-12-2000 ADMITTED THAT HE EARNED UNDISCLOSED INCOME OF RS.3, 49,500/- AND HAD GIVEN RS.3,00,000/- TO SHRI MANHARBHAI G. PATEL. HE DECLARED RS.3,50,000/- AS UNDISCLOSED INCOME AND AGREED TO P AY TAX ON THIS AMOUNT. IT IS, THEREFORE, CLEAR THAT RS.3,00,000/- FOUND IN POSSESSION OF SHRI MANHARBHAI G. PATEL WAS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD AND THE SAME WAS FOUND DURING THE SEAR CH IN THE CASE OF SHAH FINANCE GROUP OF CASES. THE AO, THEREFORE, RIG HTLY PRECEDED U/S 158BD OF THE IT ACT AGAINST THE ASSESSEE FOR COMPUT ING UNDISCLOSED INCOME OF THE ASSESSEE. THE ASSESSEE NEVER DISPUTED THE ADDITION OF RS.3,50,000/- BEFORE THE LEARNED CIT(A) IN THE BLOC K ASSESSMENT. SECTION 158 BA (1) AND (2) OF THE IT ACT PROVIDES AS UNDER: 158BA. (1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTH ER PROVISIONS OF THIS ACT, WHERE AFTER THE 30TH DAY OF JUNE, 1995 A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UND ER SECTION 132A IN THE CASE OF ANY PERSON, THEN, THE ASSESSING OFF ICER SHALL PROCEED TO ASSESS THE UNDISCLOSED INCOME IN A CCORDANCE WITH THE PROVISIONS OF THIS CHAPTER. (2) THE TOTAL UNDISCLOSED INCOME RELATING TO THE BL OCK PERIOD SHALL BE CHARGED TO TAX, AT THE RATE SPECIFIED IN S ECTION 113 , AS INCOME OF THE BLOCK PERIOD IRRESPECTIVE OF THE PREV IOUS YEAR OR YEARS TO WHICH SUCH INCOME RELATES AND IRRESPECTIVE OF THE FACT WHETHER REGULAR ASSESSMENT FOR ANY ONE OR MORE OF T HE RELEVANT ASSESSMENT YEARS IS PENDING OR NOT. [EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 11 (A) THE ASSESSMENT MADE UNDER THIS CHAPTER SHALL BE IN ADDITION TO THE REGULAR ASSESSMENT IN RESPECT OF EA CH PREVIOUS YEAR INCLUDED IN THE BLOCK PERIOD; (B) THE TOTAL UNDISCLOSED INCOME RELATING TO THE BLOCK PERIOD SHALL NOT INCLUDE THE INCOME ASSESSED IN ANY REGULA R ASSESSMENT AS INCOME OF SUCH BLOCK PERIOD; (C) THE INCOME ASSESSED IN THIS CHAPTER SHALL NO T BE INCLUDED IN THE REGULAR ASSESSMENT OF ANY PREVIOUS YEAR INCLUDED IN THE BLOCK PERIOD.] SECTION 158BB OF THE IT ACT PROVIDES COMPUTATION O F UNDISCLOSED INCOME OF BLOCK PERIOD ON THE BASIS OF EVIDENCE FOU ND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH THE AO AND RELATABLE TO SUCH EVIDENCES. SECTION 158BD OF THE IT ACT PROVIDES AS UNDER: 158BD. WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THA N THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER S ECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR AN Y ASSETS WERE REQUISITIONED UNDER SECTION 132A , THEN, THE BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS SEIZED OR REQ UISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVIN G JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESS ING OFFICER SHALL PROCEED [UNDER SECTION 158BC ] AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF THIS CHAPTER SHALL APP LY ACCORDINGLY. 