AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2004 (3) TMI 44
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....he said assessment year 1995-96, comprised in the block period, the Assessing Officer ought to have determined the undisclosed income after allowing deduction for basic exemption, i.e., the maximum amount on which no income-tax was payable for that assessment year. The Appellate Tribunal relying on the provisions contained in section 158BB(1), section 158BA(2), section 113, section 158BC and section 88(1) of the Act did not accept the contentions raised by the appellants and rejected the same. Being aggrieved, the appellant's have preferred the appeals before this court. The appeals have been admitted on the following substantial questions of law: "(a) Whether, on the facts and in the circumstances of the case, the Tribunal was correct, on an interpretation of the provisions contained in Chapter XIV-B and section 113 of the Act, in holding that the Assessing Officer was justified in not deducting/excluding Rs. 35,000 being the amount of basic (initial) exemption available for the assessment year 1995-96 while levying tax on the undisclosed income of the block period? (b) Whether, on the facts and in the circumstances of the case, the Tribunal was correct, in interpreting t....
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....he income or has not computed excessive loss or has not underpaid tax in any manner. The proceedings under the regular assessment and the assessment for the block period stand to operate on different fields. Therefore, the considerations which would be attracted while making the assessment in exercise of the powers under section 143(2) and (3) for the regular assessment would stand on a different footing and will be governed by different provisions of the Act whereas the assessment for the block period as a result of the search and seizure would be governed by different provisions of the Act and would be made by the Assessing Officer in accordance therewith. The question really falls for our consideration is "can the income of the assessees be said to have been disclosed to the Revenue when assessees paid advance tax over it and whether on account of such disclosure the income so disclosed shall not be treated to be an income from undisclosed source, while the income-tax authority takes up the proceeding in block assessment?" How the income disclosed and the advance tax paid shall be treated, was raised before the apex court in a different context in the matter of CIT v. Shelly ....
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....th the provisions of sections 208 to 219 except in the cases of incomes specified therein. Such advance tax is payable during the financial year in accordance with the provisions of section 208. Sections 209 and 210 provides for computation of advance tax and for payment of advance tax by the assessee. Section 211 prescribes the instalments of advance tax and the due dates. The aforesaid provisions therefore, clearly spell out the scheme of the Act which provides for deduction of tax at source and advance payment of tax. On such deduction or deposit of tax credit is given to the assessee for the amount so deducted or paid as advance tax. The provisions of the Act, therefore, cast an obligation on the assessee to pay the advance tax by making the deposits in instalments as required by the provisions of the Act, and after taking into account the tax paid in advance, to pay the balance of the tax and the interest, if any payable, while filing the return of income. It cannot, therefore, be contended that the deposit of advance tax or deduction of Income tax at source is not authorised by law in view of the clear mandatory provisions of the Act. The apex court has approved the decisi....
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....(1) of the Act thus does not depend on the assessment being made. As soon as the Finance Act prescribes the rate or rates for any assessment year, the liability to pay the tax arises. The assessee is himself required to compute his total income and pay the income-tax thereon which involves a process of self-assessment. Since all this is done under the authority of law, there is no scope for contending that article 265 is violated." From the aforesaid judgment of the apex court it is clear that the Act itself provides for payment of the advance tax and the Act enjoins upon the assessee a duty to file the return of the income disclosing his true income and on the basis of the income so disclosed, the assessee is required to make a self-assessment and pay the tax on such income. There cannot be any manner of doubt that when the assessee pays advance tax the advance tax payment is assessed by the assessee on the basis of self-assessed income. The advance tax reflects the income admitted by the assessee. When the assessee pays the advance tax he discloses his income at the particular point of time, which may or may not be taxable on a subsequent date, on the return submitted by him u....
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....ins a duty on the assessee to pay the advance tax by submission of return before the assessing authority. The advance tax is paid on the self-assessment of the income by the assessee which is an admission of the "current income" by the assessee. Clause (d) of sub-section (1) of section 158BB reads as under: "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 ;" Under clause (d) of sub-section (1) of section 158BB while assessing the aggregate of the total income, the income 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 year shall be taken into consideration where the previous year has not ended or the date of filing the return of the income under sub-section (1) of section 139 has not expired. When the assessee is required to file the self-assessmen....