2007 (12) TMI 219 - HC - Income Tax

Block Assessment Undisclosed income - First being as to whether for the purposes of block assessment under section 158BC the computation of undisclosed income can include income of any previous year which was below taxable limit but for which no return under section 139 was filed since there was no obligation under the Act to file the return whether the income from undisclosed sources represented through assets acquired by the parents of the assessee can be the subject-matter of block assessment in the hands of the assessee - held that - if the Assessing Officer finds that the income of the assessee falls below the taxable limit during any particular assessment year then the income of that assessment year shall not be taken to be a part of the undisclosed income for the purpose of block assessment - , on the face of the language of section 158BB and rather all provisions contained in Chapter XIV-B, we are satisfied that even from the standpoint of burden of proof the learned Tribunal has rightly appreciated the evidence of the assessee

Summary

Issues:
Challenge to Tribunal's order on block assessment, computation of undisclosed income, burden of proof, inclusion of parents' income in block assessment, validity of block assessment post amendment.

Computation of Undisclosed Income:
The appellant challenged the Tribunal's order partly allowing the appeal against the block assessment. The main issues raised were whether income below taxable limit for which no return was filed can be included in block assessment and whether the block assessment post amendment is valid. The court held that income below taxable limit after July 1, 1995, cannot be included in block assessment. The court referred to a previous judgment supporting this view.

Assessment of Income:
The court examined if the appellant's income in any assessment year fell below the taxable limit. While the initial assessment showed income above the limit, certain deletions by the Tribunal could potentially change this. The court stated that if the Assessing Officer finds income below the limit for any year, it should not be part of undisclosed income for block assessment.

Inclusion of Parents' Income:
Regarding whether parents' income can be included in block assessment, the court noted the Tribunal's detailed examination of assets and explanations provided by the appellant. The Tribunal deleted certain assets after being satisfied with the explanations. However, assets claimed to be from parents were thoroughly scrutinized, and discrepancies in explanations were found. The court emphasized that the Tribunal's factual findings on each asset were well-founded and did not warrant interference.

Burden of Proof:
The court affirmed that the burden of proof was rightly placed on the Department, and the Tribunal correctly assessed the evidence presented by the appellant. It concluded that questions regarding the burden of proof did not arise and, if deemed to, were answered against the appellant.

Final Decision:
Ultimately, the court dismissed the appeal but clarified that if the Assessing Officer finds income below taxable limits for specific assessment years post deletions by the Tribunal, such income should not be considered in the appellant's undisclosed income for the block assessment period. The judgment highlighted the importance of thorough examination of assets and evidence in block assessments.