Rajesh Mangla, v. ACIT, Range II,

ITSSA 144/DEL/2007 | misc
Pronouncement Date: 22-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 14420116 RSA 2007
Assessee PAN EYEAR1993T
Bench Delhi
Appeal Number ITSSA 144/DEL/2007
Duration Of Justice 2 year(s) 6 month(s) 3 day(s)
Appellant Rajesh Mangla,
Respondent ACIT, Range II,
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 22-01-2010
Date Of Final Hearing 13-01-2010
Next Hearing Date 13-01-2010
Assessment Year misc
Appeal Filed On 19-07-2007
Judgment Text
ITA(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A.(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 SHRI RAJESH MANGLA VS. ACIT RANGE-II C-8 LGF EAST OF KAILASH INCOME TAX OFFICE NEW DELHI 110 065 CGO COMPLEX NIT PAN : AKVPM-6493-Q) FARIDABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ASHWANI TANEJA & SHRI TARUN KUMAR ADVOCATES DEPARTMENT BY : SH. RAJEEV MEHROTRA CIT(DR) ORDER PER SHAMIM YAHYA: AM 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ASSESSMENT ORDER OF THE LD. A.O. DATED 21.6.2007 AND PERTAINS TO BLOCK PERIOD 1.4.86 TO 20.11.96. 2. THE FIRST ISSUE RAISED IS THAT AO ERRED IN MAKIN G THE ADDITION OF RS. 1 27 400/- ON ACCOUNT OF ALLEGED INVESTMENT IN SHARE APPLICATION UNDER SECTION 69 OF THE IT ACT. ITA(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 2 2.1 IN THIS CASE THE ASSESSEE IS AN INDIVIDUAL. TH E ASSESSMENT WAS EARLIER FRAMED UNDER BLOCK PERIOD. THE MATTER HAD TRAVELE D TO THE TRIBUNAL IN ITA NO. 369/DEL/07 AND VIDE ORDER DATED 31.8.2006 THE T RIBUNAL HAS SET ASIDE THE ORDER OF THE AO AND RESTORED THE SAME TO HIS FILE F OR ADJUDICATION AFRESH. PURSUANT TO THIS SET ASIDE A STATEMENT WAS TAKEN UP BY THE AO. ON THIS ISSUE THE AO NOTED AS UNDER:- IN THE ORIGINAL ASSESSMENT ORDER ADDITION OF RS. 8 19 000/- WAS MADE ON THE BASIS OF DOCUMENT NO. 1 AND 2 OF SHRI RAJESH MANGLA. THESE DOCUMENTS ARE ENVELOPS RECEIVED FROM SPS INTERNATIO NAL PVT. LTD. AND DBMB IN THE NAMES OF THE DIFFERENT PERSONS THOUGH THE ADDRESS ON ALL ENVELOPS IS THAT OF THE ASSESSEE. SINCE ASSESSEE C OULD NOT EXPLAIN THAT THESE PERSONS WERE ACTUAL PERSONS AND NOT FICTITIOU S ONES THE ADDITION OF RS. 8 19 000/- REPRESENTING THE INVESTMENT OF 1 17 PERSONS @ RS.7000/- PER PERSON WAS MADE IN THE HANDS OF THE ASSESSEE 2.2 UPON RECEIVING ASSESSEES RESPONSE IN THIS REGA RD THE AO OBSERVED THAT ASSESSESSES CONTENTION HAS TWO LIMBS FIRSTLY NO VALUABLES HAVE BEEN FOUND AND SECONDLY THE ASSESSEE HAS NOTHING TO DO WITH THE SAME. IN THIS REGARD THE AO REFERRED TO THE ALLOTMENT/REFUND ADV ICE CUM ALLOTMENT MONEY NOTICE AND OBSERVED THAT THE NOTICE EXTENDING TIME FOR PAYMENT OF ALLOTMENT MONEY DEFINITELY SUGGESTS SOME INVESTMENT TOWARDS A PPLICATION MONEY. CONSIDERING THE SAME AO OPINED THAT ASSESSEE HAVI NG FAILED TO DISCHARGE THIS BURDEN THE ONLY