Commissioner Of Income-Tax,Chennai v. M/S.integrated Finance Co. Ltd.,P.b

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 05.07.2007 Coram : THE HONOURABLE MR.JUSTICE P.D.DINAKARAN AND THE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA Tax Case (Appeal) No.1000 of 2007 Commissioner of Income-tax,Chennai...Appellant/ Appellant Vs. M/s.Integrated Finance Co. Ltd.,P.B. No.4980, 'VAIRAMS', 112, Thiyagaraya Road,T.Nagar,Chennai-600 017. ..Respondent/ Respondent Appeal under Section 260A of the Income-tax Act, 1961 againstthe order of the Income Tax Appellate Tribunal, Bench 'A', Chennaiin I.T.(SS)A No.22(Mds)/2003 dated 28.12.2006, for the block period1990-1991 to 1999-2000 and 2000-2001 against the order of theCommissioner of Income Tax (Appeals) XI Chennai inI.T.A.No.144/2001-02 dated 14.11.2002 against order dated31.10.2001 of the Dy. commissioner of Income Tax Circle I, Chennai-34 for the above period of 1990-91 to 1999-2000 & 2000-2001 inG.I.No.PA.No.9.1. For Appellant :Mr.J.Naresh Kumar,Standing Counsel for Income-tax Department JUDGMENT(Judgment of the Court was delivered byP.P.S.Janarthana Raja, J.) This appeal is filed under Section 260A of the Income Tax Act,1961 by the Revenue, against the order of the Income Tax AppellateTribunal, Bench 'A', Chennai in I.T.(SS)A No.22(Mds)/2003 dated28.12.2006, raising the following substantial question of law:- https://hcservices.ecourts.gov.in/hcservices/ "Whether in the facts and circumstances of thecase, the Tribunal was right in holding that thesubsidy received would not form part of theundisclosed income, when the receipt of thesubsidy was known only during the search?" 2.The facts leading to the above substantial question of laware as under: The assessee-company is a non-banking finance companyprimarily engaged in the business of hire purchase and leasing. Araid in the business premises of the assessee was carried out on18.08.1999. In the course of the raid, several incriminatingdocuments including the lease agreements were found and seized. Asthe assessee could not establish the existence of leased assets, ithad withdrawn the depreciation claimed in respect of the leasetransactions with various concerns. Hence the Assessing Officercompleted the block assessment for the block period 01.04.1989 to07.10.1999 determining the undisclosed income at Rs.1,67,15,250/-.While completing the assessment, the Assessing Officer made anaddition of Rs.67,50,000/- being the difference between the subsidyreceived amounting to Rs.1,12,50,000/- and the income alreadyoffered to tax amounting to Rs.45,00,000/-. This amount of subsidywas not admitted for the purpose of income-tax and hence theAssessing Officer made the above addition as undisclosed income forthe block period. Aggrieved by the order, the assessee filed anappeal to the Commissioner of Income-tax (Appeals). The C.I.T.(A)held that the same should be assessed only under the regularassessment and not in the assessment for the block period anddeleted the addition. Aggrieved, the Revenue filed an appeal tothe Income-tax Appellate Tribunal ("Tribunal" in short). TheTribunal dismissed the Revenue's appeal and confirmed the order ofthe C.I.T.(A). Hence the present tax case by the Revenue. 3.Learned Standing Counsel appearing for the Revenuesubmitted that the Returns filed for the assessment years 1996-97to 1998-99 did not show any income specifically admitted as subsidyand as such, the receipt of the subsidy came into light only duringthe raid and hence the Assessing Officer is justified in treatingthe same as undisclosed income for the block period. 3.Learned Standing Counsel appearing for the Revenuesubmitted that the Returns filed for the assessment years 1996-97to 1998-99 did not show any income specifically admitted as subsidyand as such, the receipt of the subsidy came into light only duringthe raid and hence the Assessing Officer is justified in treatingthe same as undisclosed income for the block period. 4.Heard the counsel. In the course of raid, copies of leaseagreements relating to lease transactions have been seized. In theletter addressed to the DDIT, the assessee had stated that thesubsidy of Rs.1,12,50,000/- was received from IREDA for the supplyof pumps. The said subsidy of Rs.1,12,50,000/- was offered asincome for the assessment year 1996-97, but was later reversed inthe income admitted for the assessment year 1998-99 on the basis ofthe advise from the Auditors that it should be declared as incomeover the 10-year period of lease. The assessee had offeredRs.45,00,000/- as income in the previous years 1995-96 to 1998-99 https://hcservices.ecourts.gov.in/hcservices/ at the rate of Rs.11,25,000/- per year and hence the sum ofRs.45,00,000/- was reduced and the balance sum of Rs.67,50,000/-was considered as undisclosed income assessable for the blockperiod. In this case, since the assessee itself had offered itsincome for the assessment year 1996-97 which was subsequentlyreversed and claimed by way of deduction, it could not be said thatthe assessee would not have disclosed the income for the blockperiod. It is also seen from the records that the impugned amountcould not be said to have come into light as a result of searchoperation. The findings given by the authorities below are thatthe income by way of subsidy is taxable for the purpose of income-tax in the regular assessment and not in the assessment for theblock period and that the assessee had already disclosed itstransaction and that there is no seized material to make addition.It is a question of fact and it is not a perverse one. Theconcurrent finding given by both the authorities is that the incomeshould be assessed only in the regular assessment and also that theassessee had disclosed the transaction. Hence, the AssessingOfficer is wrong in treating the impugned amount as undisclosedincome for the block period. The concurrent findings given by boththe authorities below are based on valid materials and evidence.In the case of Commissioner of Income-tax Vs. P.Mohanakala [2007]291 ITR 278 (SC), the Supreme Court held that whenever there is aconcurrent finding by the authorities below, no interference shouldbe called for by the High Court. Under these circumstances, we donot find any error or legal infirmity in the order of the Tribunalso as to warrant interference. 5.In view of the foregoing reasons, no substantial questionof law arises for consideration of this Court and accordingly, thetax case is dismissed. No costs. Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.kmTo1. The Assistant Registrar, Income-tax Appellate Tribunal, Bench "A", Chennai. 2. The Secretary, Central Board of Direct Taxes, New Delhi. Central Board of Direct Taxes, New Delhi. 3. The Commissioner of Income-tax (Appeals) XI, 121, Mahatma Gandhi Salai, Chennai-600 034. 121, Mahatma Gandhi Salai, Chennai-600 034. 4. The Deputy Commissioner of Income-tax, City Circle I, Chennai-34. City Circle I, Chennai-34. 1 cc to Mr. Pushya Sitaraman, Advocate, sr. 41068 T.C.(A) No.1000 of 2007 ASM (CO)kk 21/7