High Court Of Delhi
CIT vs. Ashok Khetrapal
Section 158BB
Block period 1999-2000 to 17th Nov., 2000
Madan B. Lokur & V.B. Gupta, JJ.
IT Appeal No. 580 of 2007
18th July, 2007
Counsel Appeared :
Mrs. P.L. Bansal, for the Appellant : Dr. Rakesh Gupta with Ms. Poonam Ahuja, for the Respondent
JUDGMENT
V.B. GUPTA, J. :
The issue involved in the present appeal is regarding deletion of an addition totalling Rs. 2,23,08,152 made on the basis of the report of valuation cell of Department of Revenue on account of unexplained investment in the properties of the assessee. On 17th Nov., 2000, a search and seizure operation under s. 132(1) of the IT Act, 1961 (for short as ‘Act’) was conducted in the case of M/s Pashupatinath Jee Tours and Travels at its business and residential premises of its partners and their relatives. The assessee is a partner of this firm and during the course of search of his residence B-174, East of Kailash, New Delhi, some papers of properties in which assessee had made investments were found. The AO made a reference to the Valuation Officer and treated the difference between the valuation as per DVO’s report and the declared value of the properties as assessee’s undisclosed income for the asst. yr. 1999-2000 and the period 1st April, 2000 to 17th Nov., 2000. In appeal, Commissioner of Income-tax (Appeals) [CIT(A)] deleted the additions made by the AO holding that no adverse material was found during the course of search to suggest that the assessee had understated the investment in the properties. The Revenue challenged the order of CIT(A) before the Income-tax Appellate Tribunal (for short as ‘Tribunal’) and vide its impugned order dt. 21st Aug., 2006, the Tribunal dismissed the appeal holding that in the absence of any adverse material found during the course of search, no addition can be made by treating the investment as undisclosed. Now, the Revenue has challenged the impugned order of the Tribunal in the present appeal.
The contention of learned counsel for the Revenue is that despite opportunity to the assessee, he had neither filed any report of registered valuer, substantiating the declared cost of the properties in issue nor any objections to the report relied upon by the AO. Since the investment was not disclosed by the assessee in the books of account maintained in the regular course of business, it had to be estimated on the basis of material found/available. Sec. 158B of the Act is a part of Chapter XIV-B dealing with special procedure for assessment of search cases. The chapter contains s. 158B to s. 158BH. “Block period” and “undisclosed income” have been defined in cls. (a) and (b) to s. 158B, for the purpose of the chapter. We are concerned with the definition of “undisclosed income”. The provision in its entirety reads as follow : “(b) ‘undisclosed income’ includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of the Act.”
8. It is clear from the above definition that the income or the property, which has been disclosed or would have been disclosed for the purpose of this Act, does not form part of the undisclosed income for purpose of block assessment. Under the provisions of Chapter XIV-B only such of the aforesaid categories of income, which has been found as a result of search can alone be the subject-matter of an assessment under this chapter. The definition specifies that where an assessee has claimed any expenses or addition, which is found to be false, the same can only be regarded as an undisclosed income for the purpose of this chapter.
9. Under Chapter XIV-B of the Act, before an addition of an “undisclosed income” can be made, the AO has to bring on record the material to show that on evidence found as a result of search there is an undisclosed income represented by credits appearing in the books of accounts.
10. This Court dealing with s. 158B of the Act in CIT vs. Ravi Kant Jain (2001) 167 CTR (Del) 566 : (2001) 250 ITR 141 (Del), held that :
“The special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. As the statutory provisions go to show, it is not intended to be a substitute for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done. The assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the AO. Evidence found as a result of search is clearly relatable to ss. 132 and 132A.”
11. In the case in hand, no incriminating material whatsoever was found during the course of search that might show that the assessee had made more investment in the properties than their declared value. In the absence of any adverse material found during the course of search, addition could not be made by treating the investment as undisclosed and as such no fault can be found with the view taken by the Tribunal.
12. The above being the position, the order of the Tribunal does not give rise to a question of law, much less a substantial question of law, to fall within the limited purview of s. 260A of the Act, which is confined to entertaining only such appeal against the order which involves a substantial question of law.
[Citation : 294 ITR 143]
