ORDER
B. S. Saluja, J.M.
1. The assessee has filed this appeal against order, dt. 29th November, 1996, passed by the AO under s. 158BC/143(3) of IT Act.
2. Grounds Nos. 1, 2 and 11 were not pressed. The same are, therefore, rejected. Ground No. 12 is general in nature and needs no comments.
3. Learned counsel Shri. P. C. Jain first took up grounds Nos. 6 and 9(b), whereby it has been urged that AO was not justified in disallowing basic exemption in respect of assessment years for which returns were not filed and taking entire amount of income as undisclosed as also that AO is not justified in treating income for asst. yr. 1995-96 for which return was not filed on due date as undisclosed income as returned income was below taxable limit. The brief facts are that the AO noted that the assessee had filed returns for the block period on 6th May, 1996 in Form No. 2-B. The assessee had not filed returns before due date in relation to asst. yrs. 1986-87 to 1990-91, 1992-93 and 1995-96. The assessee’s original return for asst. yr. 1994-95 was assessed at Rs. 38,040 whereas in return for block period even after showing truck income at Rs. 24,000 which was not shown originally the assessee had computed total income at Rs. 37,090. The same was due to certain adjustments made by the assessee, like depreciation on car claimed at Rs. 10,750 and salary from M/s. Super Pipes at Rs. 24,000 restricted to Rs. 12,226, in the, light of provisions of s. 158BB(1)(a). AO took income for asst. yr. 1994-95 at Rs. 38,040 as originally filed. He made addition on account of truck income at Rs. 24,000 separately. AO further observed that the assessee had made certain adjustments while computing income for asst. yr. 1995-96 and that he had shown Rs. 30,000 as his share from Super Pipes and Rs. 24,000 as truck income. Since the assessee did not file regular return for asst. yr. 1995-96, no credit for adjustments made on account of depreciation and car expenses at Rs. 24,038 could be allowed, in view of provisions of s. 158BB(1)(a). He held that for computation of undisclosed income, was taken at Rs. 30,000. For similar reasons given in para. 4 of the order, AO computed income for asst. yr. 1991-92 at Rs. 37,269 and treated it as undisclosed on the ground that the assessee did not file return (sic). AO further computed undisclosed income for asst. yr. 1992-93 at Rs. 1,01,418, as the assessee did not file return.
4. Learned counsel referred to the provisions of ss. 158BB relating to computation of undisclosed income, 2(45) relating to definition of ‘total income’ and 5 dealing with the scope of total income. He also referred to the provisions of s. 14, which provide that all income shall, for the purposes of charge of income-tax and computation of total income, be classified under various heads of income. He further referred to the provisions of s. 113, whereunder total undisclosed income of the block period determined under s. 158BC shall be chargeable to tax @ 60 per cent. AO was trying to treat income for assessment year for which no return was filed or for which income was below taxable limit as undisclosed. He submitted that no tax is leviable where income was below the taxable limit. He referred to Form No. 2B, Note 5, which mentions that total income be computed without giving effect to set off of brought forward loss under Chapter VI or unabsorbed depreciation under s. 32(2) in excess of whatever has been allowed for determining total income returned/assessed. He pointed out that in Note 6, it has been mentioned that ‘for any year, if the return has not been furnished for the reason that the taxable income was not above the maximum amount not chargeable to tax, total income is to be mentioned against the previous year’. He submitted that deductions allowable under Chapter IV and VI-A are admissible and ought to be allowed, while computing undisclosed income. In support, learned counsel referred to the following decisions of the Tribunal :
(i) Kasturchand Baid vs. Asstt. CIT (1997) 58 TTJ (Nag) 253 wherein it has been held that where income was below taxable limit and the assessee did not file return, income cannot be treated as undisclosed for the purpose of Chapter XIV-B. It was observed that income which could not be treated as undisclosed could not become undisclosed for the purpose of computation either. It would be highly unfair and inequitous to tax the assessee on an income which was otherwise below taxable limit, at a higher flat rate simply because there had been a search by IT authorities at his premises; and
(ii) Pradip C. Patel vs. Dy. CIT (1997) 58 TTJ (Ahd) 409 wherein the Tribunal observed that if certain income was not required to be disclosed for the purpose of the Act, it could not be treated as undisclosed income.
