2005 (10) TMI 77 - HC - Income Tax

Block assessment - income disclosed on account of payment of the advance tax - assessee not filed the returns of income within the dates but filed after the date of search - computation of undisclosed income - Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in remitting the matter and directing the Assessing Officer to quantify the undisclosed income by taking into consideration the advance tax paid and decide the issue in accordance with law? question is answered in the affirmative and against the Revenue held that the income disclosed on account of payment of the advance tax cannot be held to be undisclosed income for the purposes of block assessment - Tribunal was right in remitting the matter back to the Assessing Officer for the purpose of quantification of undisclosed income by taking into account the advance tax paid revenue appeal is dismssed

Summary

Issues Involved:
Appeal against exclusion of disclosed income for block period assessment.

Analysis:
The judgment pertains to an appeal by the Revenue against the exclusion of a total amount declared as income for the assessment years 1996-97, 1997-98, and 1998-99 during a block period assessment. The Revenue raised a substantial question of law regarding the validity of excluding the disclosed income after the assessee filed returns post a search. The case involved a search under section 132 of the Income-tax Act resulting in the seizure of jewellery and documents. The Assessing Officer and the Commissioner of Income-tax (Appeals) had rejected the assessee's claim to reduce gross total income by the disclosed income. The Appellate Tribunal, following precedent, remitted the matter back to the Assessing Officer for quantification of undisclosed income considering advance tax paid.

The court referred to a previous decision where it was held that advance tax payment reflects the income admitted by the assessee and cannot be disregarded. The court emphasized that the income disclosed through advance tax payment should be considered as disclosed income to the Revenue. The court highlighted that the advance tax paid represents the income disclosed by the assessee and should not be treated as undisclosed income for the relevant assessment year. The court reiterated that unless specific provisions bar the consideration of disclosed income, it should be taken into account for assessment purposes.

Based on the settled law, the court affirmed the Appellate Tribunal's decision to remit the matter for quantifying undisclosed income by factoring in the advance tax paid. The court also noted that the original question of law was not appropriately framed and rephrased it to align with the legal principles discussed in the judgment. Consequently, the court answered the reframed question in the affirmative, dismissing the appeal by the Revenue. The judgment concluded by stating that no costs were awarded in the case.