A. Kalyanasundharam, Vice President - (1.) THE assessee, a limited company carrying on the business of real estate, financing, hire purchase and leasing activities has filed this appeal against the Block Period Assessment order of Assistant Commissioner of Income-tax, Central Circle-V, Bangalore (hereinafter referred to as AO) dated 30-5-1997 passed under section 158BC of the Income-tax Act, 1961 (hereinafter referred to as the Act). THEse appeals have been instituted by the assessee under section 253(1)(b) of the Act. THE assessee had raised seven grounds in this appeal is and these are as under : 1. THE order of the learned ACIT u/s 158BC of the Income-tax Act, insofar as it is against the appellant is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
(2.) The order of assessment is bad in law as the order transgresses the provisions of section 158BE(1) of the Act inasmuch as there was only one warrant of authorisation and not many and the warrant of authorisation was executed on 30-3-1996 and therefore the assessment ought to have been completed on or before 31-3-1997. Without prejudice to the above, the learned ACIT erred in holding that the transactions entered into by the appellant of acquiring assets and leasing them to the customers as part of lease finance business are not genuine and such transactions were entered into solely with a view to claim depreciation at 100% and not out of commercial expediency and such claiming of depreciation resulted in undisclosed income liable to tax under Chapter XIV-B of the Income-tax Act, 1961 consequent to their detection during search on 30-3-1996. The finding is purely on suspicion and surmise, assumptions and presumptions, without any factual foundation and contrary to the evidence available even at the time of search and on improper appreciation of the evidence and thus the finding is vitiated and liable to be vacated especially, in view of the fact the appellant has filed sufficient evidence even after the search about the existence of the assets and genuineness of the transactions and the evidence about the genuineness of the transaction was also found with the appellant at the time of search and the statements of the parties which were relied upon by the Assessing Officer for such finding, such parties have not been allowed to be cross-examined by the appellant and the finding is vitiated and deserves to be vacated.
(3.) WITHOUT prejudice to the above, if disallowance of depreciation is warranted on the ground that there were no assets in existence of which the appellant was the owner or the appellant has not become the owner of such assets in existence on the basis of such finding then the authorities ought to have allowed the loss in the matter of acquiring the assets which loss is incidental to the trade of lease finance in lieu of depreciation as a deduction.;