5. Learned Departmental Representative relied heavily on assessment order and submitted that learned counsel is trying to suggest that deductions should be allowed even when no return had been filed. No benefit of deduction is allowable under Chapters IV and VI-A. Learned Departmental Representative referred to decision in the case of Bhag Chand Jain vs. Asstt. CIT (1998) 65 ITD 11 (Cal), wherein the Tribunal held that while computing income in block assessment deductions under Chapter VI-A could not be allowed.
6. He also referred to the decision in the case of P. K. Kaliannan vs. Asstt. CIT (1999) 64 TTJ (Mad) 704 : (1999) 68 ITD 401 (Mad), wherein it was held that where the assessee had not filed return of income within due date, he was not entitled to any deduction out of total income under s. 158BB(1)(c). The basic exemption allowed to the assessee while levying tax for a particular assessment year was not applicable, while tax is charged under s. 113 @ 60 per cent on undisclosed income because the rate of 60 per cent is charged on undisclosed income of block period and it does not refer to any particular assessment year.
7. Learned Departmental Representative further submitted that the provisions of s. 158BA(1) override the other provisions of the Act, as they start with non obstante clause. He urged that no basic exemption is allowable in case of an assessee who has not filed return under s. 139(1). Income in relation to various assessment years for which no return had been filed was above taxable limit, after taking into account surrender, etc. made. He, therefore, submitted that in view of provisions of s. 158BB(1)(c), disclosed income in such cases has to be treated as ‘nil’.
8. He referred to order, dt. 10th December, 1998 in ITA No. 1126/96 in the case of Shri Sunil Kumar, wherein the Tribunal noted the argument that the amount attributable to various assessment years falling in block period would reveal that income for each of these years was below taxable limit and opined that the said argument was fruitless, as for the purpose of computing undisclosed income it is the entire block which is to be considered and not separate assessment years.
9. Learned counsel, in his reply, stressed that the basic exemption ought to be allowed with reference to returns which were not filed for the purpose of computation of tax @ 60 per cent.
10. We have carefully considered the rival submissions on these grounds and perused the assessment order. We have also seen the case law relied upon by both the parties. The first issue raised is that income which is below taxable limit cannot be treated as undisclosed so as to attract tax @ 60 per cent. We may mention that similar issue came up in ITA No. 1178/96 for block asst. yrs. 1986-87 to 1995-96, dt. 24th February, 2000 in the case of Smt. Usha Goel, wherein the Tribunal held that where income was below taxable limit the assessee was not under an obligation to file return and if income as declared in relation to such year in return for block period is accepted and remains below taxable limit, the same cannot be treated as undisclosed. However, where income so declared exceeds the limit specified in s. 139(1) on account of any addition/surrender made, the entire income for that assessment year would be treated as undisclosed and liable to tax @ 60 per cent. We hold accordingly in the present case. The next question posed relates to allowability of basic exemption in relation to income for which no return had been filed under s. 139(1) within due date. We feel that this issue is covered against the assessee by the decision reported in (1999) 64 TTJ (Mad) 704 : (1999) 68 ITD 401 (Mad) (supra), wherein it has been held that tax under s. 113 @ 60 per cent is chargeable on undisclosed income of block period and it does not refer to any assessment year. We endorse this view and in view of the provisions of s. 158BB(1)(c), where the assessee had not filed return under s. 139(1) within due date, then no deduction is allowable with reference to disclosed income for relevant assessment year once the assessed income in relation to relevant assessment year exceeds taxable limit specified in s. 139(1). The next question posed relates to allowability of deductions under Chapters IV, VI and VI-A. Here, we may refer to p. 5735 of Vol. 4, 9th Edn. of Law of Income-tax by Sampatth Iyengar’s, where the provisions of Chapter XIV-B have been examined and it has been observed that since computation of undisclosed income is to be made in accordance with provisions of Chapter IV, an important question for consideration is that the other provisions such as Chapter III dealing with exempt income Chapter VI-A dealing with deductions like Insurance premium and dividends are available or not available to the assessee. The author has observed that there are judicious norms for interpretation of statutes, according to which, if there is any ambiguity