2006 (4) TMI 119 - HC - Income Tax

Block Assessment an income already disclosed by the assessee in his regular return filed under section 139 of the Act held that - The contention of the assessee before the Commissioner in revisional proceedings and later before the Tribunal was that income disclosed in the return filed under section 139 of the Act cannot be treated as income from undisclosed sources for the purpose of block assessment. This contention found favour to the Tribunal and accordingly the order passed by the Commissioner in section 263 proceedings was set aside in IT(SS) A/6/IND/2000 by the Tribunal vide order dated February 4, 2003 - In these circumstances, this appeal which arise out of assessment proceedings has to be dismissed because the basis for assessment in so far as that part of income which was the subject-matter of regular return has become final by the decision of the Tribunal

Summary

Issues:
1. Validity of quashing the assessment order under section 158BC by the Income-tax Appellate Tribunal.
2. Justification of the Tribunal's decision to pass the impugned order in favor of the assessee based on a previous order.

Issue 1: Validity of quashing the assessment order under section 158BC
The High Court considered the appeal filed by the Commissioner of Income-tax against the order passed by the Income-tax Appellate Tribunal. The Tribunal had quashed the assessment order dated November 25, 1997, framed under section 158BC. The Court noted that the Tribunal had set aside the Commissioner's order under section 263 of the Income-tax Act in a previous appeal by the assessee. As the Revenue did not challenge this decision in further appeal, the Tribunal's subsequent order in favor of the assessee was deemed justified. The Court held that the impugned order was a consequential one following the earlier order in the assessee's favor.

Issue 2: Justification of the Tribunal's decision based on a previous order
The assessee contended that the income disclosed in the regular return filed under section 139 of the Act should not be treated as income from undisclosed sources for block assessment. This argument was accepted by the Tribunal, leading to the setting aside of the Commissioner's order under section 263. The High Court observed that the basis for assessment regarding the income disclosed in the regular return had been finalized by the Tribunal's decision in favor of the assessee. Consequently, the Court dismissed the appeal, upholding the Tribunal's order based on the previous decision in the assessee's favor.

In conclusion, the High Court upheld the Tribunal's decision to quash the assessment order under section 158BC and pass the impugned order in favor of the assessee. The Court emphasized the importance of the earlier Tribunal decision in determining the validity of the assessment, ultimately leading to the dismissal of the appeal.