2013 (8) TMI 289 - HC - Income Tax

Income u/s 158BA - Block assessment - Addition on account of undisclosed income by way of FDs, Kisan Vikas Pathras - Tribunal deleted addition - Held that - assessee had filed returns disclosing the said income along with the audit report. The Assessing Authority had passed the assessment order under section 143(3) of the Act for the assessment year 1999-2000 and in the said order he has not pointed them as receipts. Therefore, the last date for filing returns was not yet over. As he had an opportunity to file returns disclosing the said income, it cannot be said that it constitutes undisclosed income. In fact, in the assessment order, the Department has passed a protective assessment order including the said income - Tribunal was justified in granting relief to the assessee - Decided against Revenue. Income u/s 158BA - Block assessment - Deduction u/s 80L - Held that - interest accrued on the said FDs cannot be held to be undisclosed income. If the principal amount is not considered as undisclosed income, the interest accrued thereon cannot be construed as undisclosed income and in the returns filed by the assessee, that income is also shown and tax is paid - benefit given to the assessee under section 80L of the Act was not challenged by the revenue before the Tribunal - Decided against Revenue. In the absence of any evidence to show that the brothers divided the income equally, as the assessee was in the complete financial management of all the assets, it was of the view that it is probable that entire agricultural income was kept in FD in his name as the ultimate beneficiaries of the same would be his brother and his son. In the light of evidence on record, it cannot be said that the said reasoning of the Tribunal is perverse and calls for interference.

Issues:
1. Appeal against order granting full benefit to the assessee by the Income Tax Appellate Tribunal.
2. Interpretation of provisions under section 158BA of the Income Tax Act.
3. Allowance of deduction under section 80L claimed by the assessee.
4. Acceptance of the order of the Appellate Commissioner regarding additions made without documentary evidence.
5. Treatment of undisclosed income related to FDs and interest accrued.
6. Agricultural income assessment and ownership.
7. Addition of value of car, education expenses, and stock of medicines without documentary evidence.

Analysis:

Issue 1:
The appeals by the Revenue were filed against the order of the Income Tax Appellate Tribunal granting full relief to the assessee. The Tribunal considered various aspects of undisclosed income and deductions claimed by the assessee, leading to the appeals.

Issue 2:
The first substantial question of law raised was whether the Tribunal correctly allowed relief to the assessee against the provisions of section 158BA of the Income Tax Act. The Tribunal justified its decision based on the professional receipts recorded in diaries maintained by the assessee, which were disclosed in regular returns. The Tribunal held that the undisclosed income related to FDs did not meet the criteria for inclusion, as the returns were not yet due.

Issue 3:
Regarding the deduction under section 80L claimed by the assessee, the Tribunal noted that the Revenue did not challenge this before them. Therefore, the issue was not considered in the appeal before the court.

Issue 4:
The second substantial question of law involved the acceptance of the Appellate Commissioner's order regarding additions made without documentary evidence for car purchase, education expenses, and stock of medicines. The Tribunal found that these acquisitions could have been made from surplus amounts and were not necessarily sourced from undisclosed income, leading to relief granted to the assessee.

Issue 5:
The treatment of undisclosed income related to FDs and interest accrued was also discussed. The Tribunal held that if the principal amount was not undisclosed income, the interest accrued could not be considered as such. The returns filed by the assessee included this income, and tax was paid accordingly.

Issue 6:
In the assessment of agricultural income and ownership, the Tribunal reviewed the evidence on record, including land ownership and cultivation details. Despite initial discrepancies in the assessment of the share of agricultural income, the Tribunal found in favor of the assessee, considering the overall financial management and beneficiaries involved.

Issue 7:
The final substantial question of law addressed the addition of the value of car, education expenses, and stock of medicines without documentary evidence. The Tribunal found that these acquisitions could be explained by surplus amounts from previous years and were not necessarily linked to undisclosed income, leading to relief granted to the assessee.

In conclusion, the High Court dismissed the appeals filed by the Revenue, upholding the decisions made by the Tribunal in favor of the assessee based on the detailed analysis of each issue raised.

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