one must resort to a reasonable interpretation to make the provisions workable. It has been observed that object of Chapter IV is to classify income under different heads and generally income under each head is not to be separately charged to tax. What is charged to tax is total income of the year. It has been observed that classification of income under various heads in Chapter IV is to be followed by computation of total income, as defined in s. 2(45) and total income is to be computed subject to all other provisions including exemption, deduction, etc. The author has pointed out that the provisions regarding brought forward loss are incorporated in Chapter VI and if that Chapter was not to be made applicable, the legislature would not have provided for specific exclusion of provisions regarding brought forward loss and it clearly means that except the provisions of brought forward loss, other provisions of Chapter VI are applicable to assessment of undisclosed income. The author has referred to provisions of s. 158BH, which provide that all other provisions of the Act shall be applicable to the computation of undisclosed income. The author has concluded that since the computation has to be made on the basis of total income of each previous year but determination of total income as laid down in s. 2(45) would mean that deductions under Chapter VI-A would be admissible. We feel that the aforesaid observations of learned author deserve to be accepted and, therefore, we hold that the provisions of s. 2(45) of the Act would apply and the assessee would be entitled to deductions and adjustments under Chapters IV, VI and VI-A while determining total income for each previous year, falling in block period. The AO may recompute income on the basis of principles enunciated in this paragraph.
11. Ground No. 3 relates to disallowance of various deductions claimed, depreciation and expenses on car, etc, even though the same were not claimed in original assessment. In original return for asst. yr. 1994-95, the income was declared at Rs. 38,040 and assessment completed at that figure under s. 143(1). In return for block period, the assessee declared income of Rs. 37,490 in relation to asst. yr. 1994-95. However, AO took income at Rs. 38,040 as originally assessed, in view of provisions of s. 158BB(1)(a). He also made an addition of Rs. 24,000 on account of truck income separately.
12. Learned counsel referred to p. 9 of paper-book, where statement of income for asst. yr. 1994-95 is placed. The assessee had claimed depreciation on car plus car expenses totalling Rs. 10,750, after disallowing 1/4th on account of personal usage. Salary income received as partner from Super Pipes was restricted by the assessee, in view of the provisions of s. 40(b) at Rs. 12,226. Truck income was shown at Rs. 22,000. Learned counsel referred to provisions of s. 158BB, Expln. (b), whereunder disclosed income of the firm determined under that clause shall not be chargeable to tax in the hands of the partners, whether on allocation or on account of enhancement. He referred to p. 3 of paper-book, where a copy of acknowledgment of return filed showing income of Rs. 38,040, is placed. He referred to s. 40(b) and submitted that salary income of partner is liable to tax as business income in the hands of the firm. He, therefore, urged that depreciation on car plus car expenses were allowable. He referred to provisions of s. 40(b)(v), whereunder remuneration to any working partner, which is authorised by and is in accordance with the terms of partnership deed and relates to any period falling after the date of such partnership deed is not allowed as a deduction where it exceeds the aggregate amount specified under sub-cl. (v)(2). He referred to provisions of s. 40(b)(c) r/w s. 28(v). In view of the foregoing, he urged that salary is required to be adjusted.
13. Learned Departmental Representative relied on the impugned order and submitted that depreciation on car was not claimed in asst. yr. 1994-95 while filing original return and that the assessee had revised computation while filing return for that block period. He referred to the provisions of s. 158BB, Expln. (a), wherein it is specified that for determining undisclosed income set off of brought forward loss under Chapter VI or unabsorbed depreciation under s. 32(2) is not to be allowed. He referred to CBDT Circular No. 717, dt. 14th August, 1995, as extracted in 65 ITD 11 at p. 15. It has been mentioned that ‘brought forward loss or unabsorbed depreciation will be allowed to be carried forward and set off in subsequent regular assessment and shall not be set off against undisclosed income determined in block assessment and that total income of each previous year shall, for the purpose of aggregation, be taken as total income/loss without giving effect to the set off of brought forward loss under Chapter VI or unabsorbed depreciation under s. 32.
