2010 (4) TMI 857 - HC - Income Tax

Block assessment - Belated return advance tax paid undisclosed income - Held that - Search had not been conducted in the premises of the assessee, advance tax was paid regularly by the assessee and even before issuing notice under section 158BD the assessee has filed the return - only mistake committed by the assessee herein is that though the advance tax was paid on time, the return was filed belatedly it cannot be treated as undisclosed income - In favour of the assessee

Summary

Issues:
1. Whether the Tribunal correctly held the income admitted by the appellant in the regular return for certain assessment years as undisclosed income for the block period?
2. Whether the Tribunal was justified in holding that the income covered by the advance tax paid for specific assessment years was not disclosed to the Department and assessable as undisclosed income for the block period?

Issue 1:
The case involved a dispute regarding the block assessment period from 1990-91 to 1999-2000. The assessee, engaged in the transport business, had paid advance taxes regularly but was not prompt in filing returns. Following a search conducted at another individual's premises, the Assessing Officer treated the entire income for the block assessment year as undisclosed income. The Commissioner of Income-tax (Appeals) and the Tribunal upheld this decision partially. The appellant contended that timely advance tax payments indicated no intention to conceal income and cited relevant case law to support the argument.

Issue 2:
The definition of undisclosed income under section 158B(b) was crucial in determining whether the assessee had the intention to hide income. The court emphasized that the timely payment of advance tax by the assessee demonstrated an intent to declare income for taxation rather than conceal it. Despite delays in filing returns, the absence of a search at the assessee's premises and the timely payment of advance tax were highlighted to argue against treating the income as undisclosed. The court referenced a judgment from the Madras High Court to support the view that belatedly filed returns with timely advance tax payments should not be considered undisclosed income.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, and the court's reasoning in arriving at the decision.