High Court Of Punjab & Haryana
Rajesh Syal vs. CIT-I
Block Period : 1-4-1985 To 7-9-1995
Section : 158BB
Adarsh Kumar Goel And Mrs. Daya Chaudhary, JJ.
IT Appeal No. 852 Of 2008 (O&M)
September 1, 2009
JUDGMENT
Adarsh Kumar Goel, J. – This appeal has been preferred by the assessee under section 260A of the Income-tax Act, 1961 (for short, “the Act”) against the order of Income-tax Appellate Tribunal, Bench ‘B’, Chandigarh, in ITA No. 1132/Chd./1996 for the block period from 1-4-1985 to 7-9-1995 dated 28-2-2008, proposing to raise the following substantial questions of law :
‘(i) That the ITAT is not justified in treating the income voluntarily declared for the period from 1-4-1995 to 7-9-1995 being the period for which the date of filing of the return under section 139(1) has not expired as undisclosed income which is against the express provisions of section 158BB(1)(d) of the Income-tax Act, 1961 and thereby taxing it at the special rate of 60 per cent instead of normal tax rates for the said year which is against the express provisions of law and thus unjustified.
(ii) That the ITAT was not justified on facts and in law in treating various incomes returned/surrendered as undisclosed income and charging the same to tax at special rate of 60 per cent on the one hand while not allowing corresponding assets in the form of shares, cash, IVPs and FDRs being directly related out of the said income.
(iii) That the Income-tax Appellate Tribunal was not justified on facts and in law in confirming additions to the extent of Rs. 3,61,750 on account of some kitty account as per seized document which is dumb document neither written in the hands of the appellant nor belonging to him or mentioning his name or any other nexus thereof as per Annexure A-6.
(iv) That the Income-tax Appellate Tribunal was not justified on facts and in law in confirming additions to the extent of Rs. 36,53,148 out of the total addition by the Assessing Officer of Rs. 52,07,311 without considering the facts, of the case and evidences on record, balance-sheets/income-tax returns, cash flow statements being prepared on the basis of seized documents, declared bank accounts and incomes of the respective years, including surrendered income wherein due taxes have been paid and thus the order of the ITAT being on the basis of conjectures and surmises relying upon rough drafts indicating transaction but without any evidence corroborating or confirming the same.’
2. Search was conducted at the business and residential premises of the assessee on 7-9-1995 resulting in seizure of cash, FDRs and other documents. In response to notice under section 158BC, the assessee filed return as per section 44AD. Assessment was made in respect of undisclosed income. On appeal, the assessment was affirmed except for deletion of some of the amounts, as indicated in the impugned order.
3. We have heard learned counsel for the parties.
4. Learned counsel for the assessee submits that the impugned order is perverse inasmuch as income for the assessment year in which search took place, could not be treated as undisclosed income in view of provisions of section 158BB(1)(d) of the Act. We are unable to accept the submission.
The Tribunal observed:
“It was contended that the contention on behalf of the assessee that the income of Rs. 5,25,325 was recorded in regular books of account is not well founded insofar the assessee had not maintained any books of account. Moreover, the income as per assessee’s own statement for earlier years was nominal at least below the maximum limit not liable to tax. The assessee could not have earned substantial income in a period of five months. It was contended that as per the provisions of section 158BB(1)(d), no credit was available to the assessee for the income claimed to be taxable at normal rates. The learned DR further contended that the documents found in the course of search have been admitted by the assessee to be his documents and, therefore, additions based on entries of such documents was justified. It was pointed out that huge cash of more than Rs. 12 lakhs was found at the time of search. The assessee was also found to be owner of various assets with aggregate value of Rs. 51 lakhs in his own name. He was neither Income-tax payee, nor a Wealth-tax assessee. The assessee had not furnished any evidence to support the claims during the course of assessment proceedings with reference to the ownership of IVPs, loans, etc. It was further contended that in respect of the alleged loan, the assessee had been given sufficient opportunity to produce the creditors which he failed. The addition was thus made on sound basis, it was contended.
