Income Tax Appellate Tribunal - Madras
P.K. Kaliannan & Ors. vs Assistant Commissioner Of Income Tax on 30 April, 1998
Equivalent citations: [1999]68ITD401(MAD)
ORDER
D.K. Tyagi, J.M.
1. These appeals filed by different assessees are directed against the orders of the Asst. CIT under s. 143(3) r/w s. 158BC(c) of the IT Act, 1961 for the block assessment period from 1st April, 1985 to 28th November, 1995. All these four appeals are decided by a common order as common question of law and facts are involved in these appeals.
2. The following grounds of appeal have been raised in the case of Shri P. K. Kaliannan (Indl.) in Appeal No. 19/Mad/97 :
(i) The Asstt. CIT erred in taking at the rate of 60 per cent the aggregate of the share of profits, interest and partnership salary from the firm, M/s Senthan Kandan & Co.
(ii) The Asstt. CIT erred in his computation of income without allowing the basic exemption and the exemptions under s. 88 of the IT Act.
(iii) The Asstt. CIT erred in holding that above sums as undisclosed income without considering the fact that the tax under s. 158B is leviable at 60 per cent while in the hands of the firm it would be less.
Similar grounds have been raised by the other appellants.
3. At the time of hearing, the learned counsel for the assessee argued only that the income which has not been disclosed by the assessees includes the difference between the minimum which is not chargeable to tax and maximum amount i.e., which is chargeable to tax. In other words, the learned counsel for the assessees argued that the basic exemption should be allowed to the assessees as that income cannot be considered as the one which the assessees would not have disclosed. The learned counsel for the assessees also pointed out that for the asst. yrs. 1994-95 and 1995-96, there was time for filing the return of income under s. 139(4) i.e. one year from the end of the assessment year and, therefore, it cannot be presumed that the assessee would not have disclosed the income if the assessee had filed the return of income under s. 139(4). According to the learned counsel for the assessee, the due date of filing the return of income as stipulated in s. 158BB(c) is the date provided under s. 139(4) and not s. 139(1) of the Act. According to the learned counsel for the assessee, the undisclosed income of the assessee is the income which is over and above the income on which no tax is chargeable.
4. According to the learned Departmental Representative, s. 158BB(c) starts with non obstante clause and other provisions are not applicable insofar as levy of tax is concerned. According to the learned Departmental Representative, since the interpretation of other provisions are not involved, there is no question of applying the harmonious rule. The learned Departmental Representative emphasised that in the definition of undisclosed income as per s. 158B, the phrase, 'would not have been disclosed for the purpose of this Act' has been used which indicates the future action of the assessee and the words 'other documents or transaction represents only income or property which has not been disclosed .....' indicate that the undisclosed income includes all the income which has not been disclosed by the assessee in the return of income.
5. According to the learned Departmental Representative since the assessee has not filed the return of income within the due date prescribed under s. 139(1), the whole of income is undisclosed income of the assessee. The time for filing the return of income has also expired and hence the assessee is not entitled to any exemption because the provisions of Chapter XIVB are self-contained. The learned Departmental Representative pointed out that under cl. (d) of s. 158BB(1), the return is to be filed under s. 139(1) and if the return of income has not been filed under s. 139(1) and the date of filing of the return of income under s. 139(1) has expired, then the whole of the income has to be considered as undisclosed income.
6. We have considered the rival submissions, facts of the case, and the material on record. The undisclosed income under s. 158B(b) has been defined as under :
"Undisclosed income includes any money, bullion, jewellery or other valuable article of thing or any income based on any entry in the books of accounts or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of accounts or other documents or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purpose of this Act."
It is clear from the above definition that there are two situations for the purpose of conceding the undisclosed income. If the return of income has not been filed by the assessee then the undisclosed income would include any money, bullion, jewellery, valuable article or any income based on any entry in the books of accounts or other documents or transactions which has not been disclosed by the assessee as income. The second situation is where the assessee has not filed the return of income but there is time for filing the return of income and the facts of the case are such that the income such as money, bullion, jewellery, valuable article etc., would not have been disclosed by the assessee for the purpose of this Act.
7. Now, in the case of the assessee, we have to consider whether the case of the assessee falls under the second situation because the assessee has not filed the return of income upto the date of search. Under s. 158BB(c) where the due date for filing the return of income has expired but no return of income has been filed, then no deduction will be admissible out of the total undisclosed income of the assessee.
Under s. 158BB(d) where the previous year has not ended or the date of filing the return of income under sub-s. (1) of s. 139 has not expired, then the undisclosed income of the assessee 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 other material or information as are available with the AO. In the case of the assessee, the due date for filing the return of income has already expired. In our opinion, "the due date for filing the return of income" is the specified date mentioned in s. 139(1) r/w Expln. 1 to s. 139. Under Expln. 1 to s. 139, the specified date in relation to return of income means in the case of every assessee whose total income from business or profession, the date of expiry of four months from the end of the previous year or the 30th day of June of the assessment year whichever is later. In the case of other assessees, the specified date under s. 139(1) is 30th June, of the assessment year. Since the assessee has not filed the return of income within the due date, the assessee is not entitled to any deduction out of the total income under s. 158BB(1)(c) of the IT Act. Due date under s. 158BB(1) refers to specific date and not to the period of time available to the assessee under s. 139(4) but it refers to a particular date for filing the return of income which means the due date for filing the return of income as stipulated under s. 139(1) only which has expired in the case of the assessee.
8. For the purpose of levy of tax, the provisions of s. 158BA(2) provides that the total undisclosed income relating to the block period shall be charged to tax, at the rate specified in s. 113. Sec. 113 provides that the total undisclosed income of the block period determined under s. 158BC shall be chargeable at the rate of 60 per cent.
9. We are of the considered opinion that the basic exemption allowed to an assessee while levying tax for a particular assessment year is not applicable while tax is charged under s. 113 of the IT Act at the rate of 60 per cent on any undisclosed income because the rate of 60 per cent is charged on undisclosed income of the block period and it does not refer to any particular assessment year. While, no doubt, income is to be determined for each assessment year separately, the tax is to be charged on the total income for the block period which cannot be reduced by exclusion of any part of the income which is not chargeable to tax under the normal provision of the income-tax for each assessment year separately. Therefore, there is no substance in the argument of the learned counsel for the assessee. No facts or evidence is placed before us in support of his claim under s. 158BB.
10. In view of the above findings, we are not inclined to agree with the argument of the learned counsel for the assessee.
11. In the result, the appeals filed by different assessees are dismissed.