2011 (2) TMI 1444 - AT - Income Tax

Summary

Issues Involved:
1. Treatment of income from mini buses.
2. Consideration of income below taxable limit as undisclosed income.
3. Assessment of income for the period falling within the block period.
4. Assessment of income from mini buses in the hands of the assessee's husband.

Summary:

Issue 1: Treatment of income from mini buses

The Revenue contended that the CIT(A) erred in holding that the income from mini buses owned by the assessee, Smt. R.K. Prema, should be assessed in the hands of her husband, Shri S.M.R. Kumaresan. The Tribunal noted that the mini buses were purchased and registered in the name of the assessee, and the hire purchase loans were also obtained in her name. Despite Shri Kumaresan admitting the income from the buses in his return, the Tribunal held that the legal ownership and income from the buses should be assessed in the hands of the assessee. The CIT(A)'s order was set aside, and the addition made by the AO was reinstated. (Para 8)

Issue 2: Consideration of income below taxable limit as undisclosed income

The Revenue challenged the CIT(A)'s decision to exclude income below the taxable limit for A.Ys. 1998-99 to 2001-02 from the undisclosed income. The Tribunal agreed with the CIT(A) that income below the taxable limit cannot be considered as undisclosed income. However, upon including the income from mini buses, it was found that the income for A.Y. 1998-99 alone was below the taxable limit, while for other years, it was above the basic exemption limit. Therefore, the Tribunal held that the income for A.Ys. 1999-2000 to 2001-02 and the broken period 01-04-2001 to 26-12-2001 should be considered as undisclosed income. (Para 12)

Issue 3: Assessment of income for the period falling within the block period

The Revenue contended that the CIT(A) erred in holding that the income for the period 01-04-2001 to 26-12-2001 should be considered only in regular assessment and not in the block assessment. The Tribunal noted that the income for the broken period of 01-04-2001 to 26-12-2001 was part of the block period and should be included in the block assessment. The AO was directed not to consider the income for this period in the regular assessment for the impugned assessment year. (Para 21)

Issue 4: Assessment of income from mini buses in the hands of the assessee's husband

The Revenue appealed against the CIT(A)'s decision to assess the income from mini buses in the hands of Shri S.M.R. Kumaresan on a substantive basis. The Tribunal reiterated its earlier decision that the income from mini buses should be assessed in the hands of the assessee, Smt. R.K. Prema, and not her husband. The CIT(A)'s direction was set aside. (Para 27)

Conclusion:

The appeals of the Revenue were partly allowed, with the Tribunal directing that the income from mini buses be assessed in the hands of Smt. R.K. Prema, and the income for the period 01-04-2001 to 26-12-2001 be included in the block assessment. The Tribunal also held that income below the taxable limit for A.Y. 1998-99 should not be considered as undisclosed income, while for other years, it should be. (Para 29)