2013 (11) TMI 1442 - HC - Income Tax

Income of minor - additions u/s 69 - Held that - The children filed returns under Amnesty Scheme, which had been accepted by the Assessing Officer, treating their separate income as such this amount was not liable to be added in the income of the assessee - Decided against Revenue. Cash found during search - Held that - The statement of independemt witnesses were taken on record - They had sold their agricultural land and received sale consideration which was lying with them in their house - They advanced money to the assessee as they wanted to purchase the land of the assessee - The sale deeds executed by the witnesses were also brought on record - It was proved that money was received by them - These witnesses were cross examined by the Revenue - Decided against Revenue.

Summary

Issues:
1. Addition of surrendered amount under Amnesty Scheme in the names of minors who became major.
2. Addition of undisclosed income found during a search operation under Section 69-A of the Income Tax Act.

Analysis:

Issue 1:
The case involved the addition of amounts surrendered under the Amnesty Scheme in the names of minors who had become major. The Income Tax Appellate Tribunal (Tribunal) had deleted the addition of Rs.1,35,000 and Rs.2,50,000 made under Section 69 of the Income Tax Act. The Assessing Officer treated the seized amount of Rs. 2,50,000 as the assessee's income from undisclosed sources. However, the assessee explained that the amount was received as an advance for the sale of agricultural property. The Commissioner Income-tax (Appeals) upheld the addition of the undisclosed income. The Tribunal, on appeal, found that the assessee had fully explained the source of the amount and directed the deletion of the added amounts from the income. The Tribunal also rectified the order, stating that the amounts in the names of minor children, filed under the Amnesty Scheme, were not to be included in the assessee's income. The High Court upheld the Tribunal's decision, stating that the amounts in the names of minor children, disclosed under the Amnesty Scheme and accepted by the Assessing Officer, were not liable to be included in the assessee's income.

Issue 2:
Regarding the addition of undisclosed income of Rs.2,50,000 found during a search operation, the Assessing Officer imposed penalties under Section 271(1)(c) of the Act. The Commissioner Income-tax (Appeals) partially allowed the appeal, directing a re-calculation of the penalty. The Tribunal held that the penalty on the amount of Rs. 2,50,000 was liable to be levied at the minimum rate. The Revenue's appeal against this decision was dismissed by the Tribunal. The High Court, after hearing arguments from both sides, concluded that the assessee had provided explanations for the amount, which were wrongly disbelieved by the Assessing Officer. The High Court affirmed the Tribunal's decision to delete the addition of Rs.2,50,000 from the assessee's income, ruling in favor of the assessee on both questions referred to it.

In conclusion, the High Court ruled in favor of the assessee on both issues, holding that the amounts surrendered under the Amnesty Scheme in the names of minors who had become major, as well as the undisclosed income found during the search operation, were not to be included in the assessee's taxable income.