CONCLUSION THAT CAN BE DRAWN IS THAT ASSESSEE HIMSELF MUST HAVE MADE THE INVESTMENTS IN DIFFERENT NAMES. HENCE AO WENT ON TO MAKE THE ESTIMATE AS UNDER:- IT IS ESTIMATED THAT THE ASSESSEE MUST HAVE MADE A PPLICATION FOR THE LEAST APPLICATION LOT OF 100 SHARES AND 10 DEBENTURES ITA(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 3 AND WOULD HAVE INVESTED 50% OF THE ISSUING PRICE AS COMPUTED BELOW:- APPLICATION FOR 100 SHARES @ RS. 14 PER SHARE (INCLUSIVE OF PREMIUM OF RS. 4 PER APPLICATION) 100 X RS. 7 (50% OF THE ISSUING PRICE) : RS. 70 0 APPLICATION FOR 10 DEBENTURES @ RS 105 PER DEBENTURE (INCLUSIVE OF PREMIUM OF RS. 10 PER APPLICATION) 10 X RS. 52.5 (50% OF THE ISSUING PRICE) : RS. 52 5 TOTAL APPLICATION MONEY : RS. 1.225 MULTIPLYING THE ABOVE WITH THE NUMBER OF ALLOTMENT NOTICES OF 104 THE INVESTMENT OF THE ASSESSEE COME S TO RS. 1 27 400/-. THE SAME IS ACCORDINGLY ADDED TO THE I NCOME OF THE ASSESSEE UNDER SECTION 69 FOR THE FINANCIAL YEAR 1 996-97. 2.3 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 2.4 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS WE FIND THAT IT IS THE CONTENTION OF THE ASSESSEE THAT NEITHER T HE ENVELOPES ARE IN THE NAMES OF ASSESSEE NOR THE ENVELOPE SHOWED THAT ANY INVE STMENT HAS BEEN MADE AND THAT TOO BY THE ASSESSEE. IT IS THE CONTENTION THAT SOME OF THE ENVELOPES WERE EVEN NOT OPENED. UPON CAREFUL CONSIDERATION WE FIND THAT IT IS TRUE THAT NO COGENT EVIDENCE HAS BEEN FOUND BY THE REVEN UE JUSTIFYING THE ADDITION. SIMPLY ON THE BASIS OF CERTAIN NOTIC ES REGARDING DATE OF PAYMENT OF ALLOTMENT MONEY IN 3 RD PERSON NAME IT CAN NOT BE PRESUMED THAT ASSESSEE HAS MADE SOME UNDISCLOSED INVESTMENT. IT IS ALSO NOT THE CASE OF THE REVENUE THAT DEPARTMENT HAS VERIFIED FROM THE CONCE RNED COMPANY AND FOUND ITA(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 4 INVESTMENT OR ON BEHALF OF THE ASSESSEE. UNDER T HE CIRCUMSTANCES IN OUR CONSIDERED OPINION THIS ADDITION IS SOLELY MADE ON SURMISES AND NOT LIABLE TO BE SUSTAINED. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. AO ON THIS ISSUE AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 3. THE NEXT ISSUE RAISED IS THAT AO HAS ERRED IN MA KING THE ADDITION OF RS. 29 000/- ON ACCOUNT OF AMOUNT DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. 3.1 ON THIS ISSUE THE AO NOTED THAT THE ABOVE ADD ITION WAS MADE ON ACCOUNT CASH DEPOSITS IN HIS ACCOUNT NO. 5264 WITH GURGAON GRAMIN BANK. THIS ADDITION WAS BASED UPON PAYING SLIP OF DEPOSIT S FOUND DURING SEARCH OPERATION FORM RESIDENCE OF SHRI PRAVEEEN KAPOOR A ND SHRI ANIL JINDAL. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FURNISHED CONFIRMATION FROM MOTHER AND WIFE WITH REGARD TO DEPOSITS OF RS. 22 000/-. THE AO DID NOT ACCEPT THIS CONTENTION. HE ADDED THE SAME TO TH E ASSESSEES UNDISCLOSED INCOME. 