Shri Mukesh Rasiklal Shah, Ahmedabad v. The Dy.CIT., Cent.Circle-1(4), Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL VP AND BHAVNESH SAINI JM) IT (SS) A NO.135/AHD/2007 BLOCK PERIOD: ENDING ON 07-11-2001 SHRI MUKESH R. SHAH PROP. DINDAYAL ASSOCIATES 11 RUDRA APARTMENTS RANA PARK GHATLODIA AHMEDABAD PA NO. AKTPS 8650F VS THE INCOME TAX OFFICER CENTRAL WARD 1 (1) AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI DHIREN SHAH AR RESPONDENT BY SMR. NEETA SHAH DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A)-IV AHMEDABAD DATED 14- 03-2007 FOR THE ABOVE BLOCK PERIOD. 2. THE ASSESSEE HAS RAISED TWO GROUNDS OF APPEAL CH ALLENGING VALIDITY OF THE NOTICE U/S 158 BD OF THE IT ACT AND ADDITION ON ACCOUNT OF UNDISCLOSED INCOME AT RS.96 267/-. THE LEARNED COUN SEL FOR THE ASSESSEE HOWEVER RESTRICTED HIS ARGUMENTS TO THE COMPUTATIO N OF UNDISCLOSED INCOME BY THE AO. HE HAS REFERRED TO PARA 2 OF THE ASSESSMENT ORDER WHICH READS AS UNDER: 2. THE UNACCOUNTED INCOME OF THE ASSESSEE IT WAS NOTICED FROM THE PART-I OF THE RETURN FILED BY THE ASSESSEE I.E. COMPUTATION OF THE TOTAL INCOME THAT THE UNDISCLOSED INCOME OF THE ASSESSEE WAS TAKEN AT NIL . THE COMPUTATION AS PROVIDED BY THE ASSESSEE IS REPRODUC ED BELOW:- IT(SS)A NO.135/AHD/2007 SHRI MUKESH R. SHAH PROP. DINDAYAL ASSOCIATES 2 PREVIOUS ASSTT. TOTAL INCOME INCLUDING RETURNED/A SSESSED INDICATE YEAR YEAR UNDISCLOSED INCOME AS ON THE DATE OF WHETHER COMPUTED U/S. 158BB SEARCH/REQUISITION RETURNED OR ASSESSED TOTAL INCOME LOSSES TOTAL INCOME LOSSES RS. RS. SOURCE AMOUNT SOURCE AMOUNT 1995-96 1996-97 20000 - - - - 1996-97 1997-98 38000 - - - - 1997-97 1998-99 38267 - - - - 1998-99 1999-00 54327 - 54327 - B 1999-00 2000-01 57600 - 5760 - B 200-01 2001-02 NIL 41311930 NIL BUSI- 41311930 NESS INCOME 208194 41311930 111927 41311930 (A) (B) (C) (D) THE TOTAL UNDISCLOSED INCOME FOR THE BLOCK PERIOD ( A-C + D-B) = RS.NIL). FROM THE PERUSAL OF THE ABOVE COMPUTATION IT IS VE RY CLEAR THAT THE UNDISCLOSED INCOME AS PER THE ASSESSEES OWN CALCUL ATION CANNOT BE NIL. SUBSTITUTING THE FIGURES GIVEN THE UNDISCLOSED INCOME OF THE ASSESSEE WILL BE WORKED OUT AS FOLLOWS:- 208194 111927 + 41311930 41311930 = 96267. (A C + B D = 96 267). HENCE AS PER THE ASSESSEES OWN SUBMISSION THE UND ISCLOSED INCOME OF THE ASSESSEE WILL BE RS.96 267/-. [ADDITION RS.96 267/-] 3. THE LEARNED COUNSEL FOR THE ASSESSEE BY REFERRIN G TO THE UNDISCLOSED INCOME COMPUTED BY THE AO AS ABOVE FOR THE BLOCK PERIOD SUBMITTED THAT THE AO COMPUTED TOTAL UNDISCLOSED IN COME U/S 158BB IN A SUM OF RS.2 08 194/-. HOWEVER IN ASSESSMENT YEAR 2001-02 THE LOSS IS COMPUTED AT RS.4 13 11 930/-. HE HAS ALSO REFERRED TO THE AMOUNT OF RS.1 11 927/- WHICH THE AO HAS TAKEN IN THE ASSESSM ENT YEARS 1999-00 AND 2000-01. THE LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE IT(SS)A NO.135/AHD/2007 SHRI MUKESH R. SHAH PROP. DINDAYAL ASSOCIATES 3 AO WHILE COMPUTING UNDISCLOSED INCOME FOR THE ABOVE BLOCK PERIOD HAS TAKEN THE FIGURE OF THE LOSS OF RS.4 13 1 930/- TWI CE AND IF THE POSITIVE INCOME IS REDUCED FROM THE LOSS OF THE ABOVE AMOUNT T HERE WOULD BE NO ADDITION OF RS.96 267/-. THE LEARNED COUNSEL FOR TH E ASSESSEE REFERRED TO EXPLANATION (A) TO SECTION 158 BB (1) OF THE IT ACT AND SUBMITTED THAT THE UNDISCLOSED INCOME IS TO BE COMPUTED TAKING BOTH TH E FIGURES OF UNDISCLOSED INCOME AND THE LOSS THEREBY THERE WOUL D BE NO ADDITION. ON THE OTHER HAND THE LEARNED DR RELIED UPON THE ORDE R OF THE AO. 4. ON CONSIDERATION OF THE ABOVE FACTS WE ARE OF T HE VIEW THAT ADDITION OF RS.96 267/- MADE BY THE AO IN THE BLOCK ASSESSMENT IS WHOLLY UNJUSTIFIED AND WITHOUT ANY BASIS. SECTION 1 58 BB (1) EXPLANATION (A) OF THE IT ACT PROVIDES AS UNDER: EXPLANATION.FOR THE PURPOSES OF DETERMINATION OF UNDISCLOSED INCOME (A) THE TOTAL INCOME OR LOSS OF EACH PREVIOUS YEA R SHALL FOR THE PURPOSE OF AGGREGATION BE TAKEN AS THE TOTAL INCOM E OR LOSS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF 5 [THIS ACT] WITHOUT GIVING EFFECT TO SET OFF OF BROUGHT FORWARD LOSSES UNDER CHAPTER VI OR UNABSORBED DEPRECIATION UNDER SUB-SECTION (2) OF SECTION 32 : [ PROVIDED THAT IN COMPUTING DEDUCTIONS UNDER CHAPTER VI-A FOR THE PURPOSES OF THE SAID AGGREGATION EFFECT SHALL BE GIVEN TO SET OFF OF BROUGHT FORWARD LOSSES UNDER CHAPTER VI OR UNABS ORBED DEPRECIATION UNDER SUB-SECTION (2) OF SECTION 32 ;] 5. CONSIDERING THE FACTS NOTED BY THE AO IN THE ASS ESSMENT ORDER FOR THE PURPOSE OF COMPUTING UNDISCLOSED INCOME AS NOTE D ABOVE WOULD SHOW THAT THE AO COMPUTED THE UNDISCLOSED INCOME AT RS.2 08 194/- AND ALSO COMPUTED LOSS OF RS.4 13 11 930/- IN THE A SSESSMENT YEAR 2001-02 AND FURTHER RETURNED/ASSESSED INCOME IS TAK EN AT RS.1 11 927/-. THE AO HOWEVER INSTEAD OF REDUCING THE LOSSES HAS TAKEN THE FIGURE OF RS.4 13 11 930/- TWICE IN THE COMPUTA TION OF TOTAL UNDISCLOSED INCOME. IF THE LOSSES ARE REDUCED FROM THE INCOME COMPUTED IT(SS)A NO.135/AHD/2007 SHRI MUKESH R. SHAH PROP. DINDAYAL ASSOCIATES 4 BY THE AO THERE WOULD BE NIL UNDISCLOSED INCOME OF THE ASSESSEE. THE ASSESSEE ALSO FILED RETURN FOR THE BLOCK PERIOD SHO WING UNDISCLOSED NIL INCOME. THE AO THEREFORE INSTEAD OF ASSESSING THE INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD AT NIL HAS WRONGLY AS SESSED THE UNDISCLOSED INCOME AT RS.96 267/-. THERE IS A MISTAKE IN THE CA LCULATION OF UNDISCLOSED INCOME BY THE AO. WE ACCORDINGLY SET A SIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS .96 267/-. 6. AS A RESULT THE L APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON 01-04-2010 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 01-04-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD