JMM bribery Case – Section 158BB, addition can be made in the course of a block assessment on the basis of evidence found in the course of search and not on the basis of confirmation of a prior knowledge by way of search

Shri Shibu Soren Vs. ACIT and others (ITAT Delhi)- If there is any undisclosed income and there is a search, addition of such undisclosed income is to be made in block.It is observed by the Honourable Jurisdictional High Court in this case that where the department is aware of the existence of an asset, then the department may be fully justified in issuing notice u/s 148 if the department feels that there is any undisclosed income.

This shows that for undisclosed income, addition can be made in reassessment proceedings also if the department is aware about the assets and department does not agree with the explanation of the assessee that receipt out of which the asset has come into existence is not taxable. In the present case also, the department is fully aware with precise and minute details about these bank accounts and money lying therein and the assessee also accepted about these bank accounts in the Statements u/s 131 and also explained that these are party funds. If the department is not satisfied with such explanation of the assessee, it could have been questioned in regular assessments by issuing notice u/s 148 but these bank accounts in the facts and circumstances of the present case cannot be subject matter of consideration and addition in block assessment proceedings. We, therefore, delete the addition on account of these bank accounts also by holding that the same cannot be considered or added in block assessment. In the light of this decision as per which we have held that no addition is justified in the present case, either in respect of deposits in various bank accounts with PNB Noroji Nagar, New Delhi or various other additions made by the A.O., which are not relatable to any evidence found in course of search, we are of the considered opinion that no adjudication is called for regarding various other contentions raised by the Ld. A.R. regarding non existence of search, or non validity of search for the reason that there is no panchnama or that there is no notice issued by the A.O. u/s 143(2) after filing of block return etc. We do not decide these aspects because now these aspects are of academic interest only once it is held by us that no addition made by the A.O. in the present cases is sustainable. We, therefore, do not decide these aspects.

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “ A ”

Before Shri R. P. TOLANI, JUDICIAL MEMBER
and Shri A. K. GARODIA, ACCOUNTANT MEMBER

Shri Shibu Soren Vs.  ACIT

I.T. (SS) No. 100/ Del/1997
(Block period 01.04. 1986 to 26.04. 1996

Shri Suraj Mandal  Vs.  ACIT, CC-6

IT(SS) 95/Del/1997
(Block Period 01.04. 1986 to 26.04.1996)

Shri Simon Marandi Vs. ACIT, CC-6

IT(SS) 99/Del/1997

(Block assessment period 01.04. 1986 to 26.04. 1996)

Shri Shailendra Mahto Vs. ACIT, CC-6,

IT(SS) 91/Del/1997

(Block assessment period 01.04. 1986 to 14.04. 1996)