3.2 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 3.3 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. FIRST LIMB OF THE ASSESSEES CONTENTION IS THAT PAYING SLIP WE RE NOT FOUND DURING THE SEARCH OPERATION AT THE RESIDENCE OF THE ASSESSEE. HOWEVER IN OUR OPINION THIS SUBMISSION IS DEVOID OF COGENCY. SUCH DEPOSIT S ARE IN FACT IN THE BANK ACCOUNT OF THE ASSESSEE AS SUCH IT IS THE DUTY OF T HE ASSESSEE TO EXPLAIN THE SOURCE THEREOF. IN SUPPORT THEREOF THE ASSESSEE HAD GIVEN CONFIRMATIONS FROM HIS WIFE AND MOTHER THAT THEY HAVE GIVEN RS. 29 000/- TO HIM. IN OUR CONSIDERED OPINION THIS IS ONLY SELF SERVING MATER IAL. NEITHER ANY REASON NOR THE OCCASION FOR GIVING THE ASSESSEE THE SAID MONEY BY THE WIFE AND MOTHER ITA(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 5 IS MENTIONED. UNDER THE CIRCUMSTANCE WE CONF IRM THIS ADDITION MADE BY THE AO. 4. THE NEXT ISSUE RAISED IS THAT THE AO HAS ERRED I N MAKING THE ADDITION OF RS. 10 320/- ON ACCOUNT OF BILLS FOR PETTY HOUS EHOLD PURCHASES. 4.1 ON THIS ISSUE THE AO NOTED AS UNDER:- ADDITION OF RS. 10 320/- WAS MADE ON ACCOUNT OF DO CUMENT NO. 3 SEIZED FROM THE ASSESSEE. THIS DOCUMENT CONTAINS 3 BILLS FOR THE PURCHASE OF REFRIGERATOR AND HOUSEHOLD GOODS. IN THE REASSESSMENT PROCEEDINGS THE ASSESSEE REITERATED T HE STAND TAKEN BY IT IN THE ORIGINAL ASSESSMENT PROCEEDINGS WITHOUT ADDUCING ANY SUFFICIENT EVIDENCE IN SUPPORT. THERE FORE THE ADDITION OF RS. 10 320/- IS REPEATED IN THIS ORDER AS WELL. 4.2 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 4.3. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED T HE RECORDS. WE FIND THAT THE ADDITION IS BASED UPON DOCUMENTS FOUND DUR ING SEARCH REGARDING PETTY HOUSEHOLD EXPENSES. EVEN IN THE BLOCK RETURN ASSESSEE HAS RETURNED SOME INCOME FOR EXAMPLE RS. 41000/- AND RS. 42000/- FOR A.Y. 1995-96 AND 1996-97. IN OUR OPINION THESE INCOME CAN BE REASON ABLY EXPECTED TO COVER SUCH MINOR EXPENSES. HENCE WE DELETE THIS ADDITION OF RS. 10 320/-. 5. THE NEXT ISSUE RAISED IS THAT THE AO ERRED IN M AKING THE ADDITION OF RS. 3 80 000/- AND RS. L 00 000/- ON ACCOUNT OF HOU SEHOLD EXPENSES AND MARRIAGE EXPENSES RESPECTIVELY. 5.1 IN THE ASSESSMENT THE AO NOTED THAT IN THE ORI GINAL ASSESSMENT ORDER ADDITION OF RS. 11 27 000/- WAS MADE ON ACCOUNT OF HOUSEHOLD EXPENSES. AFTER CONSIDERING THE ASSESSEES SUBMISSION THE AO OBSERVED THAT NO DOUBT NO DOCUMENTARY EVIDENCE WITH REGARD TO HOUSEHOLD EX PENSES HAS BEEN FOUND IN RESPECT OF THE HOUSEHOLDS EXPENDITURE INCURRED BY THE ASSESSEE TO SUSTAIN ITA(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 6 HIMSELF AND HIS FAMILY. HOWEVER AO PROCEEDED TO MAKE THE ADHOC ADDITION BY OBSERVING AS UNDER:- LOOKING INTO THE CIRCUMSTANCES OF THE CASE AND THE COST OF LIVING INDEX OF EARLY NINETIES IT IS CONSIDERED JUST AND FAIR TO ADD RS. 3 80 000/- (BY ADOPTING RS. 30 000/- PER ANNUM EXPE NDITURE FOR FINANCIAL YEAR 1989-90 TO 1992-93 WHEN THE ASSESSEE WAS BACHELOR AND RS. 60 000/- PER ANNUM EXPENDITURE FOR THE REMA INING 4 YEARS OF THE BLOCK) AS ASSESSEES UNEXPLAINED EXPENDITURE ON HOUSEHOLD AFFAIRS. 