High Court Of Rajasthan
CIT vs. Rajendra Prasad Gupta
Sections 144, 158BB, 158BC, 260A
Asst. Year Block period 1986-87 to 1995-96
Rajesh Balia & Bhagwati Prasad, JJ.
IT Appeal No. 18 of 2000
9th November, 2000
R.B. Mathur, for the Appellant : P.K. Kasliwal, for the Respondent
RAJESH BALIA, J. :
Heard learned counsel for the appellant.
2. In this appeal, the appellant has challenged the order of the Tribunal, dt. 24th May, 1999, setting aside the order of assessing authority on the ground that the assessment made by the assessing authority for the block period 1986-87 to 1995-96 upto 31st Aug., 1995, under s. 158BB to the extent that it rejects the return filed by the assessee under the proceedings for the different years disclosing the incumbent of purchase was not justified inasmuch as the assessing authority had necessary jurisdiction to assess the income to the best of his judgment on finding that the income disclosed by the assessee in the returns filed in the proceedings did not disclose the income correctly. The Tribunal has not accepted resort to estimation submitted by assessing authority inter alia, on the ground that the assessing authority has resorted to the best judgment assessment without examining the material that has come in his possession during the course of search. It is contended by the learned counsel that there is no prohibition against making a best judgment assessment under s. 158BB in view of the Explanation to s. 158BB permitting resort to the provisions of ss. 144 and 145 of the IT Act, 1961. We are of the opinion that so far as contention of the learned counsel for the appellant that the AO has necessary jurisdiction to resort to best judgment assessment in proceedings under s. 158BB, correctness of it cannot be doubted. However, under the scheme of the provisions for block assessment it is apparent that it relates to assessment of âUndisclosed income” of the assessee excluding the income subjected to regular assessment in pursuance of returns filed by the assessee for such period. It is also apparent from the perusal of s. 158BB that the returns are also required to be filed in pursuance of the notice under s. 158BC(1)(a) and the assessment is to be framed on that basis in the light of material that has come in possession of the assessing authority during the course of search which is foundation of the proceedings. That being so, the correctness or otherwise of the returns filed in pursuance of the notice under s. 158BC(1)(a) has to be examined with reference to the material in possession of the assessing authority having nexus to assessment of âundisclosed incomeâ which is with the assessing authority, and premise of such proceedings. If the returns filed by the assessee do not accord with the materials which is already in possession of the authority, it can be estimated to best judgment by the assessing authority on the basis of the material in his possession. However, the assessing authority is not conferred with power to make estimation of income do hors the material in his possession, whether while making regular assessment order or under s. 158BB. It has to be borne in mind that proceedings under ss. 158BB and 158BC are that of undisclosed income. Therefore, the proceeding carries with a presumption that returns filed in pursuance of such proceedings are of undisclosed and not necessarily in accordance with the books of accounts. Its verification has to be searched outside regular books with reference to material that has been found during search. That makes it imperative to adjudicate the return with reference to material that has come in possession of assessing authority during the course of search proceedings and on which basis the belief about existence of undisclosed income is entertained by the assessing authority inviting invocation of ss. 158BB and 158BC. The enquiry into correctness of such returns with reference to material so found has nexus with the object of the special provisions, to adjudge whether the assessee is still honestly disclosing his income correctly after incriminating material has been found in possession of the Revenue authority before such returns can be rejected and thereafter to frame assessment estimating the income liable to tax to the best of judgment on the basis of material that is available with him.
Having perused the assessment order, we are of the opinion that no such finding has been recorded by the AO whether the returns filed by the assessee do not accord with facts that come to light during the course of search and seizure nor estimate of income made by the assessing authority appears to be after considering that material on record. It is the substance and the reasoning adopted by the Tribunal that the AO has estimated the income without reference to the material in his possession which cannot be countenanced. Thus, finding has rightly been reached by the Tribunal on the basis of material that was on record by applying principle of law correctly. Such finding does not give rise to any substantial questions of law. The appeal is accordingly rejected. There shall be no order as to costs.
[Citation : 248 ITR 350]