2018 (8) TMI 718 - HC - Income Tax

Block Assessment u/s 158BC - exclusion/ reduction of lease rentals from the depreciation offered to tax - undisclosed income - Held that - the prohibition in Second Proviso to Section 158BC(a) of the Act of filing a revised return of income before the Assessing Officer would not prohibit a Assessee from raising the additional claim before Appellate Authorities - the substantial question of law is answered in favour of the Appellant Assessee.

Summary

Issues:
- Interpretation of second proviso to Section 158BC(a) of the Income Tax Act, 1961 regarding filing revised return of income.
- Entitlement of the appellant to exclude or reduce lease rentals from depreciation offered to tax.
- Validity of additional claim made before the Tribunal.

Analysis:
1. The appeal was filed under Section 260A of the Income Tax Act, 1961 challenging the order of the Income Tax Appellate Tribunal (the Tribunal) dated 13.8.2002.
2. The substantial question of law raised was whether the appellant was justified in excluding or reducing lease rentals from depreciation offered to tax for the block period under the second proviso to Section 158BC of the Act.
3. The block period for the Assessment Year involved was from 1985-86 to 1995-96.
4. The Tribunal's order did not entertain the appellant's additional claim, citing the second proviso to Section 158BC(a) which prohibits an assessee subjected to search from filing a revised return of income.
5. The appellant relied on the decision in CIT v. Sheth Developers (P) Ltd. where it was accepted that fresh claims could be made by a searched person before Appellate Authorities even without making the claim before the Assessing Officer.
6. The Revenue argued that the decision in Sheth Developers (P) Ltd. was based on a concession made by them, but failed to demonstrate why the concession was incorrect.
7. The High Court held that the prohibition in the second proviso to Section 158BC(a) did not prevent an assessee from raising additional claims before Appellate Authorities, as established in previous court decisions.
8. Consequently, the substantial question of law was answered in favor of the appellant, and the matter of additional claims was remanded to the Tribunal for fresh consideration on merits.
9. The Tribunal was directed to decide on the merits of the appellant's claim in accordance with the law.
10. The appeal was allowed, with no order as to costs.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the court's reasoning behind its decision.