5.2 AO FURTHER NOTED THAT IN THE YEAR 1993 THE ASSE SSEE GOT MARRIED AND SINCE NO DETAILS OF EXPENSES INCURRED IN RESPECT OF MARRIAGE WAS FURNISHED AN ADDITION OF RS. 2 00 000/- WAS MADE IN THE ORIG INAL ASSESSMENT ORDER. IN THE SECOND ROUND THE AO NOTED THAT ASSESSEE HAS NOW ALSO FAILED TO FURNISH ANY DETAIL ON THIS ACCOUNT AND HE HELD THAT LOOKING INTO THE CIRCUMSTANCES OF THE CASE I.E. THE YEAR OF MARRIAGE 1993 THE TOWN T HE LIVING STANDARD OF THE ASSESSEE ETC. IT IS CONSIDERED JUST AND FAIR TO A DD AN AMOUNT OF RS. 1 LAKH TO THE ASSESSEE ON THIS ACCOUNT. 5.3 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 5.4 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT THE ABOVE ADDITION HAS BEEN SOLELY MADE ON SUR MISES AND CONJECTURES. SECTION 158BB MANDATES COMPUTATION OF UNDISCLOSED I NCOME OF THE BLOCK PERIOD ON THE BASIS OF EVIDENCE FOUND UPON SEARCH. IT IS A SETTLED LAW THAT NO ADDITION CAN BE MADE ON BLOCK ASSESSMENT DEHORSE ANY MATERIAL FOUND DURING THE SEARCH. IN THIS CASE IN THE ASSESSME NT ORDER THE AO HIMSELF OBSERVED THAT NO MATERIAL REGARDING INVESTMENT ON H OUSEHOLDS EXPENSES OR ITA(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 7 ON MARRIAGE FOUND DURING THE SEARCH. UNDER SUCH C IRCUMSTANCES WE FIND THAT ADDITION IN THIS CASE CANNOT BE SUSTAINED. UNDER THE CIRCUMSTANCES WE SET ASIDE THE ORDERS OF THE AO AND DELETE THE ADDIT ION. 6. . THE NEXT ISSUE RAISED IS THAT THE AO ERRED I N MAKING THE ADDITION OF RS. 40 500/- UNDER SECTION 69 OF THE ACT ON ACCOUNT OF VARIOUS HOUSEHOLD ASSETS. 6.1 ON THIS ISSUE THE AO NOTED THAT IN THE ORIGINAL BLOCK ASSESSMENT ADDITION OF RS. 40500/- WAS MADE UNDER SECTION 69 OF THE ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT IN RESPECT OF COLOUR TV COO LER AC STUDY TABLE FOUND AT THE TIME OF SEARCH OPERATION AT THE RESID ENTIAL PREMISES OF THE ASSESSEE. AO NOTED THAT ASSESSEE COULD NOT PRODU CE EVIDENCE WITH REGARD TO SOURCE OF INVESTMENT. AO PROCEEDED TO CONCLU DE THAT THE INVESTMENT IN ABOVE ASSETS MUST BE OUT OF ASSESSEES UNDISCLOSED INCOME. HENCE HE MADE THE ADDITION OF RS. 40 500/- IN THE HANDS OF THE AS SESSEE UNDER SECTION 69 OF THE IT ACT. 6.2 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 6.3 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT THE ABOVE ADDITION IS ALSO BASED ON SURMISES A ND CONJECTURES OF THE AO. THE ASSESSEE HAS CONTENDED THAT HE IS IN THE JOINT FAMILY. THERE IS NO REFERENCE REGARDING THE TYPE OF ASSET ITS MAKE OR WHEN IT IS PURCHASED WHETHER IT IS PURCHASED DURING THE BLOCK PERIOD OR BEFORE IT. UNDER THE CIRCUMSTANCES IN OUR CONSIDERED OPINION THE ADDITI ON IN THIS REGARD IS NOT LIABLE TO BE SUSTAINED. ACCORDINGLY THE ADDITION IS DELETED. 