2000 (3) TMI 204 - AT - Income Tax

Summary

Issues Involved:
1. Claim of the assessee u/s 80-I.
2. Undisclosed income for the assessment year 1996-97.
3. Alleged double taxation for the assessment year 1995-96.
4. Computation of undisclosed income u/s 158BB(1).
5. Consideration of losses for the assessment years 1988-89 and 1989-90.

Summary:

1. Claim of the assessee u/s 80-I:
The primary issue raised in the appeal was the claim of the assessee u/s 80-I. The assessee contended that the total income for the Block period should be computed after allowing deductions under Chapter VI-A, referencing section 158BH. The Tribunal concluded that interpreting section 158BB as suggested by the Revenue would lead to double taxation of a part of the income, which was not intended by the Legislature. The Tribunal held that total income u/s 158BB(1) should be computed after allowing deductions under Chapter VI-A. Consequently, the order of the Assessing Officer was set aside, and he was directed to recompute the income after allowing the deductions.

2. Undisclosed income for the assessment year 1996-97:
The assessee challenged the addition of Rs. 34,38,673 as undisclosed income, arguing that the due date for filing the return had not expired and the regular books of account were found correct. The Tribunal found that the alleged bogus purchases were not entered in the regular books of account, which were complete and accurate. Therefore, the provisions of sub-section (3) of section 158BA were applicable, and this income could not be included in the Block period. The Tribunal set aside the order of the Assessing Officer and deleted the sum of Rs. 34,38,673 from the assessment of undisclosed income.

3. Alleged double taxation for the assessment year 1995-96:
The assessee contended that Rs. 15 lakhs offered in the regular assessment proceedings should not be assessed again in the Block assessment. The Tribunal found that the Assessing Officer had already given credit for this amount while computing the undisclosed income. Therefore, this additional ground was dismissed as misconceived.

4. Computation of undisclosed income u/s 158BB(1):
The assessee argued that the deduction allowed under clauses (a) to (f) should be the amount of income before allowing deduction u/s 80-I in the regular assessment proceedings. Since the assessee succeeded on the main issue of section 80-I, this ground became infructuous and was dismissed.

5. Consideration of losses for the assessment years 1988-89 and 1989-90:
The assessee argued that losses of Rs. 2,52,080 for the assessment years 1988-89 and 1989-90 should be reduced from the net undisclosed income. The Tribunal found no merit in this argument, as the net undisclosed income would remain the same as determined by the Assessing Officer even after considering these losses. Therefore, this ground was dismissed.

Conclusion:
The appeal of the assessee was partly allowed, with significant relief granted on the primary issue of section 80-I and the deletion of the undisclosed income for the assessment year 1996-97. Other contentions raised by the assessee were dismissed.