TMI Blog2004 (3) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee s case, it was noticed by the AO that in the instant case the return of income for asst. yr. 1999-2000 filed by the assessee on 23rd June, 2000 was beyond the specified date in the Act. According to the AO, the return of income for the asst. yr. 1999-2000 was due on or before 30th June, 1999. The assessee was a partner in M/s Nanda Clinic. The due date in the case of said concern was 31st Oct., 1999. The assessee did not file the return by this date. However, the return was filed on 23rd June, 2000. The AO was of the view that the income declared at Rs. 3,57,214 was undisclosed income of the assessee liable to tax under the provisions of s. 158BB(1)(c) of Chapter XIV-B of IT Act, 1961. Accordingly, the AO determined the income of the assessee and levied the tax. He had also initiated penalty proceedings under s. 158BFA(2) of the IT Act, 1961 and vide order dt. 24th June, 2002 imposed penalty of Rs. 2,35,761 under s. 158BFA(2) read with second proviso thereto of the IT Act, 1961. 3. In further appeal, the CIT(A) upheld the action of the AO in levying the penalty and also directed the AO to take action under s. 158BFA(1) for charging interest as return of undisclosed inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessee had the time upto 31st March, 2001 to file such return under s. 139(4) of the Act. There was no justification in treating the income admitted by the assessee in the return so filed on 23rd June, 2000 as undisclosed income by the AO and no penalty should have been imposed for alleged default on the part of the assessee in terms of provisions of s. 158BFA. Shri R.G. Nahar, the learned counsel for the assessee also submitted that there was no undisclosed income which was found by the search party at the time of conducting the search in terms of s. 158B(b) of the Act. According to the learned counsel for the assessee, in absence of any undisclosed income found and so assessed, no penalty should have been imposed. It was also stated that the AO did not find any income from undisclosed sources assessable to tax. The assessee was being assessed to tax since long. The main source of the assessee s income was interest on savings bank account, fixed deposits with the bank, dividend from investment in shares and the commission received from LIC. It was also stated that on substantial part of such income, tax was being deducted at source and all the sources and investments w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully justified in considering the income relating to assessment year under consideration as undisclosed income. Accordingly, it was submitted that the penalty levied by the AO and confirmed by the CIT(A) may be upheld. She has also submitted that the CIT(A) was justified in directing the AO to charge interest as per the provisions of s. 158BFA(1) of the Act. 7. We have carefully considered the rival submissions and have also perused the orders of the authorities below. At the same time, we have also considered the decisions cited by the either party. At the very outset, we may point out here that there is no merit in this contention of the learned Departmental Representative that the findings given in the assessment order have become final since no appeal was preferred and, therefore, the AO was justified in levying the penalty. It is well settled law that findings in assessment proceedings are relevant but not conclusive in the penalty proceedings. It is also true that assessment proceedings are different and independent proceedings and the assessee has every right to contest the penalty proceedings and is also entitled to adduce further evidence in penalty proceedings. We the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved on PPF account is exempt. 2. Rs. 41,140 interest received on NSS 1987 will be taxable at the time of withdrawal as per NSS Rules 1987. 3. Deduction under s. 80G is donation made as under: Ded. % Amount (a) Sadhu Vaswani Mission 10,000 50% 5,000 (b) Helpage India 5,000 100% 5,000 (c) World Vision of India 10,000 50% 5,000 Total: 25,000 15,000 4. Share of profit from a firm M/s Nanda Clinic is exempt under s. 10(2A)." It is observed that undisclosed income has been defined in s. 158B(b) of the Act, which reads as under: "158B. In this Chapter, unless the context otherwise requires, (a)..... (b) "undisclosed income" includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. The advance tax for assessment year under consideration was paid on 5th Sept., 1998, amounting to Rs. 1,000, Rs. 1,000 on 5th Dec., 1998, and Rs. 11,000 on 5th March, 1999. Similarly, tax of Rs. 6,500 was paid on 21st June, 2000, under s. 140A of the Act. It is true that the assessee has filed regular return of income under s. 139(4) of the Act on 23rd June, 2000. In fact, the return so filed resulted in claim of refund. The Department was knowing the sources of income of the assessee. The AO has not brought out any material on record to show that the Department had detected any concealed income of the assessee. At the same time, there is also no material on record to show that the assessee had not declared fully and truly his income. The income declared by the assessee for the assessment year under consideration has been accepted by the AO. In our view, in the facts and circumstances of the present case, it could not be said that the assessee would not have disclosed such income to the IT Department. In the case of Vidya Madanlal Malani vs. Asstt. CIT, this Bench of the Tribunal, in similar circumstances, held as under: "The assessee could not be punished merely be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also unable to agree with the view of the Department that the due date mentioned in s. 158BB(1)(c) is the due date for filing the return under s. 139(1). It is very pertinent to note that s. 158BB(1)(b) specifically mentions s. 139(1) and s. 147. Sec. 158BB(1)(b) states "where returns of income have been filed under s. 139 or s. 147 but assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such return". It means that the returns filed under both the sections are equally to be considered for the purpose of computing the income. If that being so, it is not correct to say that in s. 158BB(1)(c), the words "due date for filing a return of income has expired but no return of income has been filed" means the due date under s. 139(1) only. There are different due dates for filing the returns in different sections under the Act. As in the case of this assessee against whom a notice has been served under s. 148 r/w s. 147 and the time for filing the return has not been expired, the due date for filing the return of income has not expired. In case of such an assessee, if transactions are reflected in the books of account, then they can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aggregate of the total income of the previous years falling within the block period computed, in accordance with the provisions of Chapter IV, on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with AO, as reduced by the aggregate of the total income, or as the case may be, as increased by the aggregate of the losses of such previous year determined: (a)..... (b)..... (c) where the due date for filing a return of income has expired but no return of income has been filed, as nil;" From a reading of this section, it is evident that it is only a procedure enunciated for computation of undisclosed income of the block period. Even taking into consideration the said clause it talks about a situation where no return is filed during the period provided for filing the return. But it is not stated as income shown in the return filed after expiry of the time-limit in that clause is to be treated as undisclosed income. The block assessment enunciated in Chapter XIV-B of the Act is a special procedure and the assessed income under this chapter is to be taxed at the maximum rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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