2016 (2) TMI 127 - AT - Income Tax

Undisclosed income in the block assessment - interest income received by the assessee on which tax has already been deducted at source - Held that - When the TDS has already been deducted by the Citi Bank on the interest income in question as referred to by the Assessing Officer in the assessment order, the same cannot be again put to tax by declaring undisclosed income, so it cannot be again subjected to tax. So, we are of the considered view that the Assessing Officer has erred in declaring the interest income of the assessee for the Assessment Year 1997-98 as undisclosed income on which TDS has already been deducted. - Decided in favour of the assessee. Credit of TDS Certificate denied - Held that - It is settled principle of law that the benefit of TDS is to be claimed by the assessee in the normal assessment and not in case of block assessment made by the Revenue in the instant case. In case, the assessee has any such claim, he is at liberty to approach the appropriate authority to take benefit of any such TDS. So, we find no ground to interfere into the findings returned by the Assessing Officer - Decided against assessee.

Summary

Issues involved:
1. Determination of whether interest income received by the assessee, on which tax has already been deducted at source, is to be treated as 'undisclosed income' in the block assessment.
2. Allegation by the assessee that the Assessing Officer arbitrarily did not allow credit of TDS Certificate despite the amount being included in the total interest income.

Detailed analysis:
Issue 1:
The appellants sought to set aside impugned orders passed by the Assessing Officer, challenging the addition of interest income on NCD with Citibank. The Tribunal excluded the interest income from assessment years 1996-97 and 1997-98, as per section 158BB(1) of the Act. The Assessing Officer assessed the undisclosed income despite the income being recorded in the books of accounts and proper verification. However, the Tribunal found that the interest income, on which TDS was deducted, cannot be treated as undisclosed income. Citing relevant judgments, it concluded that when TDS has been deducted, the income is disclosed, and the Assessing Officer erred in declaring it as undisclosed income.

Issue 2:
The assessee alleged that the Assessing Officer did not allow credit of TDS Certificate, despite the amount being included in the total interest income. The Tribunal held that the benefit of TDS is to be claimed in normal assessment, not in block assessment. It stated that if the assessee has a claim, they should approach the appropriate authority. Consequently, the Tribunal determined this ground against the assessee.

In conclusion, the Tribunal partly allowed both appeals filed by the assessees, ruling in favor of treating the interest income with TDS deducted as disclosed income but against allowing credit of TDS Certificate in block assessment. The judgment provides a detailed analysis of the legal principles and relevant case laws to support its decision, ensuring a fair and comprehensive review of the issues raised by the parties.