The Appellate Tribunal dismissed batch appeals against block assessments where cash credits alleged as income were already reflected in the assessee's returns. The High Court upheld the Tribunal order, rejecting the Revenue's appeal as unjustified.
All appeals are dismissed. No order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
*** HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM**
+ I.T.T.A. Nos.106 of 2001; 128 of 2001 and 129 of 2001
% 1st July, 2014 # Commissioner of Income-Tax, A.P.-I, Hyderabad. … Appellant AND $ Tharmandal Builders (P) Ltd., 113, Taramandal Complex, Saifabad, Hyderabad. … Respondent ! Counsel for the Appellant : Sri S.R. Ashok, Learned Sr. Standing Counsel for the Income Tax. ^ Counsel for the respondents : None < Gist: > Head Note: ? Cases referred: 2010 (321) ITR 362 SC
HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND
HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A. Nos.106 of 2001; 128 of 2001 and 129 of 2001
COMMON JUDGMENT:- (per LNR,J)
The subject matter of this batch of appeals is the block assessments. The assessees were submitting the returns year after year. However on the basis of searches conducted vis-a-vis assessees block assessments, covering a decade preceding the date of search, were made. The items of income in the form of investments that were noticed in the search were sought to be included and that in turn resulted in levy of Income Tax.
The assessees pleaded that the so called information, said to have been unearthed in the course of search, was already reflected in the profit and loss account of the concerned assessment years and in that view of the matter, it cannot be said that there was any concealment or non disclosure on their part and they wanted the proceedings to be dropped. The Assessing authority, however, passed orders by including the items of undisclosed income, said to have been noticed during the search. Aggrieved by the orders of block assessment, the assessees filed appeals before the Hyderabad Bench of Income Tax Appellate Tribunal (in short “the Tribunal”). Through a common order dated 31.01.2001, the Tribunal allowed the batch of appeals setting aside the assessment orders passed in respect of block assessments. Hence these batch of three appeals, by the revenue.
Heard Sri S.R.Ashok, learned Standing Counsel for the Income Tax Department. None appeared for the assessees.
Whenever searches are undertaken by the concerned authorities of Income Tax Department, the inevitable consequence that follows is that a block assessment covering a decade, immediately preceding the date of search must be made. The manner in which the assessment in such cases, must be made, is indicated in Section 158 BB, occurring in Chapter XIV-B of the Act. The prescribed procedure was followed by the
Income Tax Officer and he added certain items after verifying the orders of assessment of the corresponding period. The orders passed by him disclose that the so called undisclosed cash credits were noticed on a verification of the books of accounts, submitted by the assesses in the earlier assessment years. In other words, the search did not result in the recovery of any material, which did not find place in the returns submitted by the assessees for the respective years.
I n ACIT Vs. Hotel Blue Moon[1] the Hon’ble Supreme Court categorically held that an occasion to undertake an exercise under Section 158 BB of the Act would arise only when the search resulted in recovery of any material information, which did not form part of the returns submitted by the assessee. In other words, if the basis for the assessing authority to include the items of block assessment order in the entries in income or cash credits in the books of account or other information that was taken into account in regular returns for the block assessment period, the exercise becomes untenable.
In the instant case, the Tribunal recorded a categorical finding to the effect that all the items of cash credits alleged against the respondents were reflected in the books of accounts referable to the concerned assessment years. That being the case, the very justification for making block assessment and thereby the passing of assessment order becomes shaky. The Tribunal has taken correct view in the matter and based its conclusions on the relevant precedents. Therefore, we do not find any basis to interfere with the order under appeal.
Therefore, all the appeals are dismissed. There shall be no order as to costs.
L. NARASIMHA REDDY, J
____________________________ CHALLA KODANDA RAM, J
Date:01.07.2014 Note: L.R. Copy to be marked. (B/o) Ssv/Gk
HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND
HON’BLE SRI JUSTICE CHALLA KODANDA RAM
I.T.T.A. Nos.106 of 2001; 128 of 2001 and 129 of 2001
Date: 01.07.2014
Ssv/Gk
2 issues framed by the court
Whether the Tribunal correctly held that a block assessment under Section 158 BB became untenable when undisclosed cash credits were already reflected in the assessee's returns and books of accounts.
Whether the Revenue was entitled to set aside an Tribunal order which allowed appeals against block assessments where no new material was recovered during search.
Colour shows how this judgement treated each authority
ACIT Vs. Hotel Blue MoonDistinguished¶12
2010 (321) ITR 362 SC
Commissioner of Income-Tax, A.P.-I
Tharmandal Builders (P) Ltd.
L. Narasimha Reddy
Challa Kodanda Ram
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
