2019 (3) TMI 897 - HC - Income Tax

Assessment in remand - Tribunal remanded the case to AO to confine to determination of undisclosed income only on net asset basis based on the materials and evidences found during the course of search, if it is not reflected in the regular books of accounts.with certain direction - During the pendency of appeal before High Court AO passed the order - HELD THAT - In view of the remand proceedings being concluded by the direction of the Tribunal, the present Tax Case filed by the Revenue has become infructuous. Accordingly, the Tax Case is dismissed as infructuous.

Summary

Issues:
1. Appeal by Revenue under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal regarding Block Assessment period.
2. Remand of the case by the Tribunal to the Assessment authority for determining undisclosed income on a "net asset" basis.
3. Fresh assessment orders passed by the Assessment Authority post the remand direction.
4. Dismissal of the Tax Case filed by the Revenue as infructuous due to the conclusion of remand proceedings.

Issue 1: Appeal by Revenue under Section 260-A of the Income Tax Act, 1961
The Revenue filed a Tax Case under Section 260-A of the Income Tax Act, 1961 challenging the order of the Income Tax Appellate Tribunal related to the Block Assessment period from 01.04.1996 to 26.11.2002. The Block Assessment was initiated following a search under Section 132 of the Act at the Assessee's premises, with the notice served on 04.03.2003 and the Assessee filing the block return on 24.09.2003.

Issue 2: Remand of the case by the Tribunal
The Tribunal remanded the case back to the Assessment authority, directing them to determine undisclosed income on a "net asset" basis based on the materials found during the search, not reflected in the regular books of accounts. The Tribunal emphasized that undisclosed income must be determined in accordance with the law, and the Assessee is liable to pay tax only on income includible in the total income as per law. The Tribunal cited legal precedents to support the proper assessment of tax liability in accordance with the law.

Issue 3: Fresh assessment orders post remand direction
Following the remand direction, the Assessment Authority issued fresh assessment orders on 20th March 2018, which were reviewed by the counsel for the Assessee and the Revenue. The Tribunal acknowledged the conclusion of the remand proceedings based on the Assessment Authority's actions, rendering the Tax Case filed by the Revenue as infructuous. Consequently, the Tax Case was dismissed as infructuous, with no costs imposed.

This judgment highlights the procedural aspects of tax assessment, emphasizing the importance of determining undisclosed income in compliance with the law. The Tribunal's directive for a "net asset" basis assessment underscores the significance of accurate tax liability determination. The dismissal of the Tax Case due to the completion of remand proceedings signifies the resolution of the dispute within the legal framework of the Income Tax Act.