TMI Blog2013 (11) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. Thus, as far as Clause (ca) is concerned, when the due date for filing of the return of income has expired and the assessee had not filed the return even as stating that it was 'nil' income, then Section 158BD would be of relevance - Assessment made under Chapter XIV B of the Act is justifiable on facts and in law – Decided against the Assessee. - Tax Case (Appeal) Nos.906 to 915 of 2005 - - - Dated:- 1-10-2013 - Chitra Venkataraman And T. S. Sivagnanam,JJ. For the Appellant : Mr. V. S. Jayakumar in all the appeals For the Respondent : Mr. M. Swaminathan in all the appeals Standing counsel for Income Tax Department JUDGMENT (The Judgment of the Court was made by Chitra Venkataraman, J.) The assessees are on appeal as against the common order of the Income Tax Appellate Tribunal, "D" Bench dated 28.03.2005 passed in IT(SS)A No.168/Mds/04 to IT(SS)A No.177/Mds/04 for the block assessment period 1990-91 to 2000-01, raising the following questions of law: 1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the salary and interest paid to partners are undisclosed income in the hands of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by this, the assessees went on appeal before the Income Tax Appellate Tribunal. As already pointed out in the preceding paragraphs, the Income Tax Appellate Tribunal passed a common order covering the cases of all the assessees, confirming the assessment. 6. One of the contentions taken by the assessees before the Income Tax Appellate Tribunal was that when in respect of the firm assessment, the salary and interest paid to the partners were already disclosed within the time allowed for filing the return, the same could not be the subject matter of undisclosed income under Chapter XIV B of the Act. These are for the individual assessments. Though the returns were filed belatedly, they were filed before the issuance of notice under Section 158BD of the Act. Hence, the Block Assessment made was without jurisdiction. The Income Tax Appellate Tribunal, however, rejected the plea of the assessees and pointed out that the assessees had not filed the returns of income before the date of search. Thus, the income disclosed in the returns filed after the date of search could not be treated as disclosed income. The Income Tax Appellate Tribunal further pointed out that considering the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as 158 BD of the Act, the Supreme Court pointed out that the Legislature has chosen to define "undisclosed income" as income not disclosed for the purposes of the Act. The Supreme Court pointed out that for the income to be disclosed, the only course of disclosing income on the part of the assessee is through filing of a return. Therefore, undisclosed income signified, income not stated on the returns filed. It observed there are two scenarios where income would be deemed to be undisclosed (1) Where the income has clearly not been disclosed and (2) Where income would not have been disclosed. For this, reliance must be placed on the surrounding facts and circumstances of the case. It held that if the search is conducted after the expiry of the due date for filing return, payment of advance tax is irrelevant in construing the intention of the assessee to disclose income. If the search is conducted prior to due date for filing return, opportunity to disclose the income by filing the return is there, in which case, the payment of advance tax may be material for construing whether the assessee is intended to disclose the income. Thus, when the income had not been properly disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income of the previous years falling within the block period computed, (in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence), 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 years, determined.- (a) ......................... (b) .......................... [(c) where the due date for filing a return of income has expired, but no return of income has been filed, - (A) on the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of search or requisition where such entries result in computation of loss of any previous year falling in the block period; or (B) on the basis of entries 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 where such income does not exceed the maximum amount not chargeable to tax for any pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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