7. THE NEXT ISSUE RAISED IS THAT THE AO HAS ERRED IN MAKING THE ADDITION OF RS. 3 33 000/- ON ACCOUNT OF AMOUNT DEPOSITED IN BANK ACCOUNT OF SMT. SUNITA MANGLA WIFE OF THE ASSESSEE. ITA(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 8 7.1 ON THIS ISSUE THE AO NOTED THAT IN THE ORIGINA L ASSESSMENT ADDITION OF RS. 3 33 000/- WAS MADE ON ACCOUNT OF UNEXPLAINED DEPOSITS IN BANK ACCOUNT OF THE ASSESSEES WIFE. AO NOTED THAT IN T HE REASSESSMENT PROCEEDINGS IT WAS CONTENDED THAT THE ASSESSEE IS N OT RESPONSIBLE FOR DEPOSITS IN THIS ACCOUNT WHICH IS IN THE NAME OF HIS WIFE. A T THE SAME TIME THE AO NOTED THAT THE ASSESSEE HAS FURNISHED THE CONFIRMAT ION FROM VARIOUS PERSONS STATING THAT CASH DEPOSITS IN THE BANK ACCOUNT THA T ARE GIFTED BY THEM TO MRS. SUNITA MANGALA WIFE OF THE ASSESSEE. AO ALSO NOTED THAT ASSESSEES WIFE WAS A LIC AGENT. AO OBSERVED THAT NO CORROBORATIN G EVIDENCE REGARDING INCOME EARNED OVER THE YEARS ETC. HAVE BEEN FURNISH ED. AO PROCEEDED AND CONFIRMED THE ADDITION IN THE ASSESSEES HAND. 7.2 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 7.3 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. IT IS UNDISPUTED THAT THE SAID ACCOUNT IS IN THE NAME OF HIS WIFE. IT IS ALSO EMANATING FROM RECORDS THAT ASSESSEES WIFE IS LIC AGENT. THERE IS NO PRESUMPTION THAT ALL THE UNDISCLOSED INCOME OF WI FE BELONGS TO THE HUSBAND. IN THIS REGARD WE PLACE RELIANCE UPON COM MENTARY BY LD. AUTHORS CHATURVEDI & PITHISARIAS ON INCOME TAX LAW (FIFTH EDITION) VOLUME-2 PAGE 3090 AS UNDER:- NO PRESUMPTION FOR DEEMING WIFES PROPERTY AS HUSB ANDS PROPERTY THERE IS NO PRESUMPTION IN LAW WHETHER REBUTTABLE OR IRREBUTTABLE THAT THE PROPERTIES OWNED BY THE WIFE MUST BE DEEME D TO BE THE PROPERTY OWNED BY THE HUSBAND. THE WIFE IS AS MUCH ENTITLED TO OWN PROPERTY AS THE HUSBAND IS SHE IS EQUALLY ENTITLE D TO RECEIVE INCOME FROM THE PROPERTY. THE OBJECT OF ENACTING SECTION 6 4(1(IV)) IS ONLY TO ENSURE THAT INCOME TAXABLE IN THE HANDS OF THE HUS BAND IS NOT SOUGHT TO BE REDUCED WITH A VIEW TO REDUCE THE BURDEN OF TAX BY THE TRANSFER OF PART OFF THE HUSBANDS PROPERTY TO THE WIFE FOR NO CONSIDERATION OR INADEQUATE CONSIDERATION. THE ENQUIRY PERMISSIBLE UNDER THAT SECTION ITA(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 9 IS A LIMITED ENQUIRY CONFINED TO CASES OF TRANSFER BY THE HUSBAND TO THE WIFE FOR NO CONSIDERATION OR INADEQUATE CONSIDERATI ON AND CANNOT EXTEND TO CALLING INTO QUESTION THE TITLE OF THE WI FE WHEN SUCH TITLE HAD BEEN ACQUIRED BY PURCHASE FROM A THIRD PARTY [CF. P . SELVAMONY V. STATE OF TAMIL NADU (1998) TAX LR 672 674 (MAD)] UNDER THE CIRCUMSTANCES WE DO NOT FIND ANY JUSTIF ICATION OF THIS ADDITION IN THE HANDS OF THE ASSESSEE. ACCORDINGLY WE DELETE THIS ADDITION. . 