In counter reply, the learned counsel for the assessee contended that the Assessing Officer was required to give credit for the income up to assessment year 1993-94 to the extent the income which was not chargeable to tax. Reliance was placed on the decision of the Patna High Court in the case of CIT v. Smt. Lily Tobias[2004] 266 ITR 401 to support the contention. It was further contended that once the advance tax is paid by the assessee, the Assessing Officer cannot claim that the income which was subsequently declared by the assessee in the return was undisclosed income. For this reliance has been placed on the decision of the Gauhati High Court in the case of (i) Dr. (Mrs.) Alaka Goswami (ii) Dr. Anil Kumar Goswami v. CIT[2004] 268 ITR 178. The learned counsel for the assessee further contended that the Assessing Officer has wrongly levied tax on the income of the proprietary concern namely Panchkula Civil Construction at the rate of 60 per cent as against the normal rates. It was further contended that the assessee had pointed out that he was engaged in the business of sale and purchase of land, money lending etc. Therefore, the Assessing Officer ought to have given credit for the income pertaining to the assessment year 1993-94 in which the income did not exceed the maximum non-taxable limit. It was further contended that the Assessing Officer had never demanded to produce the parties before him and, therefore, no addition could be made for non-production of the parties. Relying upon the decision of the Delhi High Court in the case of CIT v. Ravi Kant Jain[2001] 250 ITR 141, it was contended that the Assessing Officer cannot make any addition without any document found in the course of search to support the addition. It was accordingly pleaded that the appeal of the assessee may be allowed.
We have given our careful consideration to the rival contentions and have also perused the record including the paper book filed by the assessee as well as by the department. At the very outset, we would like to make it very clear that the statement of the learned counsel for the assessee that the assessee was a regular taxpayer before the date of search, is contrary to the facts on record and no material has been placed before us to support the claim.
On the contrary, the learned DR after verification of records has made a statement that the assessee was neither income-tax assessee nor wealth-tax assessee before the date of search. The assessee had also not maintained any books of account in respect of his business or for his income. Therefore, the contention advanced on behalf of the assessee that he was entitled to credit in respect of the business income recorded in the books of account or disclosed in the returns of income filed before the search is not well founded as the assessee had neither filed any return of income before the date of search nor maintained any books of account. Therefore, the declared income in the return by the assessee of Rs. 3,50,777 and Rs. 5,25,325 was rightly assessed by the Assessing Officer as undisclosed income as per the return filed by the assessee and charged to tax at the rate of 60 per cent.”
5. From the above finding, it is clear that even though time for filing return had not expired, there was no disclosure by the assessee in any manner. Benefit of section 158BB(1)(d) could be available only when there was disclosure in the books of account and other documents maintained in the normal course on or before the date of search. The relevant provision is reproduced below:
“158BB. Computation of undisclosed income of the block period.—(1) The undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed, in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence, as reduced by the aggregate of the total income, or as the case may be, as increased by the aggregate of the losses of such previous years, determined,
(a) to (c)******
(d) where the previous year has not ended or the date of filing the return of income under sub-section (1) of section 139 has not expired, on the basis of entries relating to such income or transactions as 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 years;”
6. The scheme of section 158BB(1)(d) is that the assessee may get credit for the income which may have already been disclosed prior to search either in the form of return or in the form of entries in books of account or documents maintained in the normal course. Disclosure can be in the form of advance tax also.
7. Learned counsel for the assessee has placed reliance on CIT v. Jai Parkash [2008] 171 Taxman 233 (Punj. & Har.), CIT v. Ravi Kumar [2007] 294 ITR 78 (Punj. & Har.), CIT v. Vimla Khatri[2007] 288 ITR 1681 (MP), CIT v. J.K. Narayanan[2007] 293 ITR 179 (Mad.), Dr. (Mrs.) Alaka Goswami v. CIT[2004] 268 ITR 1782 (Gauhati) to submit that assessee should get credit even if income disclosed later, when time for return had not expired.
8. We are unable to accept the submission. The judgments relied upon are distinguishable. In Jai Parkash’s case (supra), the assessee had paid the entire advance tax and to that extent the income was held to be disclosed. The appeal of the revenue filed in this Court was dismissed. In Ravi Kumar’s case (supra), explanation of the assessee in respect of proposed addition in the form of loose slip was found to be satisfactory, having regard to the facts of that case and, thus, no inference was drawn of there being undisclosed income, on the basis of loose slip. The appeal of the revenue was dismissed by the High Court. In Vimla Khatri’s case (supra), the income of the assessee was found to be below taxable and the Tribunal held that there was no undisclosed income. The revenue’s appeal to this Court was dismissed. In J.K. Narayanan’s case (supra), belated returns were held to be genuine and on that ground, the revenue’s appeal by the High Court was dismissed. In Dr. (Mrs.) Alaka Goswami’s case (supra) advance tax having been paid, in the facts and circumstances of that case, it was held that there was no undisclosed income. There is no inflexible rule in any of the judgments that mere fact that time for return had not expired was enough to hold that the income disclosed after search could not be treated as undisclosed. Such interpretation is not justified even on plain language of the statute. Thus, it is not possible to hold that finding of fact with regard to undisclosed income is perverse.
9. No substantial question of law arises.
10. The appeal is dismissed.
[Citation : 344 ITR 482]