14. We have carefully considered the rival submissions on this issue, in the light of provisions of s. 158BB. It is observed that the assessee did not claim any depreciation under s. 32 in original return for asst. yr. 1994-95, a copy placed at p. 3 of paper-book. We feel that in view of provisions of s. 158BB(1)(a), the assessee has to be allowed deduction out of aggregate of total income of the amount assessed under s. 143. The amount assessed is Rs. 38,040 as against revised computation of income by the assessee while filing return for block assessment year at Rs. 37,490. We have also examined provisions of Expln. (a), as referred to by learned Departmental Representative, and it is observed that the said clause prohibits set off of unabsorbed depreciation under s. 32(2). We feel that claim of depreciation made by the assessee in revised computation of income cannot be treated as a claim for set off of unabsorbed depreciation, as depreciation has been claimed in relation to asst. yr. 1994-95 itself, though not claimed in original return. We feel that in whichever way figures of returned/assessed as undisclosed in the light of provisions of s. 158BB(1)(a). AO is, therefore, directed to allow appropriate relief to the assessee on the said basis.
15. Ground No. 4 relates to treatment of Rs. 15,000 as unexplained investment under s. 69. AO observed that the assessee had shown cash in hand on 1st April, 1989 at Rs. 15,000 and that he failed to give basis on which the said amount had been shown especially when no books of account had been maintained. It was impossible for a person to recollect the amount held by him ten years back on certain dates. He, therefore, held that source of cash of Rs. 15,000 remained unexplained and he treated the same as income for asst. yr. 1986-87.
16. Learned counsel referred to pp. 17-18 of paper-book, where copies of balance sheet as on 31st March, 1985 and 31st March, 1986 are placed. Amount of cash in hand of Rs. 15,000 has been shown in both balance sheets. He referred to copy of capital account, placed at p. 18. He submitted that the amount had been shown in books of account regularly maintained. He also referred to copy of balance sheet as on 31st March, 1987, wherein cash in hand has been shown at Rs. 18,200 and opening balance in capital account at Rs. 2,20,978. He submitted that the amount may have been kept anywhere but there was a possibility of availability of Rs. 15,000. He referred to pp. 55-57 of paper-book, where a copy of return filed by Smt. Gurmeet Kaur wife of the assessee is placed.
17. Leaned Departmental Representative basically relied on order of AO and submitted that memory of the assessee has really to be appreciated as he could remember availability of cash of Rs. 15,000 on the relevant date. Documents relied upon by learned counsel have been prepared after search and preparation of such documents is based on memory. Said documents were not found during search. He referred to p. 24 of paper-book, where cash in hand has been shown at Rs. 16,917 in balance sheet as on 31st March, 1992. How the exact figure has been arrived at in the books of account, is very surprising. There is no documentary evidence to support the said figure of cash in hand. He referred to p. 25, where figure of cash in hand increased to Rs. 1,76,995 and then came down to Rs. 8,045 in balance sheet as on 31st March, 1994, refer p. 26 of paper-book. He, therefore, urged that addition of Rs. 15,000 has been rightly made.
18. Learned counsel, in his reply, submitted that no doubt figures of cash in hand are on estimate basis but the same have not been rebutted by the Department and have not been found false. Statement of affairs has not been manufactured, as pleaded by learned Departmental Representative. Return form required filing of statement of affairs, which has been acted upon by AO. There is no material with the Department to establish that statement of affairs was bogus. He also referred to the provisions of s. 69 and submitted that possibility of availability of Rs. 15,000 with the assessee has to be taken into account and the assessee’s explanation is required to be rebutted. He relied on the decision in the case of Roshan Di Hatti vs. CIT (1977) 107 ITR 938 (SC).
