2015 (8) TMI 228 - HC - Income Tax

Undisclosed income - salary income - Assessment order passed under Section 143(3) r.w. Section 158 BB(1)(c) and 158BC - Held that - Assessee was working as an Engineer under a Government Department. The income is a salaried income therefore, it cannot be considered to be of undisclosed nature. Tax must have been deducted from the salary income provided his salary is taxable. Looking to the order passed by the ITAT and looking to the evidences on record and looking to the facts and circumstances of the case and also looking to Section 158 BB(1)(c) to be read with Section 158 BC to be read with Section 143(3) of the Income Tax Act, 1961 it cannot be said that the income of the respondent was an undisclosed income as he was salaried man in the Government Department and TDS must have been deducted and therefore, only substantive question of law raised by this appellant that whether the Tribunal is justified on the facts and in the circumstances of the case in holding the salary incomes falling under the block period as disclosed, when no returns were filed for these years looking to Section 158 BB(1)(c) of the Income Tax Act, 1961. Answer of this substantive question of law is that no error has been committed by the Tribunal in deciding this issue. There was no other income with the salaried man which is taxable. - Decided in favour of assessee.

Issues:
1. Restoration of Tax Appeal No. 14 of 2002 dismissed for default.
2. Difficulty in serving notice upon the respondent.
3. Uncertainty regarding legal heirs of the deceased respondent.
4. Assessment order against the respondent under the Income Tax Act, 1961.
5. Appeal against the assessment order before the Income Tax Appellate Tribunal.
6. Tribunal's decision on the nature of the respondent's income and justification for the same.

Issue 1: Restoration of Tax Appeal
The civil miscellaneous petition sought restoration of Tax Appeal No. 14 of 2002, which was dismissed for default due to the non-appearance of the Advocate. The petitioner informed the Court that the respondent had passed away, making it challenging to serve notice and identify the legal heirs. Upon considering the circumstances, the Court recalled the order dated 22nd April, 2013, and restored Tax Appeal No. 14 of 2002 to its original file.

Issue 2: Difficulty in Serving Notice
The petitioner faced difficulties in serving the notice upon the respondent, who was believed to have expired. Despite efforts to gather information on the legal heirs and their addresses, the petitioner was unable to serve the notice for an extended period, leading to the Court's intervention in recalling the dismissal order.

Issue 3: Uncertainty Regarding Legal Heirs
The petitioner expressed uncertainty about identifying the legal heirs of the deceased respondent, further complicating the process of serving the notice. This lack of clarity on the legal heirs' names and addresses contributed to the delay in the restoration of Tax Appeal No. 14 of 2002.

Issue 4: Assessment Order Under Income Tax Act
The assessment order against the respondent was made under Section 143(3) read with Section 158 BB(1)(c) and Section 158 BC of the Income Tax Act, 1961. The order was based on findings from a search conducted at Canara Bank, Bistupur, Jamshedpur, revealing undisclosed income from the respondent's three bank accounts during the block period from 1987-88 to 1997-98.

Issue 5: Appeal Before Income Tax Appellate Tribunal
The respondent appealed the assessment order before the Income Tax Appellate Tribunal, which concluded that the respondent's salaried income as a Government Department Engineer was not undisclosed income. The Tribunal emphasized that taxes should have been deducted from the salary income, and no error was found in its decision regarding the nature of the income.

Issue 6: Tribunal's Decision and Dismissal of Tax Appeal
The Tribunal's decision highlighted that the respondent's salary income was not undisclosed, given his status as a salaried individual subject to tax deductions. The Tribunal's ruling was upheld, stating that no error was made in considering the salary income as disclosed. Consequently, the Tax Appeal was dismissed, as there was no merit in challenging the Tribunal's decision on the nature of the respondent's income.

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