12. THE BARE READING OF THE ABOVE PROVISIONS WOULD SHOW THAT IN CASE SEARCH IS INITIATED U/S 132 OF THE IT ACT, THE AO S HALL HAVE TO PROCEED TO ASSESS THE UNDISCLOSED INCOME IN ACCORDANCE WITH TH E PROVISIONS OF CHAPTER XIV-B ON THE BASIS OF EVIDENCE FOUND AS A R ESULT OF SEARCH OR OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH THE AO AND RELATABLE TO SUCH EVIDENCE U/S 158 OR 158BD OF THE IT ACT AS THE CASE MAY BE. THE UNDISCLOSED INCOME RELATING TO THE BLOCK PERIOD SHA LL BE CHARGED TO TAX AT THE RATE SPECIFIED IN SECTION 113 OF THE IT ACT. TH E BLOCK ASSESSMENT SHALL IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 12 BE FRAMED SEPARATELY AND THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD SHALL NOT BE INCLUDED IN THE REGULAR ASSESSMENT. TH E LEARNED COUNSEL FOR THE ASSESSEE FILED COPY OF THE COMPUTATION OF TOTAL INCOME AT PB 10 TO 12 FOR ASSESSMENT YEAR 2001-02 IN WHICH, IN THE NOT E, IT IS SPECIFICALLY MENTIONED THAT DURING THE COURSE OF SEARCH AT M/S. VIR FINANCE, AHMEDABAD, THE ASSESSEE WAS INVESTIGATED AND CASH A MOUNTING TO RS.3,00,000/- WAS FOUND AT THAT TIME AND THEREAFTER THE ASSESSEE DECLARED THE SAME AS ADDITIONAL INCOME IN HIS STATE MENT BEFORE THE DDIT(INV.) WHICH IS ALSO SEIZED BY THE OFFICIALS. I T WOULD, THEREFORE, SHOW THAT RS.3,00,000/- WAS CONNECTED WITH THE SEARCH MA TTER AND AS SUCH THERE WAS NO REASON FOR THE ASSESSEE TO HAVE DECLAR ED A SUM OF RS.3,00,000/- IN THE RETURN FOR REGULAR ASSESSMENT. RS.3,00,000/- IS, THEREFORE, BEING CONNECTED WITH THE SEARCH MATTER S HOULD HAVE BEEN ASSESSED AS UNDISCLOSED INCOME IN ACCORDANCE WITH T HE PROVISIONS OF CHAPTER XIV-B OF THE IT ACT. IT APPEARS THAT THE AS SESSEE DECLARED RS.3,00,000/- IN THE REGULAR RETURN IN ORDER TO GET THE BENEFIT OF REDUCTION IN THE TAX LIABILITY BECAUSE FOR THE BL OCK ASSESSMENT THE LIABILITY OF THE TAX IS MORE AS COMPARED TO THE RE GULAR ASSESSMENT. WE MAY ALSO NOTE HERE THAT THE ASSESSEE IN HIS STATEME NT DATED 20-12-2000 ADMITTED RS.3,50,000/- AS HIS UNDISCLOSED INCOME FO R THE BLOCK PERIOD OVER AND ABOVE THE REGULAR INCOME EARNED BY THE ASS ESSEE. DUE TO THIS FACT, THE ASSESSEE DID NOT CHALLENGE THE ADDITION B EFORE THE LEARNED CIT(A) SPECIFICALLY. CONSIDERING THE FACTS AND CIRCUMSTANC ES NOTED ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO AGREE WITH THE CONTEN TION OF THE LEARNED COUNSEL THAT SINCE RS.3,00,000/- IS DECLARED IN THE REGULAR RETURN, THEREFORE, NO ADDITION CAN BE MADE IN BLOCK ASSESSM ENT. WE ACCORDINGLY REJECT THE CONTENTION OF THE LEARNED COUNSEL FOR TH E ASSESSEE AND CONFIRM THE FINDINGS OF THE AUTHORITIES BELOW THAT RS.3,00, 000/- IS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. THEREF ORE, THE AUTHORITIES BELOW RIGHTLY ASSESSED THE SAME IN THE BLOCK ASSESS MENT. WE ACCORDINGLY DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES IT(SS)A NO.89/AHD/2007 SHRI MANHARLAL V. SHAH 13 BELOW, WE CONFIRM THEIR FINDINGS AND DISMISS THIS G ROUND OF APPEAL OF THE ASSESSEE. 13. NO OTHER POINT IS ARGUED OR PRESSED. 14. AS A RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED ON 09-04-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 09-04-2010 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