The Tax Publishers2021 TaxPub(DT) 0156 (Mum-Trib)


Section 158BD Section 69C

Where loans (credits) were already disclosed by the assessee in books of account before search, the same could not be treated by the AO as unexplained undisclosed income of assessee.

Search and seizure - Assessment under section 158BD - Computation of undsiclosed income - Transaction/amount disclosed in books of account--Applicability of Chapter XIV-B

Search under section 132 had taken place at her residential premises along with other relatives and Atco Group of companies on 27-11-1995. Consequently, notice under section 158BD was issued to assessee on 15-2-1996, in response to which she filed a return showing income of Rs. 2,43,659 for the period 1-4-1995 to 27-11-1995. Undisclosed income declared by her was Nil. However, AO determined the total undisclosed income at Rs. 30,30,919. The assessee filed appeal against the block assessment directly before the Tribunal. Hence, it would meet the ends of justice, if addition is restricted to the peak of the loans. Assessee had placed the peak working which may be considered by AO after ignoring the balances in respect of Bharat Trading Co. Tribunal deleted the addition of Rs. 5,00,000 in the name of Bharat Trading Co. and directed AO to restrict the addition to the peak of loans in respect of the other three credits. Against the said order of the Tribunal, the assessee filed an appeal before the High Court. The High Court felt that the matter should go back to the Tribunal for adjudication of the issue of unexplained loans on substantive grounds as well. Thus, the matter had come before this Tribunal for the second time. Held: Assessee was maintaining regular books of account. All the loans which have been treated by the assessing authority as unexplained have already been recorded in the books of account in the normal course of business as and when the loans were transacted. Therefore, it was to be seen, without any contradiction that all the loans availed of by the assessee and treated as unexplained by the assessing authority in the impugned block assessment have already been disclosed to the department, before search action. When these loans have already been disclosed to the department, it was not possible for the AO to treat those loans as unexplained for the purpose of making additions in the impugned block assessment. No material were available in the hands of the assessing authority so as to discredit the earlier disclosure already made by the assessee. It is not necessary to repeat the plethora of case laws which consistently held that what had been already disclosed cannot be a matter of block assessment. The AO cannot indulge in roving enquires regarding the issue that had already been disclosed in the books of account and placed before the departments. The loan amount cannot be made a subject-matter of a block assessment held by the on the basis of the review made by the assessing authority.

Followed:Virkram Doshi, who Order dated 26-9-2007, the ITAT 'C' Bench, Mumbai [IT(SS) A No. 105/Mum/1996. Relied:Rakesh Dutt v. Asstt. CIT (2009) 311 ITR 247 (Bom) : 2009 TaxPub(DT0 195 (Bom-HC, Lotus Investment Ltd. v. Asstt. CIT (2007) 88 ITR 459 (Bom-HC) : 2007 TaxPub(DT) 746 (Bom-HC) and A.V.Fernandez v. State of Kerala, AIR 1957 SC 657. Distinguished:Margadarsi Chit Fund (P.) Ltd. v. Addl. CIT (2013) 60 SOT 85 (Hyd-Trib) (URO), Hanemp Properties (P.) Ltd. v. ACIT (2006) 101 ITD 19 (Del-Trib) : 2006 TaxPub(DT) 1490 (Del-Trib) and Hope (India) Ltd. v. CIT (1993) 71 Taxman 387 (Cal-HC) : 1993 TaxPub(DT) 125 (Cal-HC).


FAVOUR : In assessee's favour

A.Y. : Block Period 1986-87 to 27-11-1995



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