19. We have carefully considered the rival submissions and have perused assessment order. We feel that the submissions made by learned Departmental Representative have force, in view of the basis facts that no books of account had been maintained by the assessee and there is no supporting evidence to establish availability of Rs. 15,000 as on 1st April, 1985. The plea of learned counsel that statement of affairs has not been rebutted does not have much force, as the Department cannot be expected to bring material to rebut availability of cash in hand as on 1st April, 1985. We feel that the addition cannot be deleted merely on the basis of possibility of the amount being there and it is for the assessee to give a reasonable explanation regarding availability of the impugned cash. The burden would shift to the Revenue only if a reasonable explanation is adduced by the assessee.
20. Ground No. 5 relates to addition of Rs. 5,600 in asst. yr. 1991-92. AO observed that the assessee did not file return for asst. yr. 1991-92 and that he had shown Rs. 6,669 as his share income from Super Pipes and had surrendered Rs. 30,600 on account of his share income and amount after firm’s tax from Super Pipes. He, therefore, made an addition of Rs. 37,269 on account of undisclosed income for asst. yr. 1991-92.
21. Learned counsel referred to p. 53 of paper-book, where it is pointed out that the assessee had filed return for block period including Rs. 5,600 for asst. yr. 1991-92 on account of share of amount surrendered in Super Pipes after firm’s tax. In view of the amendment by the Finance Act, 1996, w.e.f. 1st July, 1995, undisclosed income of the firm so determined shall not be chargeable to tax in the hands of partners, whether on allocation or account of enhancement. The assessee thus asked for relief of Rs. 5,600. The assessee surrendered an amount of Rs. 25,000 and Rs. 5,600 had been surrendered in the hands of the firm. He referred to p. 5 of paper-book.
22. Learned Departmental Representative relied on impugned order and submitted that the assessee had not filed return for asst. yr. 1991-92. He referred to p. 11 of paper-book and submitted that amount of Rs. 5,600 has come to the assessee after payment of tax by the firm.
23. We have carefully considered the rival submissions in the light of provisions of s. 158BB, Explanation (b), proviso. We feel that the submissions made by learned counsel have force. AO may, however, verify as to whether amount of Rs. 5,600 has been surrendered in the hands of the firm and, if so, addition of Rs. 5,600 made in the hands of the assessee shall stand deleted.
24. Ground No. 7 relates to addition of Rs. 45,000 on account of investment in Kisan Vikas Patras belonging to the wife of the assessee. During search, it was noticed that wife of the assessee had purchased KVPs for Rs. 45,000, – Rs. 15,000 in her own name and Rs. 30,000 in the names of her two children. The assessee stated that his wife had purchased KVPs on 17th March, 1993 out of her income. AO observed that though the assessee had furnished copy of return filed by his wife in Form No. 4A under s. 115K but no reliance could be placed on the same because he was not able to explain the source of money invested by his wife in purchase of KVPs. He, therefore, treated the amount of Rs. 45,000 as undisclosed income of the assessee for asst. yr. 1993-94.
25. Learned counsel referred to the written submissions filed before AO at pp. 44-48 of paper-book. It has been mentioned that during search it was clarified that KVPs were purchased of 17th March, 1993, for Rs. 45,000 by wife of the assessee and that she was an regular income-tax assessee and that she had filed IT return under s. 115K by paying tax of Rs. 1,400 being income from tailoring, etc. The assessee also mentioned that the said investment had been made out of past savings of his wife amounting to Rs. 10,000 to Rs. 30,000 and that her income was below taxable limit. The assessee stressed that no investment had been made by him for purchase of KVPs. He pointed out that KVPs were encashed in 1996 prematurely and the money was received by his wife only and that the amount so received had been used by her. Learned counsel submitted that return by Smt. Gurmeet Kaur wife of the assessee was filed before search, i.e. in February, 1995, while search took place on 23rd November, 1995. There was no evidence with the Department that investment of Rs. 45,000 has been made by the assessee. Learned counsel relief on the decisions reported in (1977) 107 ITR 938 (supra) and CIT vs. Smt. P. K. Noorjahan (1999) 237 ITR 570 (SC). In the case of CIT vs. Smt. P. K. Noorjahan (supra), the apex Court has observed that s. 69 conferred a discretion on ITO in the matter of treating the source of investment which had not been satisfactorily explained by the assessee as the income of the assessee and ITO is not obliged to treat such source of investment as income in every case where the explanation offered is found to be not satisfactory.
26. Learned Departmental Representative relied on the impugned order and submitted that return for asst. yr. 1995-96 was filed by Smt. Gurmeet Kaur on 23rd February, 1996, i.e. after search. There is no evidence of income from tailoring, as claimed. The income of the wife had been utilised towards household expenses.
27. We have carefully considered the rival submissions on this issue and we feel that the explanation offered by the assessee appears to be reasonable. It is observed from provisions of s. 115K that a person engaged in any vocation having income not exceeding Rs. 49,330 could have filed statement under s. 115K(4) by paying tax mentioned in that section. It is also observed that in Expln. (b), the expression ‘vocation’ has been defined to include tailoring, haircutting, clothes washing, etc. It is observed that return for asst. yr. 1994-95 had been filed in February, 1995, i.e., about nine months before search, wherein income was shown from tailoring as is clear from copy placed at p. 54 of paper-book. The plea of learned Departmental Representative that return for asst. yr. 1995-96 was filed after date of search is thus not relevant. In view of the foregoing, we feel that addition of Rs. 45,000 cannot be sustained in the hands of the assessee.
28. Ground No. 8 relates to computation of income from truck at Rs. 24,000 against declared income of Rs. 22,000, which was for 11 months and not allowing depreciation on car and other expenses while determining income for asst. yr. 1994-95. Grounds Nos. 9(a) and (c) relate to treatment of income for asst. yr. 1995-96 as undisclosed and disallowance of deduction for depreciation on car, car expenses, insurance, etc. Ground No. 10 relates to treatment of declared and recorded income at Rs. 32,000 as undisclosed for the period from 1st April, 1995 till date of search, for which return was to be filed in October, 1996. AO observed that the assessee had not maintained any books of account and had shown income for asst. yr. 1994-95 and 1995-96 at Rs. 22,000 and for asst. yr. 1996-97 at Rs. 24,000 from two trucks plyed for eight months. AO referred to provisions of s. 44AE and computed income from truck for asst. yr. 1996-97 at Rs. 32,000. No account in respect of truck income had been maintained. He, therefore, computed truck income for asst. yrs. 1994-95 and 1995-96 at Rs. 24,000 and for asst. yr. 1996-97 at Rs. 32,000.
29. Learned counsel submitted that return for asst. yr. 1996-97 was not due when search took place on 23rd November, 1995, therefore, the amount of Rs. 32,000 in relation to truck income could not be treated as undisclosed. He referred to provisions of s. 44AE, whereunder income from plying, hiring or leasing of truck is required to be computed in case of assessees not maintaining any books of account. Income for asst. yr. 1994-95 has been shown from truck for 11 months, as the vehicle was purchased in April and the assessee could not have shown income for 12 months. In relation to asst. yr. 1995-96, taxable limit was Rs. 35,000 and since income from truck, etc. was below taxable limit, no return was filed. He, therefore, urged that no addition is called for on account of income from truck in relation to asst. yrs. 1994-95 to 1996-97.
30. Learned Departmental Representative relied on impugned order and submitted that even if truck is played for a single day income has to be estimated under s. 44AE. He pointed out that under s. 44AE(2), profits and gains from each goods carriage have to be taken at Rs. 2,000 for every month or part of the month during which the goods vehicle was owned by the assessee in previous year or an amount higher than the amount as declared by him in his return of income. For asst. yr. 1994-95, the assessee had filed return but truck income was not shown. For asst. yr. 1996-97, the assessee never intended to disclose truck income of Rs. 32,000. He referred to provisions of s. 158BA, which start with non obstante clause and submitted that the said income had been rightly treated as undisclosed.
31. We have carefully considered the rival submissions and have perused asssessment order and other relevant documents placed in the paper-book. The issue regarding income for asst. yr. 1994-95 has already been dealt with by us above and relying on provisions of s. 158BB(1)(a), we have held that the assessee is entitled to deduction of an amount of Rs. 38,040, out of aggregate of undisclosed income, as assessment had been completed under s. 143(1). It is observed that in return for block period, the assessee has shown income of Rs. 37,490 for asst. yr. 1994-95, wherein truck income has been shown at Rs. 22,000. We feel that in view of our decision in relation to asst. yr. 1994-95, where we have held that income of Rs. 38,040 as assessed cannot be treated as undisclosed, the income from truck shown as Rs. 22,000 as which is embedded in higher income taken at Rs. 38,040, cannot be treated as undisclosed. We may mention that in the light of our decision in para 3.5 above, the adjustments claimed by the assessee in asst. yr. 1994-95 became admissible while computing undisclosed income. Further, AO has no material to show that the assessee had any other income apart from that shown by the assessee in revised computation of income at Rs. 37,490. With reference to asst. yr. 1995-96, it is observed that the assessee had shown income of Rs. 29,960 and had not filed return earlier. AO has observed that the assessee had shown Rs. 30,000 as his share from Super Pipes and Rs. 24,000 as truck income and since he did not file regular return for asst. yr. 1995-96, no credit for adjustment made on account of depreciation and car expenses at Rs. 24,038 can be allowed, in view of provisions of s. 158BB(1)(a). He, therefore, took undisclosed income at Rs. 30,000 and made another addition of Rs. 24,000 an account of truck income. We feel that the depreciation on car, car expenses and insurance have to be allowed having regard to the provisions of Expln. (a) to s. 158BB(1), as the only prohibition specified related to set off of unabsorbed depreciation under s. 32(2). This issue is already decided above. We, therefore, hold that AO is not right in holding that no credit for adjustments made on account of depreciation and car expenses at Rs. 24,038 can be allowed. In this view of the matter, AO may recompute income for asst. yr. 1995-96 and if assessed income for asst. yr. 1995-96 exceeds taxable limit, then whole income in relation to that year would be treated as undisclosed, as the assessee did not file any return under s.139 and the provisions of s. 158BB(1)(c) would become attracted. However, if income remains below taxable limit then, as already held above, income for asst. yr. 1995-96 cannot be treated as undisclosed. AO may recompute income for asst. yr. 1995-96 in the light of above observations. We feel that submissions made by learned counsel have force in relation to asst. yr. 1996-97, as return was not due at the time of search. We may refer to the provisions of s. 158BB(1)(d), which specify that ‘where the previous year has not ended or the date of filing return of income under s. 139(1) has not expired, the aggregate of total income has to be reduced on the basis of entries relating to such income or transaction as recorded in the books of account and other documents maintained in the normal course on or before the date of search.’ Learned Departmental Representative has raised a plea that the assessee would not have disclosed truck income for asst. yr. 1996-97. We feel that where period for filing of return for asst. yr. 1996-97 had not expired and provisions of s. 44AE are admittedly applicable for computing income from truck, it is difficult to hold that the assessee would not have disclosed the said income in return which was yet due. Thus, we hold that truck income of Rs. 32,000 in relation to asst. yrs. 1996-97 cannot be treated as undisclosed. Grounds Nos. 8, 9(a), (c) and 10 are disposed of accordingly.
32. Ground No. 9(d) relates to ascertaining tax liability without giving any rebate under s. 88 and advance-tax. AO after computing total undisclosed income at Rs. 3,08,690, levied tax @ 60 per cent and did not adjust the amount of advance-tax paid.
33. Learned counsel referred to p. 7 of paper, where a copy of challan evidencing payment of advance-tax of Rs. 2,000 in relation to asst. yr. 1995-96 is placed. He submitted that AO should have allowed credit for amount of advance-tax paid.
34. Learned Departmental Representative submitted that benefit for adjustment of advance-tax/TDS is not provided anywhere in the Act. He referred to the decision in the case of P.K. Kaliannan vs. Asstt. CIT (supra).
35. We have carefully considered the rival submissions. We feel that in view of the provisions of s. 158BH, whereby all other provisions of the Act apply to assessment made under Chapter XIV-B, the assessee deserves to be allowed credit of Rs. 2,000 paid as advance-tax.
36. In the result, the appeal is allowed in part, as above.