Income Tax Appellate Tribunal - Nagpur
Smt. Gulakandi Devi Agrawal vs Assistant Commissioner Of Income Tax on 31 August, 1999
Equivalent citations: (2000)66TTJ(NAG)844
ORDER
K. P. T. Thangal, J.M. This appeal by the assessee is directed against the order of the assessing officer passed under section 158BC(c) of Chapter XIV-B of the Income Tax Act, 1961 in determining the undisclosed income at Rs. 51,466, being the regular income for the assessment year 1989-90 for which return of income under section 239 was not filed.
2. There was a search and seizure operation at the residential premises of the assessee on 8-8-1996. Notice under section 158BC of the Income Tax Act, 1961, was issued and served on the assessee on 24-6-1997. The assessee filed the return in response to the above notice declaring income at nil. The assessee derives income from interest on deposits. On verification of the records, the assessing officer noticed that the assessee has not filed the return for the assessment year 1989-90 though the time for filing the return was expired. He added the income of the assessee for the assessment year 1989-90 amounting to Rs. 51,466 as undisclosed income of the assessee. The assessee claimed deduction on account of life insurance premium at Rs. 6,320 but the same was disallowed for want of evidence. Since the assessee failed to file the return under section 139(1) for the assessment year 1989-90, the income for that year was treated as undisclosed income of the assessee for the period under consideration under section 158BC(c) of the Income Tax Act. Aggrieved by the above order, the assessee is in appeal before the Tribunal.
3. The learned counsel for the assessee submitted that though the assessee did not file the return for the assessment year 1989-90, when subsequently the assessee filed the return for the assessment year 1990-91, she filed the computation of income and challan of the advance tax payment along with the return. This was done much before the search. Search took place on 8-8-1996, whereas the return for the assessment year 1990-91 was filed on 19-1-1991. Therefore, the learned counsel submitted that this income cannot be treated as undisclosed income merely because the assessee did not file the return. He further submitted that unless there is undisclosed income, the provisions of section 158BB could not be applied as this being procedural, computation of undisclosed income presupposes that undisclosed income has to be determined first and then only it has to be computed in the prescribed manner. Hence, the learned counsel for the assessee, relying upon the decision of Tribunal, Nagpur Bench, Nagpur, in the case of Smt Jatan Bai Baid, Raipur v. Assistant Commissioner in ITA No.898/Nag/1996, dated 24-6-1997, contended that the appeal of the assessee deserves to be allowed.
4. Opposing the above submissions, the learned departmental Representative submitted that the definition of undisclosed income given in section 158BB is an inclusive one and, therefore, the scope of section is very wide. In the instant case of the assessee, the learned Departmental Representative that, though the time for filing the return under section 139 was over and the assessee was having taxable income and the assessee's income was exceeding the minimum taxable limit, the assessee's income is liable to be treated as nil under section 158BB. The learned Departmental Representative, relying upon the decision of the Hon'ble Supreme Court in the case of Union of India & Anr. v. India Fisheries (P) Ltd. (1965) 57 ITR 331 (SC), submitted that this being a special provision, it should prevail upon the other sections and, therefore, the failure of the assessee to file the return under section 139(1) means the assessee kept the taxable income undisclosed and hence falls within the ambit of this section.
5. Replying to the above, the learned counsel submitted that if any income is to be taxed under enhanced rate being the undisclosed income, the first ingredient is that the income or the property should be one that has not been or would not have been disclosed for the purpose of this Act. In this case, though the time was over, the assessee filed the estimate and paid the taxes in advance. Therefore, the learned counsel submitted that the assessee's appeal deserves to succeed.
6. I have gone through the order of the assessing officer and the decisions cited supra. In the order of the Tribunal, Nagpur Bench, Nagpur, in the case of Smt Jatan Bai Baid, Raipur (supra), the Tribunal held that before coming into play the section 158BB, the undisclosed income should be determined first. This undisclosed income should be found out as a result of search because the heading of this section itself is "special procedure of assessment of search cases." Section 158BB(1) states that "undisclosed income of the block period shall be the aggregate of the total income of the previous year falling within the block period computed in accordance with the provisions of Chapter IV on the basis of evidence found as a result of search or requisition of books of account or documents, " Here in the instant case of the assessee, the income was estimated on the basis of the estimate filed by the assessee though belated along with the return of income for the assessment year 1990-91. When the assessee filed this computation, along with it, the proof of payment of advance tax was filed; and at that time the search had not taken place. If the assessee had paid the advance tax and the existence of the income was known to the revenue, merely because the assessee failed for some reason or other, it cannot be treated as an undisclosed income that came into knowledge of the department as a result of search and seizure operation that took place at the residential premises of the assessee.
7. In view of the above, I am of the opinion that the addition is liable to be set aside. I do so accordingly.
8. In the result, the appeal by the assessee is allowed.