8. THE LAST ISSUE RAISED IS THAT THE AO ERRED IN M AKING THE ADDITION OF RS. 41 000/- AND RS. 42 000/- ON ACCOUNT OF INCOME DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 199 5-96 AND 1996-97 RESPECTIVELY. 8.1 ON THIS ISSUE THE AO HELD THAT AS PER THE PROVI SIONS OF SECTION 158BB SUB-SECTION(1) CLAUSE (CA) THE INCOME DISCLOSED BY FILING OF RETURNS ARE LIABLE TO BE ADDED TO THE INCOME OF THE BLOCK AND THEREAFTER ARE NOT TO BE REDUCED FROM THE TOTAL INCOME AS RETURNS FOR THE AS SESSMENT YEAR 1995-96 AND 1996-97 WERE FILED SUBSEQUENT TO SEARCH OPERATI ONS. HENCE HE MADE THE ABOVE SAID ADDITION. 8.2 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 8.3 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT THE SAID RETURNS WERE SUBMITTED AFTER THE SEA RCH AS SUCH AO OPINED THAT THE INCOME RETURNED THEREIN CANNOT BE CONSIDERED TO BE DISCLOSED INCOME. WE ALSO FIND THAT THESE INCOME ARE NOT FOUND AS PER ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. THE ASSESSEE HAS CONTE NDED THAT BASIC EXEMPTION LIMIT OF RS. 40 000/- BE ALLOWED. 8.4 WE FIND THAT SECTION 158BB(1) READ WITH CLAUSE (CA) MANDATES THAT WHEN NO RETURN HAS BEEN FILED BEFORE SEARCH AND DUE DATE FOR FILING OF THE ITA(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 10 SAME HAS EXPIRED NIL WOULD BE REDUCED FROM UNDIS CLOSED INCOME. IT MEANS ASSESSEE WOULD NOT BE GIVEN ANY CREDIT FOR TH E INCOME RETURNED AFTER THE SEARCH FROM THE UNDISCLOSED INCOME COMPUTED. BU T THIS DOES NOT MEAN THAT INCOME EVEN UPTO THE BASIC EXEMPTION LIMIT IN THE CONCERNED YEAR WOULD BE TREATED AND ADDED AS UNDISCLOSED INCOME. 8.5 WE FURTHER FIND THAT HONBLE HIGH COURT OF RAJA STAN; JAIPUR BENCH IN THE CASE OF CHAIN SUKH RATHI VS. CIT & ANR. 270 ITR 368 (RAJ) AFFIRMED THE CONTENTION THAT WHEN SOME MATERIAL WAS SEIZED CONN ECTING THE CONCEALED INCOME THE ITO CAN COMPUTE THE INCOME ON THAT BAS IS BUT THAT SHOULD BE COMPUTED AND TAXED IN ACCORDANCE WITH THE PROVISION S OF ACT 1961. THEREFORE THE TAX EXEMPTION LIMIT HAS TO BE KEPT I N MIND AND TO THAT EXTENT INCOME NOT CHARGEABLE TO TAX TAX SHOULD NOT BE CHA RGED ON THAT PART OF THE INCOME. 8.6 IN THE BACKGROUND OF AFORESAID DISCUSSION AND P RECEDENT WE DIRECT THAT BASIC EXEMPTION BE ALLOWED IN THIS REGARD. . 9. THE OTHER GROUNDS PERTAINING TO ASSUMPTION OF J URISDICTION AND INITIATION OF PENALTY PROCEEDINGS WERE NOT PRESSED BEFORE US. HENCE THEY ARE DISMISSED AS NOT PRESSED. ITA(SS) NO. 144/DEL/2007 BLOCK PERIOD : 1.4.86 TO 20.11.96 11 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/01/2010. SD/- SD/- [C.L. SETHI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22//01/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES