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TMI Blog2012 (10) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... -1995. In response to such notice he filed a return on 7- 11-1996 declaring total undisclosed income at Rs.50,000/-. While processing such return, the Assessing Officer dealt with several different issues. We are, however, concerned with only one of them pertaining to the salary income of the respondent assessee received by him during the block period. Details of such salary received by the assessee during five years falling within the block period and tax collected at source on such income are as under: Asstt. Year Income Tax Paid 1986-87 52,300 5,437 1987-88 56,205 6,289 1988-89 75,644 11,997 1994-95 4,65,105 1,54,700 1995-96 5,71,851 1,61,124 Total. 12,21,105 3,39,547 3. The Assessing Officer confronted the assessee with such income received by him and called upon him why such income should not form part of the undisclosed income of the assessee for the block period by virtue of the provisions contained in section 158BB(1)(c). After hearing the assessee, the Assessing Officer formed an opinion that such income would form part of the undisclosed income of the block period. The assessee's contention that on such salary income, the employer had deducted tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. He submitted that undisputably on the salary income received by the assessee, the employer had deducted tax at source and deposited the same with the Government. That being so, such income cannot be treated as undisclosed income. 8.1 The counsel submitted that section 158BB of the Act only provides the mechanism for computation of undisclosed income and unless and until a certain income falls within the definition of "undisclosed income", the same cannot be brought within the fold of the block period by virtue of section 158BB of the Act. 8.2 In support of his contentions, the counsel relied on the following decisions:- (i) Assistant Commissioner of Income-Tax vs. A.R. Enterprises reported in 274 ITR 110 (ii) Commissioner of Income-Tax vs. Kerala Roadways Ltd. reported in 322 ITR 609 (iii) Surendra Kumar Lahoti vs. Assistant Commissioner of Income-Tax reported in 300 ITR 124 (iv) Dr. Mrs. Alaka Goswami vs. Commissioner of Income- Tax reported in 268 ITR 178 (v) Commissioner of Income-Tax vs. Ashok Taksali reported in 257 ITR 352 9. Having thus heard learned counsel for the parties, we may, at the outset, notice the statutory provisions applicable in the present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sments; (b) where returns of income have been filed under section 139 or section 147 but assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such returns; (c) where the due date for filing a return of income has expired but no return of income has been filed, as nil" 12. From the above statutory provisions, it can be seen that section 158BA of the Act makes substantive provision for collection of tax at a uniform specified rate for the entire block period on the undisclosed income. Sub-section (2) of section 158BA, as already noted, provides for the rate at which such tax shall be collected. On the other hand, section 158BB provides for computation of such undisclosed income of the block period. Such provision is thus a machinery provision providing for mechanism for computation of the undisclosed income of the block period. Clause (b) of section 158B defines the term undisclosed income. It would, thus, be clear that to levy tax at a specified rate on an income of a block period, such income must first be established to be undisclosed income. If such income can be treated as undisclosed income, tax at a specified rate as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of taxing statute would apply to charging provision and not to machinery provisions. 16. The distinction between a charging provision in a taxing statute and a procedural or machinery provision is thus a well-recognised distinction. By interpreting a machinery or a computation provision, the scope of the charging provision obviously cannot be enlarged. In that view of the matter, we are of the opinion that unless income in question can be categorised as undisclosed income of a block period, charging tax on such income at the rate specified for the block period by applying computation provision of section 158BB of the Act would not be permissible. With this background in mind, we may peruse the law developed on the issue. 17. At the outset, we may notice that a somewhat similar case came up before a Division Bench of this court in the case of Commissioner of Income-Tax vs. Vishnu Prasad C. Mehta in Tax Appeal No.951/2009. In an unreported decision dated 29-11-2010, this court ruled in favour of the assessee. In the said case, the assessee who was a salaried employee was subjected to block assessment. Before the revenue authorities, he contended that on the salary income which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance has been placed on behalf of the assessee also support the aforesaid view. 13. Examining the issue from another angle as is apparent from the table reproduced in the order of the Tribunal, no tax over and above the tax deducted at source was payable by the assessee in relation to the salary income. Thus, though the assessee had not filed his return of income for the years under consideration, the total tax payable in respect of the said income had already been paid. The provisions of the Act, both under Chapter XIV-B as well those providing for assessment and reassessment of income escaping assessment have been introduced for the purpose of taxing untaxed income. The Act does not envisage double taxation in respect of the same income. In the present case, the salary income of the assessee has already been brought to tax, albeit by way of tax deducted at source and not by filing a regular return on income. Nonetheless, the income has been subjected to taxation under the provisions of the Act. In the circumstances, in absence of any additional tax being payable on the salary income of the assessee, the question of taxing the said income once again merely because the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision Bench of Gauhati High Court held that the income disclosed by the assessee on payment of advance tax cannot be treated as undisclosed income. The Bench held and observed as under:- "Under clause (d) of sub-section (1) of section 158BB while assessing the aggregate of the total income, the income recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition relating to such previous year shall be taken into consideration where the previous year has not ended or the date of filing the return of the income under sub-section (1) of section 139 has not expired. When the assessee is required to file the selfassessment for payment of the advance tax before the income-tax authorities the return of assessment would fall within the documents maintained in the normal course by the assessee and as such the income disclosed on payment of the advance tax would fall within clause (d) of sub-section (1) of section 158BB. In any case although there is a difference between the regular assessment and the block assessment, as we have already noticed, unless the provisions of the block assessment specifically bar the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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