TaxTMI 
TaxTMI 
2014 (8) TMI 1258
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....3 of the IT Act on 19.04.2005 wherein he has mentioned that the assessee had filed a regular return for the assessment year 2002-03 on 01.09.2004 disclosing an income of Rs. 53,27,812/-. The ld.CIT noted that said return of income was filed by the assessee beyond the time allowed u/s. 139 of the IT Act and was, therefore, non-est. The ld. CIT was of the view that while completing the block assessment order, income disclosed by the assessee in the said return for the assessment year 2002-03 should have been considered by the AO as undisclosed income for the block period. The ld.CIT relied upon the provisions of section 158BB(1)(ca) of the IT Act, according to which no reduction on account of income disclosed in the return for assessment year 2002-03, which is filed after expiry of the due date of filing of the return of income, was permissible. He has also noted that the AO also did not properly examined the computer generated accounts for the assessment year 2002-03, which were generated from the CPU seized during the course of search and seizure and did not include the undisclosed income reflected from the said accounts while completing the aforesaid block assessment order. T....
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....date of the search and there are various decisions of the High Courts and ITAT enclosed with the paper book where the Courts have held that since the return was not due on the date of search, it is not correct to say that the income disclosed in the return filed subsequently was undisclosed income when, in reality, it was the disclosed income of the assessee." 3. The ld. CIT rejected the aforesaid submissions of the assessee on the following reasons : (i). That the definition of undisclosed income provided by section 1588BB(1)(ca) provided such inclusion of income and the AO failed to apply the correct position of law. (ii). The Settlement Commission has not proceeded with the application of the assessee and is pending. (iii). The assessee has not paid full advance tax on the income as disclosed in the non-est return and the balance payable of Rs. 10,12,827/- as per the said return was not paid by the assessee while filing the said return on 01.09.2004. (iv). The regularization of return for the assessment year 2002-03 by issue of notice u/s. 148 would not, in any way, affect the provisions of section 158BB(1)(ca) of the IT Act. 3.1 The ld.CIT, therefore, considered....
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....s below and submitted that the return for the assessment year 2002- 03 was not due on the date of search. The search was conducted on 04.09.2002 and due date of filing of the return for the assessment year 2002-03 u/s. 139(1) was 31.10.2002 and the same was filed after getting photocopies of the seized material and books of account on 05.07.2004 and thereafter obtained audit report on 25.08.2004 and the assessee filed return of income on 01.09.2004 (PB-51) declaring income of Rs. 53,27,812/-. Copies of the letters seeking copies of the seized material are filed at page 30 and 75 of the paper book (new). He has referred to PB-64 to 68 (new)(Panchnamas) to show that the seized materials including CPU were operated only in June, 2004 and thereafter copies were supplied to the assessee. The assessee paid advance tax for the assessment year 2002-03 amounting to Rs. 5,71,000/- on 14.03.2002 and the balance amount was payable of Rs. 10,12,827/- and since the assessee was not in a position to pay the demand, therefore, he had requested to adjust the same from the seized cash lying with the Income-tax Department. He has submitted that the notice u/s. 148 was issued for the as....
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.... that the provisions of section 158B would not be applicable in the case of the assessee inasmuch as nothing had been recorded in the order of assessment or in any proceeding thereafter that the amount had not been indicated in the books of account or that the assessee had failed to produce the books of account as directed by the Assessing Officer. The presumption against the assessee could be drawn only if the sums wholly or partly had not been reflected in the books or the assessee had failed to render explanation in terms of the said provisions. Thus, no question of law much less a substantial question of law arose from the order of the Tribunal. 6.1 He has also relied upon the decision of the Supreme Court in the case of ACIT vs. A.R. Enterprises, 350 ITR 489, in which it was held - "Section 158 BD and 158BC of the Income-tax Act, 1961, along with the rest of Chapter XIV-B, find application only in the event of discovery of "undisclosed income" of an assessee. Undisclosed income is defined by section 158B as that income "which has not been or would not have been disclosed for the purposes of this Act". The only way of disclosing income on the part of an assessee, is through....
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...., accrued or arisen in the previous year, and is computed according to the provisions of the Act. The disclosure of the income is the disclosure of the total income in a valid return under section 139, subject to assessment and chargeable to tax under the provisions of the Act. The total income is distinct from the estimated income, upon the basis of which advance tax is paid by an assessee. The fact that the "current income" is an estimation implies that it is not final and is subject to further adjustments in the form of additions or reductions, as the case may be, and would have to be succeeded by the disclosure of final and total income in a valid return. It will be a misconstruction of the law to construe the undisclosed income for purposes of Chapter XIV-B as an 'estimate' of the total income, which is assessable and chargeable to tax. Therefore, payment of advance tax based on "current income" does not involve the disclosure of "total income", as defined in section 2(45) of the Act, which has to be stated in the return of income. An estimate always has an element of guesswork. There could be various reasons due to which an estimate may be faulty and inaccurate which is....
