TMI Blog2014 (9) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... ared as "undisclosed income" within the meaning of "undisclosed income" as contained in clause (b) of section 158B of the Act - nondisclosure of the share income received by the assessee as partner of the firm and from the firm and non-filing of the return and not disclosing the aforesaid share income is wrongly treated as "undisclosed income" within the meaning of "undisclosed income" as contained in clause (b) of section 158B of the Act and consequently the assessment proceedings are required to be held bad in law – thus, non-filing of the return and nondisclosure of the share income received by the assessee as a partner of firm M/s. Chandulal Govindlal Choksi from the firm is wrongly treated as "undisclosed income" within the meaning thereof in section 158B(b) of the Act under Chapter XIVB and consequently the block assessment proceedings are non est – Decided in favour of assessee. - Tax Appeal No. 445 of 2000 - - - Dated:- 10-6-2014 - M. R. Shah And K. J. Thaker,JJ. For the Petitioner : Manish J. Shah For the Respondent : Km Parikh JUDGMENT (Per : Honourable Mr. Justice M. R. Shah) [1.0] Feeling aggrieved and dissatisfied with the impugned judgment an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the amount of ₹ 1,16,482 the share income in the firm as undisclosed income for the years for which no income tax returns were filed by the assessee, the assessee preferred appeal before the learned Tribunal in ITA No.4053/AHD/1996 and by impugned judgment and order the learned Tribunal has dismissed the said appeal preferred by the assessee by holding that it was the assessee who was required to disclose the income i.e. the disclosure envisaged under Section 158B(b) undoubtedly should have been made by the assessee and not by any other person. The learned Tribunal also held that filing of returns by a firm showing allocation of share income to the assessee would not amount to disclosure by the assessee in terms of Section 158B(b) of the Act. [2.3] Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the assessee has preferred the present tax appeal to consider the following substantial questions of law. 1. Whether the tribunal, erred in law in holding that share income of the appellant from the firm which had filed its return of income, was undisclosed income within the meaning thereof in section 158B(b) of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id income which was not forming part of the total income cannot be treated as undisclosed income as the said income was neither assessable nor taxable. It is submitted that as such the share income received from the firm was exempted under Section 10(2) of the Act and therefore, the same do not form part of the total income of the assessee and therefore, not liable to be assessed and/or taxed and therefore, nondisclosure of the same, which was not forming part of total income , cannot be treated as undisclosed income . It is, therefore, submitted that if the aforesaid cannot be treated as undisclosed income within the meaning thereof in section 158B(b) under Chapter XIVB, the whole proceeding under Section 158B(c) would be non est and consequently the assessment order confirmed by the learned Tribunal deserves to be quashed and set aside. [3.4] Shri Shah, learned advocate appearing on behalf of the assessee has relied upon the decision of the Hon ble Supreme Court in the case of Assistant Commissioner of Income Tax v. A.R. Enterprises reported in [2013] 350 ITR 489 (SC). Relying upon the aforesaid decision it is submitted that as held by the Hon ble Supreme Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 under Chapter XIVB. It is submitted that therefore the impugned order passed by the learned Tribunal and holding the share income of the assessee from the firm as undisclosed income is absolutely in consonance with the provisions of the Act more particularly Section 158B(b) of the Act. [4.1] It is further submitted by Shri Parikh, learned advocate appearing on behalf of the Revenue relying upon the decision of the Hon ble Supreme Court in the case of A.R. Enterprises (Supra) that as even after the search and seizure the assessee did not file the return of income and disclosed the share income derived and/or received towards its share in the partnership firm, the same can be said to be an undisclosed income within the meaning of section 158B(b) under Chapter XIVB of the Act. It is submitted that therefore nondisclosure of the said share income derived by the assessee from the partnership firm and though the partnership firm might have declared the said income, when the same was not being disclosed by the assessee by not filing the return even after the search and seizure and even after initiation of block assessment proceedings, the same is to be treated as undisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon ble Supreme Court that the computation of undisclosed income for the purposes of Chapter XIVB of the Act, if any income which is not required to be included in computing the total income assessable and chargeable to tax, cannot be declared as undisclosed income within the meaning of undisclosed income as contained in clause (b) of section 158B of the Act. Under the circumstances, nondisclosure of the share income received by the assessee as partner of the firm and from the firm and nonfiling of the return and not disclosing the aforesaid share income is wrongly treated as undisclosed income within the meaning of undisclosed income as contained in clause (b) of section 158B of the Act and consequently the assessment proceedings are required to be held bad in law. [5.2] Now, so far as the contention on behalf of the revenue relying upon the decision of the Hon ble Supreme Court in the case of A.R. Enterprises (Supra) that the return was not filed even after search and seizure and initiation of the block assessment proceedings disclosing the aforesaid share income, the same is required to be treated as undisclosed income is concerned, the aforesaid cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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