2007 (10) TMI 638 - HC - Income Tax

Summary

Issues involved: Interpretation of Sections 158BA(3) and 158B(b) of the Income Tax Act, 1961 in relation to undisclosed income from a sale transaction of agricultural land.

Summary:

The High Court of Delhi heard an appeal by the Revenue against an order passed by the Income Tax Appellate Tribunal regarding the treatment of undisclosed income in the block assessment period u/s 132 of the Income Tax Act, 1961. The case involved a search conducted on the bank account of the Assessee post a sale transaction of agricultural land completed before the search.

The Assessing Officer contended that the cash amount received from the land sale was undisclosed income, seeking to include it in the block assessment period. However, both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal held that since the Assessee disclosed the entire sale proceeds in a regular return before the search, the cash receipts could not be treated as undisclosed income u/s 158BA(3) and 158B(b) of the Act.

The Court analyzed the provisions of Section 158BA(3) and Section 158B(b) and concluded that the cash income recorded in the bank account before the search did not qualify as undisclosed income. It was determined that the Revenue should have assessed the income under Section 143(3) of the Act rather than Chapter XIV B. The Court found no substantial question of law and dismissed the appeal.