SRI PRASANCHAND SURANA SEC.BAD

O/TAXAP/60/2000 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 60 of 2000

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI

and HONOURABLE MR.JUSTICE K.J.THAKER

================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ ASSTT. C.I.T.....Appellant(s) Versus GAURANG B. SOLANKI....Opponent(s) ================================================================ Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1 MR SN SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Page 1 of 6

O/TAXAP/60/2000 JUDGMENT

Date : 18/11/2014

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned judgement and order dated 17.12.1999 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘A’ in M.A. No. 117/Ahd/1999 in Income Tax (SS) Appeal No. 35/Ahd/1998 for the block year 1986-87 to 1995-96 and period up to 05.01.1996 in assessment year 1996-97, the revenue has preferred the present tax appeal. 2. This appeal was admitted by this Court on 09.10.2000 for consideration of the following substantial questions of law: “(1) Whether the Appellate Tribunal is right in law and on facts in in entertaining and allowing the application filed by the assessee under section 254(2) of the Income tax Act,1961 and holding that amount of Rs 13,62,865/- was not undisclosed income and further directing the assessing officer to assess the said amount while framing regular assessment for the assessment year 1995-96? (2) Whether inclusion of proposed amount of Rs 13,62,875/- as undisclosed income for the block period is barred by Explanation (b) below sub-section (2) of Section 158BA read with section 139 (5) of the Act ?"

O/TAXAP/60/2000 JUDGMENT are set out as under: 2.1 A search u/s 132 was carried out and during the search it was found that plots of the assessee were sold to various parties for Rs. 56,24,342/- of which Rs. 45 lakhs was by way of cheque. A show cause notice was issued as to why the amount of Rs. 45 lakhs be not treated as undisclosed income of the assesee. The Assessing Officer added Rs. 51188/- to the total undisclosed income for the block period and the difference between original return and revised return was treated as undisclosed income by A.O. Thereafter order under section 154 was passed on 18.02.1998 whereby total undisclosed income was reduced to Rs. 59,42,186/-. 2.2 Being aggrieved by the order, the assessee preferred appeal before the ITAT and the Tribunal vide impugned order directed the A.O to take the sale consideration as per sale deeds in relation to sale of six plots by assessee for the purpose of calculating capital gains. The assessee thereafter preferred M.A before the Tribunal and the Tribunal vide order dated 17.12.1999 directed not to consider capital gains of Rs. 13,62,865/- as undisclosed income of the assessee in the block period and to tax the same while framing regular assessment for assessment year 1995-96. Being aggrieved by the said order, the present appeal is filed by the revenue. 3. Mr. Sudhir Mehta, learned advocate appearing for the revenue submitted that the Tribunal has erred in allowing M.A. Application of assessee u/s 254 holding that an amount of Rs. 1362865/- was not an undisclosed income of assessee which has been discussed at length. He submitted that the Page 3 of 6

O/TAXAP/60/2000 JUDGMENT 158BD proceedings are just and proper in the facts and circumstances of the case. 3.1 Mr. Mehta has relied upon the decision of this Court in the case of N.R. Paper & Board Ltd. vs. Deputy Commissioner of Income-tax reported in [1998] 234 ITR 733 wherein it is held that there is no overlapping in nature of assessment made under Chapter XIV-B of undisclosed income and regular assessment made under section 143(3) and these provisions operate entirely for different purposes, one of assessing undisclosed income of block period while other for assessing total income or loss of previous year in regular assessment. 3.2 Mr. Mehta submitted that the Appellate Tribunal has erred in law and on facts in entertaining and allowing application filed by the assessee under section 254(2) of the Act and holding that the amount of Rs. 13,62,865/- was not undisclosed income and further directing the Assessing Officer to assess the said amount while framing the regular assessment for assessment year 1995-96. 4. Mr. S.N. Soparkar, learned Senior Counsel appearing with Mr. B.S. Soparkar, learned advocate for the respondent supported the impugned order and submitted that the Tribunal has rightly not considered the capital gains of Rs. 1362865/- as undisclosed income of the assessee. He submitted that the present appeal lacks merit and therefore deserves to be dismissed. 4.1 Mr. Soparkar has drawn the attention of this Court to Page 4 of 6

O/TAXAP/60/2000 JUDGMENT sections 158A(2) and 158BD of the Act and the explanation which was inserted with effect from 01.07.1985 and submitted that section 158BD was wrongly invoked in the present case when the assessee himself was subject to a serach action u/s 132 and therefore the order passed by the A.O u/s 158BD is bad in law. 5. We have heard learned advocates for both the sides and perused the orders passed by the Tribunal. It is pertinent to note that the assessee had filed return of income for assessment year 1995-96 showing total income at Rs. 101792/-. Later on the assessee filed a revised return showing income of Rs. 14,64,657/- on 16.01.1996 including capital gain taking the sale price of land at Rs. 1821101/-. However, the notice was issued on 22.01.1997 u/s 158BD of the Act which means the assessee filed his revised returns prior to the date of receipt of notice. 6. The Tribunal has observed in para 8 of the impugned order as under: “8. ... However a perusal of assessment order passed indicates that the Block period for the purpose of assessment has been taken as the period ending 5-1-1996 which is the date of search in the case of Shri B.B. Solanki (father of the assessee) and the assessee and the contention of the learned representative of the assessee is that since nothing incriminating during that search relating to the assessee was found, the proceedings u/s 158BD could not be taken against the assessee. However the fact remains that the seized paper did contain reference to plots of land belonging to the assessee in relation to which cheque payments were received by the assessee and accounted for in his return filed in the normal course of business, but there were also other notations on the seized Page 5 of 6

O/TAXAP/60/2000 JUDGMENT paper which points to the transfer/payment of Rs. 45 lacs cash, may be form the purchasers to Shri. Vijay C. Shah or to the assessee and as such the AO was justified in issuing notice u/s 158BD to the assesee on the basis of information which came into his possession consequent to the search and seizure operation in the case of Shri Vijay C. shah whose premises were searched on 22-10-1995. Since the order u/s. 158BD has also passed on 29- 1-1998 i.e. within one year from the date service of the notice u/s. 158, the same is within the limitation provided in the Act and as such can not be held to be time barred.” 6.1 Considering the aforesaid observations, we are of the opinion that the Tribunal has not committed any error in passing the impugned order. We therefore answer the questions raised in the affirmative i.e. against the revenue and in favour of the assessee. 8. In the premises aforesaid, appeal is dismissed. No costs. (K.S.JHAVERI, J.) (K.J.THAKER, J) divya Page 6 of 6