Saturday, August 24, 2013

income tax - assessee disclosed certain income

T: Where assessee disclosed certain income in its regular return filed within prescribed time for assessment year 1999-2000, amount so disclosed could not be added to assessee's undisclosed income computed in pursuance of block assessment proceedings initiated for block period 1-4-1989 to 11-5-1999
[2013] 34 200 (Karnataka)
Commissioner of Income-tax
K.S. Puttaswamy (HUF)*
IT APPEAL NO. 39 OF 2007
APRIL  1, 2013 
Section 158BA of the Income-tax Act, 1961 - Block assessment in search cases - Assessment of undisclosed income [Amount disclosed in regular return] - Block period 1-4-1989 to 11-5-1999 - Pursuant to search proceedings, Assessing Officer passed a block assessment order wherein certain addition was made on account of undisclosed income - Appellate authority reappreciated entire material on record and held that time limit for filing of return for assessment year 1999-2000 was not over - Since assessee had disclosed income in question in return for assessment year 1999-2000, addition made by Assessing Officer was deleted - Tribunal confirmed order of appellate authority holding that assessee had already disclosed income in regular return filed by him within time - Whether since two fact finding authorities had deleted impugned addition on proper appreciation of material on record, impugned order passed by said authorities was to be upheld - Held, yes [Para 6] [In favour of assessee]
M. Thirumalesh for the Appellant. S. Parthasarathi for the Respondent.
N. Kumar, J. - The Revenue has preferred this appeal against the order passed by the Tribunal, which has upheld the order of the appellate authority holding that the additions cannot be treated as undisclosed income within the meaning of Chapter XIV B of the Income Tax Act.
2. A search was conducted at the residence assessee. Some documents were seized by them under Section 158 BD of the Act. The Assessment Officer made an addition of Rs. 1,05,600 on account of rent, Rs.3,95,262 for capital gains of Tumkur property and interest of Rs.33,333 on fixed deposits, for the block period.
3. Aggrieved by the said order, the assessee preferred an appeal to the appellate authority. The appellate authority on reappreciation of the entire material on record held that the time limit for filing of the returns for the assessment year 1999-2000 was not over. The assessee has disclosed the income in the return for the assessment year 1999-2000 filed on 29.06.2001. There is nothing on record factually to indicate that there is any undisclosed income as the income of all the years up to 31st March, 1998 was well within the taxable limit. Therefore he set aside the order passed by the Assessing Authority.
4. Aggrieved by the same, the Revenue preferred an appeal to the Tribunal. The Tribunal held that the assessee had already disclosed the aforesaid income in regular return filed by him within time. There was no taxable income during the block period. In those circumstances, the order passed by the First Appellate Authority is valid and legal and do not suffer from any infirmity. Therefore the Tribunal dismissed the appeal.
5. The appeal was admitted on 01.10.2007 to consider the following substantial question of law:
"Whether the Appellate Authorities were correct in holding that the income detected in the course of search cannot be brought to tax as the undisclosed income for the block period despite this income not being disclosed in the normal books of accounts maintained as per Section 158BA(3) read with Section 158B(b) and that the return of income for the first time was filed for the assessment year 1999-2000 after the expiry of the period prescribed under Section 139(1) of the Act and no advance tax on the said amount was paid."
6. The facts are not in dispute. The dispute pertains to a sum of Rs.54,666 income on interest on fixed deposits, a sum of Rs.8,35,522 income under the head of capital gains and Rs.7,19,358 addition on account of rental income. The assessee has filed its return for the assessment year 1999-2000 on 29.06.2001 disclosing the aforesaid income. That is the income for the relevant assessment year for the block period, though the assessee had incurred, it was well within the taxable limit. It is by adding 10 years income, it was made to appear as if, he is evading tax. Two fact finding authorities on proper appreciation of the material on record have exposed this mistake committed by the Assessing Authority.
In that view of the matter, we do not find any merit in this appeal. The substantial question of law is answered in favour of the assessee and against the revenue.

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