2004 (10) TMI 306 - AT - Income Tax

Tribunal rules for assessee: Partnership income deemed disclosed, rebate allowed under section 88

S Badrinarayan Kala. Versus Assistant Commissioner Of Income-Tax.

The Tribunal ruled in favor of the assessee on both issues. The income from the partnership firm, though not individually disclosed, was considered ... Search And Seizure Issues:1. Whether the income of the assessee from share of partnership, interest, and salary from a partnership firm can be treated as disclosed for block assessment purposes.2. Whether rebate under section 88 should be allowed in case of block assessment.Issue 1:The appeal concerned the block assessment order following a search conducted under section 132 of the Income Tax Act, 1961. The block period for assessment was from April 1, 1985, to December 14, 1995. The assessee declared undisclosed income at Rs. 3,91,943, but the block assessment framed undisclosed income at Rs. 5,25,430. The assessee contended that the income from the partnership firm had already been disclosed in the firm's returns before the search date. The key argument was whether the income, though not disclosed by the assessee individually, could be considered disclosed due to the firm's returns and advance tax payments made by the assessee. The Tribunal analyzed relevant case law, including a decision by the jurisdictional High Court, and concluded that income disclosed through advance tax payments cannot be treated as undisclosed income for block assessment purposes. Therefore, the Tribunal allowed the appeal, holding that the income from the partnership firm should not be considered undisclosed for block assessment.Issue 2:The second issue revolved around whether rebate under section 88 should be allowed in the case of block assessment. The assessee argued that rebate under section 88 should be permitted even in block assessment, citing section 158BH of the Act, which states that all other provisions of the Act apply to assessments made under the block assessment chapter. The Tribunal considered this argument and agreed with the assessee, allowing the rebate under section 88 in the block assessment. Consequently, the Tribunal canceled the Assessing Officer's order and allowed the assessee's appeal.In conclusion, the Tribunal ruled in favor of the assessee on both issues. The income from the partnership firm, which was not individually disclosed but reflected in the firm's returns and through advance tax payments, was deemed disclosed for block assessment purposes. Additionally, the Tribunal allowed the rebate under section 88 in the block assessment, in accordance with the provisions of the Income Tax Act.