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TMI Blog2014 (7) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... right in law and on facts in excluding the salary income disclosed by the assessee in return of block period ? (c) Whether the Appellate Tribunal is right in law on facts in reducing the addition on account of unexplained investment of Rs. 1,88,884/- to Rs. 35,000/- without any evidence? [2.0]. Facts leading to the present Tax Appeal in nutshell are as under: [2.1]. That the assessee is a salaried employee working as Works Manager with M/s. Khemani Distillery Private Limited, Ringawada, Kachigam Road, Daman from June, 1995 onwards. However, from 01.04.1987 to 31.03.1995 included in the block period the assessee was employed with Zandu Pharmaceutical Works Limited, Mumbai as Chief Engineer. The assessee has never filed his returns of income although he had income liable to tax during the block period. There was a search and seizure operation in the case of entire Khemani Group on 20.08.1997 and consequently the search was also conducted at the assessee's residence on 20.08.1997. In the course of search, cash of Rs.84,500/and jewelery of Rs.2,29,804/- were found, out of which, cash of Rs.50,000/- was seized. In the course of search, the assessee was also found to have investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned CIT(A) vide his order dated 13.12.1999. [2.4]. Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A), the assessee preferred appeal before the learned Tribunal and by impugned judgment and order the learned Tribunal has allowed the said appeal by holding and directing that the income earned by way of salary by the assessee cannot be treated as "undisclosed income" within the meaning thereof in section 158B(b) under Chapter XIV-B of the Act and also reducing the addition on account of unexplained investment of Rs.1,88,884/- to Rs.35,000/-. [2.5]. Feeling aggrieved and dissatisfied with the impugned judgment and award passed by the learned Tribunal the revenue has preferred the present tax appeal to consider the following substantial questions of law. (a) Whether the Appellate Tribunal is right in law and on facts in directing that income earned by way of salary by the assessee though declared in the return of undisclosed income cannot be treated as undisclosed income for levying tax at 60% on the salary income as undisclosed income despite the provisions of section 158BB(1)(c) even though no return of income showing such salary income was ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Tribunal in reducing the addition on account of unexplained investment of Rs.1,88,884/- to Rs.35,000/- is concerned, it is submitted that as such the aforesaid is without any evidence and no reasons have been signed by the learned Tribunal to reduce the addition on account of unexplained investment of Rs.1,88,884/- to Rs.35,000/-. Therefore, it is requested to allow the present appeal and answer the questions in favour of the revenue. [4.0]. Though served, nobody appears on behalf of the assessee. [5.0]. Present tax appeal is of the year 2000 and therefore, this Court is proceeding with hearing of the present tax appeal ex parte. [5.1]. At the outset it is required to be noted that after search and seizure it was found that the asssessee did not disclose the income received by him by way of salary and thereafter the block assessment proceeding was initiated treating the non-disclosure of the said income received by the assessee by way of salary as "undisclosed income". Both, the Assessing Officer as well as the learned CIT(A) held against the assessee. However, on an appeal, the learned Tribunal has held that as on the aforesaid income the TDS was deducted and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39. Thus, for the purposes of computation of undisclosed income under Chapter XIVB, an assessee can rebut the Assessing Officer's finding of undisclosed income by showing that such income was disclosed in the return of income filed by him before the commencement of search or the requisition. In other words, when Section 158BB(3) is read with Section 158B(b), which defines undisclosed income, we reach the conclusion that for income to be considered as disclosed income, the same should have been disclosed in the return filed by the assessee before the search or requisition. In our opinion, on failure to file return of income by the due date under Section 139 of the Act, payment of Advance Tax per se cannot indicate the intention of an assessee to disclose his income. 40. If we were to hold that the payment of Advance Tax reflects the intention of the assessee to disclose its income, it could result in a situation where the mandatory obligation of filing a return for disclosure of income under the provisions of the Act, would not be necessary. It will be open to an assessee to contend that payment of Advance Tax is tantamount to disclosure of income. Such a proposition would be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. [5.3]. In the aforesaid decision in the case of A.R. Enterprises (Supra), the Hon'ble Supreme Court has also considered one another aspect with respect to the intention of the assessee to disclose the income. In the aforesaid decision the Hon'ble Supreme Court has observed and held that return was filed only when the block assessment proceedings are initiated by the Assessing Officer declaring the income in the said return. It indicates that there was no intention to disclose the income. In the present case the assessee filed return of income declaring the income received by him by way of salary only after the block assessment proceedings were initiated by the Assessing Officer. Under the circumstances also, the learned Tribunal has materially erred in not treating the income earned by way of salary by the assessee as "undisclosed income". Under the circumstances, question (a) & (b) are answered in favour of the revenue and against the assessee. [5.4]. Now, so far as the question No.(c) is concerned, by impugned order the learned Tribunal has reduced the addition made by the Assessing Officer on account of unexplained investment of Rs.1,88,884/-to Rs.35,000/-. It is requir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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