Deputy Commissioner of Income Tax vs Smt. Hamidaben N. Narsinh

Y.R. Meena, Acting C.J.

The following questions are proposed for admission in this appeal:

(i) Whether on the facts and in the circumstances of the case, and in law the Income Tax Appellate Tribunal is justified in coming to the conclusion that transactions of assessment years 1999-2000 and assessment year 2000-2001 up to 29th June 1999 cannot be subject matter of block assessment under Chapter XIVB of the Income Tax Act.?

(ii) Whether, on the facts and in the circumstances of the case, and in law, the Income tax Appellate Tribunal is right in coming to the conclusion that the preliminary statement recorded by the authorized officer u/s 131(1A) of the Income Tax Act cannot be taken into evidence, as the same has no evidentiary value and any conclusion arrived at on the basis of such statement is not sustainable in law?

(iii) Whether, on the facts and in the circumstances of the case, and in law, the Income Tax Appellate Tribunal is right in relying upon the books of account prepared by the assessee after the search and seizure operation carried at the residential premises of the assessee and the Office Premises of the Trust, wherein, the assessee was a Trustee?

(iv) Whether, on the facts and in the circumstances of the case, and in law, the Income Tax Appellate Tribunal is right in reversing the order of the Appellate Commissioner without assigning any cogent and relevant reasons to show that the finding arrived at by the Appellate Commissioner is not tenable in law?

(v) Whether, on the facts and in the circumstances of the case, and in law, the Income Tax Appellate Tribunal is justified in deleting the addition of Rs. 7 lakhs, out of addition made by the Assessing Officer towards ''unexplained cash deposit'' of Rs. 17,99,000/-?

The Tribunal has considered the factual aspect of the issue raised in these questions as under:

We have heard the rival submissions and perused the material available on record. As far as tuition income is concerned, it is not denied that the assessee is qualified teacher working as a Principal of the school. Right from A.Y. 1989-90 till the date of search, papers regarding her earning of income from tuition and the disclosure thereby in income tax return has been found. The same are listed at page No. 122 of the PB. Copies of the return also are filed. Details in this behalf are given from PB 129 to 132. The assessee prepared her books of accounts after the date of search, showing tuition income. Bank deposit was claimed to be out of this income. As far as earning of tuition income is concerned, the same is not ruled out. It is evident that the assessee prepared books of accounts as per the material available on search record, and the assessee based on which, considering the tuition income is contended to have deposited the said amount of Rs. 1,00,000/-. Similar issue about completion of books of accounts and earning tuition income arose in her husband''s case viz. Shri Ashikali R. Narsinh v. CIT IT (SS) No. 139/Ahd/2002 vide order dated 28-6-2005 decided the issue of earning tuition income, uphold the acceptability of books completed after search on the material on following observations:

If we consider the facts on records with respect to assessee having shown income from tuition in his returns of income since Asst. Year 1990-91 (evidence has been placed by the assessee at page No. 19 of Vol. I of paper book), the only conclusion to be arrived at is that the assessee was having regular income from tuition. So far as his statement is concerned, we have gone through the assessee''s answer given to question No. 2 which has been referred to by the Assessing Officer in the assessment order and have noticed that the assessee had not denied to have no income from tuition work. The question put to the assessee was as to what were the assessee''s business, profession and total income and it was in response to that question that the assessee went on stating the facts, such as, that he was partner in the M/s. Gandhi Petrol Pump having 221/2 shares. The assessee seems to have understood the question that he was to disclose the business carried on by him and not the sources of income because had he not understood the question like that he could have disclosed the other sources of income, such as, dividend, interest, rent and tuition also.

14.2 In the totality of the facts and circumstances of the case, we are of the opinion that he assessee having not denied to have income from tuition work, his answer to question No. 2, his answer cannot be interpreted so as to mean that he had admitted that he had no income from tuition and even if for the sake of arguments, the question is interpreted the way as Revenue Authorities have interpreted, then also we are of the opinion that in view of the fact that he assessee was returning income from tuition in his returns of income since asst. year 1990-91, the assessee''s claim of having income during the period to asst. years 1999-2000 and 2000-01 cannot be rejected.

14.3 Coming to the assessee''s claim of having tuition in come during asst. years 1999-2000 and 2000-01, we are of the opinion that by the date when search took place, i.e. by 29/06/1999, the due date for furnishing of the return for asst. year 1999-2000, and previous year relevant to assessment year 2000-01, i.e. previous year during which search took place; having not expired, the assessee had right to furnish the returns of income for asst. years 1999-2000 and 2000-01, on the basis of documents found at the time of search, i.e. bank account/bank statement, loose papers, documents and books relating to others.

14.4 Further since the books of account prepared after the search, in case of ''Shah Trust'' have been accepted by the Tribunal to be genuine books, we are of the opinion that books prepared by the assessee in his own case, in view of same facts and circumstances, also are liable to be accepted and consequently, all transactions relating to previous years, relevant to Assessment Years 1999-2000 and 2000-01 record in stock books can be said to have been recorded in the books of account before search and consequently those transactions cannot be subject matter of block assessment under Chapter-XIVB of the Act.

It is not disputed that both husband and wife were working in the school, facts and circumstances become stronger in assessee''s case, as she was a qualified teacher, lady principal not deriving salary and was allowed to take tuition activity and tuition income in earlier years have been accepted, details whereof are placed at PB 122 which also includes current year''s income. Books prepared on the basis of search material have been held to be regular books of account, under these circumstances, it cannot be held that books prepared by the assessee becomes unreliable, as the Tribunal has already held such books to be acceptable, following the Tribunal''s order and looking at the facts and circumstances of the case we delete the addition of Rs. 1,00,000/-

Learned counsel fairly admits that in the case of husband of the assessee, similar questions were raised and the appeal was dismissed. Following the view taken in the case of husband of this assessee, we see no merit in this appeal. The appeal stands dismissed.