1998 (7) TMI 132 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order for the block period.
2. Consideration of belated returns filed by the assessee.
3. Allowance of deductions under Chapter VI-A.

Summary:

1. Validity of the Assessment Order for the Block Period:

The appeal was filed against the order passed u/s 143(3) read with section 158BC for the block period "1-4-1995 to 6-2-1996". The assessee contended that the assessment order was not a speaking order and should be annulled. The Tribunal noted that the assessment years 1988-89, 1989-90, 1990-91, 1992-93, and 1993-94 were outside the block period. The Tribunal highlighted that section 158BB(1)(c) does not mention section 139 and that the returns for these years were filed before the search date. Consequently, the impugned assessment order was set aside due to non-application of mind by the Assessing Officer to the relevant provisions of law.

2. Consideration of Belated Returns Filed by the Assessee:

The Judicial Member opined that the block period mentioned in the assessment order was a typographical error and should be from 1-4-1985 to 6-2-1996. He argued that since the returns were filed beyond the time limit prescribed u/s 139, the income declared in these belated returns could not be considered by the Assessing Officer. The Judicial Member confirmed the action of the Assessing Officer on this point but remitted the matter back for redoing the assessment concerning deductions claimed under Chapter VI-A.

3. Allowance of Deductions under Chapter VI-A:

The Vice-President noted that the deductions claimed under sections 80CCA and 80G were not considered by the Assessing Officer, which was in total disregard of section 158BH. The Judicial Member agreed that the assessment should be set aside for redoing it concerning these deductions. However, the Third Member concluded that since the income considered in the impugned assessment was already disclosed by the assessee in the returns filed before the search, it could not be treated as undisclosed income. Thus, the assessment was annulled, making the question of allowing deductions under Chapter VI-A infructuous.

Final Decision:

The Third Member agreed with the Vice-President, resulting in the annulment of the assessment order. Consequently, the appeal of the assessee was allowed as per the majority opinion.