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2011 (7) TMI 318

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..... e accounts of books of the firms and TDS is deducted - Therefore, the Tribunal in the facts of these cases was justified in holding that the remuneration received from the partnership firm, interest income derived from the partnership cannot be construed as undisclosed income and does not fall within the block assessment proceedings as contended by the authorities - The said income has to be excluded from the block assessment proceedings - Decided in favour of assessee. - IT APPEAL NOS. 931,935 & 957 OF 2006 - - - Dated:- 27-7-2011 - N. KUMAR AND RAVI MALIMATH, JJ. Aravind and M.V. Seshachala for the Appellant. A. Shankar and M. Lava for the Respondent. JUDGMENT 1. The Revenue has preferred this appeal challenging the ord .....

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..... search in the premises of the assessees and remuneration paid by those firms were clearly disclosed in their returns, they contended that they were not undisclosed income which calls for a block assessment order. It was also contended that those firms had deducted TDS in respect to the interest paid to these assessees. 4. The Assessing Officer on consideration of the aforesaid material held that these incomes are sufficient to explain the assets found during the search. The assessees filed returns of their income after the date of search. However, the Assessing Officer held that as the assessees have not filed their returns before search and disclosed the said incomes in the returns and that income was disclosed only in the returns filed .....

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..... filed in pursuance of the notice issued in block assessment proceedings is to be construed as income undisclosed, it becomes the subject-matter of the block assessment order. Even if the TDS is deducted and advance tax is paid. Law does not make any difference and therefore, he submits that the order of the Tribunal requires interference. 6. Per contra, Sri A. Shankar, learned Counsel for the respondent supported the impugned order. 7. The appeals were admitted to consider the following substantial questions of law on 5-4-2007:- "1. Whether the Tribunal was correct in holding that the income detected pursuant to search cannot be brought to tax in the Block assessment despite the same having not been disclosed within the stipulated t .....

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..... iles returns, an income disclosing the aforesaid remuneration as well as the interest received from those firms, the said income cannot be construed as undisclosed income. The undisclosed income for the purpose of block assessment has been defined under the Act. The said definition has been the subject-matter of interpretation by various High Courts and the Supreme Court. It has been clearly held that the proceedings under the regular assessment and the assessment for the block period stands to operate on different fields. Income in respect of which advance taxes has been paid, as well as TDS deducted cannot be construed as undisclosed income at all. The moment advance tax is paid the taxable income at that point of time stands disclosed to .....

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