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....s of section 158BB(1)(ca), which is according to the amendment by Finance Act, 2002 wherein such income is to be included in the block assessment order. He has submitted that Hon'ble High Court has given finding that the return u/s. 139(1) is non-est, therefore, no further adjudication is required in the matter. He has submitted that the Settlement Commission application has also been rejected as filed by the assessee. The advance tax could be deposited for assessment year 2002-03 latest by 15.03.2002. Therefore, at the most the assessee could get benefit of payment of advance tax of Rs. 5,71,000/- paid on 14.03.2002. He has submitted that letters written by the assessee for adjustment of the tax could not be construed payment of advance tax at later stage because advance tax could be paid up to 15.03.2002 only. Therefore, the adjustment of tax in the case of assessee is not permissible out of the seized cash etc. He has submitted that when the assessee moved on 01.10.2002 seeking copies of the seized material, the authorized officer was having time to examine the seized documents. He has submitted that even if the provisions of section 158BA(3) may be applied in the case of a....
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....n 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; (e) where any order of settlement has been made under sub-section (4) of section 245D, on the basis of such order; (f) where an assessment of undisclosed income had been made earlier under clause (c) of section 158BC, on the basis of such assessment. Explanation.-For the purposes of determination of undisclosed income,- (a) the total income or loss of each previous year shall, for the purpose of aggregation, be taken as the total income or loss computed in accordance with the provisions of 85[this Act] without giving effect to set off of brought forward losses under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32: Provided that in computing deductions under Chapter VI-A for the purposes of the said aggregation, effect shall be given to set off of brought forward losses under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32; (b) of a firm, returned income and t....
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....ided in section 158B(b) of the Act. For the purpose of computation of undisclosed income, the AO should aggregate the total income of the previous year falling within the block period on the basis of evidence found as a result of search or other documents and such other material or information relatable to such evidence and thereafter reduce there from income "nil" as due date for filing the return of income has expired, but no return of income has been filed. The ld. CIT has not mentioned that the block income computed by the AO does not include the income for the previous year 2001-02. The difference between clause (c) and clause (ca) of section 158BB (1) is that where the assessee maintained regular books of account in normal course of business, then income computed in accordance with entries in the books of account shall not form part of undisclosed income whereas sub-clause (ca) refers to a situation where the case does not fall in clause (c). Therefore, under clause (ca), only those cases may come where the assessee does not maintain regular books of account for a relevant previous year. The assessee contended before the authorities below that he has maintained regular books ....
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....sessment year 2002-03 was accepted at Rs. 53,27,810/-. Equally it is also a fact that the assessee while filing the non-est return on 01.09.2004 declaring income of Rs. 53,27,810/- had deposited only Rs. 5,71,000/- as advance tax on 14.03.2002. Admittedly, no other advance tax has been paid by the assessee. According to the Income-tax Act, advance tax could be paid latest by 15.03.2002 for the assessment year 2002-03. Therefore, the letters written by the assessee later on for adjustment of tax from the seized cash etc. could not be construed as payment of advance tax for the remaining amount of Rs. 10,12,827/- .The assessee in the computation of income filed with the return of income (PB54) also made the same request that since the assessee is not in a position to liquidate the present demand of tax, therefore, requested the department for adjustment of the cash seized by the department for payment of tax. Such request would also not absolve the assessee from making payment of advance tax in accordance with the IT Act before expiry on 15.03.2002. Hon'ble Supreme Court in the case of ACIT vs. A.R. Enterprises (supra) laid down two propositions and for the sake o....
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....2-03. The assessee paid advance tax of Rs. 5,71,000/- on 14.03.2002 and after search, the assessee was making request for supply of the seized documents including the copies of books of account for the purpose of filing return of income for the assessment year 2002-03. Therefore, the surrounding facts and circumstances of the case clearly prove that the assessee had intention to disclose income to the extent to which the assessee paid advance tax of Rs. 5,71,000/- on 14.03.2002. For the rest of income, nothing is available on record to prove that the assessee had any intention to disclose the income for the assessment year 2002-03 because no advance tax for the balance amount had been paid by the assessee and no valid return u/s. 139(1) has been filed. The balance amount of tax of Rs. 10,12,827/- remained unpaid even at the time of filing of non-est return on 01.09.2004. Therefore, considering the facts of the case in the light of the decision of Hon'ble Supreme Court in the case of A.R. Enterprises (supra), we are of the view that the assessee could be given benefit of such income, to be considered as disclosed income, on which he has paid the advance tax of Rs.&nbs....