Nitin P. Shah Alias Modi v. Dy. CIT ()

INCOME TAX

--Search and seizure----BLOCK ASSESSMENTApplicability of section 158BD--Search and seizure proceedings were carried out on LT group. Allegedly on the basis of seized material certain addition in assessee s case was made by the AO while reframing assessment invoking section 158BD. Held: The AO having jurisdiction over the person searched (LT group) having not recorded satisfaction that income unearthed belonged to person other than that searched and having not handed over books of account, etc., to the AO having jurisdiction over such other person (assessee), the provisions of section 158BD could not be invoked in respect of such other person (assessee).

Income Tax Act, 1961 s.158DB;

Income Tax Act, 1961, s.158B(b);

Income Tax Act, 1961 s.158BA

INCOME TAX

--Reassessment----NOTICE UNDER SECTION 148Validity--Certain income was disclosed under VDIS, 1997 by the assessee during assessment year 1996-97 and on AO s query the assessee made a statement during assessment year 1997-98 that relevant entries were made in the books of account, etc. On the basis of this intimation the assessment for the assessment year 1996-97 was reopened. Held: Notice issued under section 148 was not valid as before the assessing authority can assume jurisdiction to reopen assessment under section 147, it will have to show that it has reason to believe on the basis of independent material relatable to the year under consideration that income chargeable to tax had escaped assessment. Thus, omission of assessee for assessment year 1997-98 cannot be a ground for reopening assessment for the assessment year 1996-97.

Income Tax Act, 1961 s.147;

Income Tax Act, 1961, s.148

INCOME TAX

--Income from undisclosed source----ADDITION UNDER SECTION 69Proper hearing opportunity not given to assessee--While framing original assessment the AO made addition of Rs. 67.75 lakhs towards undisclosed investment as revealed in search proceedings of the LT group (borrower). In appeal, the CIT(A) set aside the assessment on the ground that only three days time was given to the assessee to produce the relevant evidence. The CIT(A) remanded the issue. While framing the fresh assessment the AO excluded the addition of Rs. 67.75 lakhs but made an altogether new addition of Rs. 137 lakhs. In second round of appeal, CIT(A) set aside the addition of Rs. 137 lakhs but issued enhancement notice in respect of Rs. 67.75 lakhs. On receiving the said notice, the assessee produced pass book issued by the LT group. The CIT(A) made the addition of Rs. 67.75 lakhs and the Tribunal also sustained the same on the ground that assessee did not produce the pass book during the original assessment. Held: On facts of the case, the assessee was prevented by the sufficient cause in not producing the pass book at any stage prior to appellate stage in second round, therefore, matter was remanded to the Tribunal to provide proper hearing opportunities to parties.

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