9911796707
TMI Blog2004 (3) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... eclared as Rs. Nil. From the records of the assessee's case, it was noticed by the AO that in the instant case the return of income for asst. yr. 1999-2000 filed by the assessee on 23rd June, 2000 was beyond the specified date in the Act. According to the AO, the return of income for the asst. yr. 1999-2000 was due on or before 30th June, 1999. The assessee was a partner in M/s Nanda Clinic. The due date in the case of said concern was 31st Oct., 1999. The assessee did not file the return by this date. However, the return was filed on 23rd June, 2000. The AO was of the view that the income declared at Rs. 3,57,214 was undisclosed income of the assessee liable to tax under the provisions of s. 158BB(1)(c) of Chapter XIV-B of IT Act, 1961. Accordingly, the AO determined the income of the assessee and levied the tax. He had also initiated penalty proceedings under s. 158BFA(2) of the IT Act, 1961 and vide order dt. 24th June, 2002 imposed penalty of Rs. 2,35,761 under s. 158BFA(2) read with second proviso thereto of the IT Act, 1961. 3. In further appeal, the CIT(A) upheld the action of the AO in levying the penalty and also directed the AO to take action under s. 158BFA(1) for charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... une, 2000 in the asst. yr. 1999-2000 and the assessee had the time upto 31st March, 2001 to file such return under s. 139(4) of the Act. There was no justification in treating the income admitted by the assessee in the return so filed on 23rd June, 2000 as undisclosed income by the AO and no penalty should have been imposed for alleged default on the part of the assessee in terms of provisions of s. 158BFA. Shri R.G. Nahar, the learned counsel for the assessee also submitted that there was no undisclosed income which was found by the search party at the time of conducting the search in terms of s. 158B(b) of the Act. According to the learned counsel for the assessee, in absence of any undisclosed income found and so assessed, no penalty should have been imposed. It was also stated that the AO did not find any income from undisclosed sources assessable to tax. The assessee was being assessed to tax since long. The main source of the assessee's income was interest on savings bank account, fixed deposits with the bank, dividend from investment in shares and the commission received from LIC. It was also stated that on substantial part of such income, tax was being deducted at source a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, the AO was fully justified in considering the income relating to assessment year under consideration as undisclosed income. Accordingly, it was submitted that the penalty levied by the AO and confirmed by the CIT(A) may be upheld. She has also submitted that the CIT(A) was justified in directing the AO to charge interest as per the provisions of s. 158BFA(1) of the Act. 7. We have carefully considered the rival submissions and have also perused the orders of the authorities below. At the same time, we have also considered the decisions cited by the either party. At the very outset, we may point out here that there is no merit in this contention of the learned Departmental Representative that the findings given in the assessment order have become final since no appeal was preferred and, therefore, the AO was justified in levying the penalty. It is well settled law that findings in assessment proceedings are relevant but not conclusive in the penalty proceedings. It is also true that assessment proceedings are different and independent proceedings and the assessee has every right to contest the penalty proceedings and is also entitled to adduce further evidence in pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act, or any expense, deduction or allowance claimed under this Act which is found to be false." From a perusal of the above provisions, it would be clear that the legislature has used the words 'has not been or would not have been disclosed for the purposes of this Act'. In the case of Vidya Madanlal Malani vs. Asstt. CIT, this Bench of the Tribunal held that the scope of these words, i.e., 'has not been or would not have been disclosed' are to be construed harmoniously. It was further held by the Tribunal that, "therefore, if so construed, then the words 'has not been' are to be considered in those cases where the disclosure has already been made by the assessee in respect of its income for any assessment year before the date of search and the words 'would not have been disclosed' are to be considered in those case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been accepted by the AO. In our view, in the facts and circumstances of the present case, it could not be said that the assessee would not have disclosed such income to the IT Department. In the case of Vidya Madanlal Malani vs. Asstt. CIT, this Bench of the Tribunal, in similar circumstances, held as under: "The assessee could not be punished merely because he/she failed to file his/her income before the due date or before the date of search. There may be cases that due to various circumstances, beyond the control of the assessee, the return could not have been filed on or before due date and the search might have taken place just after the due date. In such case, it would be unreasonable to hold that assessee would not have disclosed such income particularly when assessee is legally permitted to file the valid return under s. 139(4), i.e., after the expiry of the due date specified under s. 139(1)." In view of the above facts, it cannot be held that the assessee would not have disclosed his income for the assessment year under consideration. We may also add here that during the course of search no incriminating material was found to establish this fact that the assessee would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns in different sections under the Act. As in the case of this assessee against whom a notice has been served under s. 148 r/w s. 147 and the time for filing the return has not been expired, the due date for filing the return of income has not expired. In case of such an assessee, if transactions are reflected in the books of account, then they cannot be treated as undisclosed income. 3.4 The argument of the learned counsel as well as the learned Departmental Representative stand fully answered in the above observation of the Bench and we are in agreement with the view taken by the SMC Bench and respectfully following the same it is to be concluded that AO was not justified in treating the returned income of the assessee for asst. yrs. 1995-96 and 1996-97 in belated returns as undisclosed income for the block period and the same are liable to be deleted." From the above decision of the Tribunal, Delhi Bench, it would be clear that the return due after the date of search filed with some delay, income returned cannot be treated as undisclosed income of the block period. Applying the above ratio, in the facts and circumstances of the present case, we are of the opinion that inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period provided for filing the return. But it is not stated as income shown in the return filed after expiry of the time-limit in that clause is to be treated as undisclosed income. The block assessment enunciated in Chapter XIV-B of the Act is a special procedure and the assessed income under this chapter is to be taxed at the maximum rate of 60 per cent and it contains the procedure for computation of undisclosed income of the block period. The provisions are to be taken in its strict meaning but not assuming other than what was stated in the said provisions. So under these circumstances, in our considered opinion, the disputed addition is not at all sustainable under law applicable thereto. Accordingly, this issue is answered in favour of the assessee." From the above observations of the Chennai Bench of the Tribunal, it would be clear that s. 158BB(1)(c) is only a procedure enunciated for computation of undisclosed income of the block period. It is also observed that the section provides about a situation where no return is filed during the period provided for filing the return, but this provision does not speak that any income shown in a return filed after the expiry of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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