Itta/114/2001 Of Commr.of Income Tax Ap. Hyd v. B.r.shah And Others[[1]] ~~.~~

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDYAND THE HON’BLE SRI JUSTICE M. SATYANARAYANA MURTHY I.T.T.A. Nos.114 AND 123 of 2001, AND I.T.T.A.No.33 OF 2002 % 02.07.2014 I.T.T.A.No.114 OF 2001 The Commissioner of Income Tax, Andhra Pradesh - II, Hyderabad .. Appellant And $ Mr. Vimal Chand Jain, H.No.15-9-406, Afzalgunj, Hyderabad .. Respondent !Counsel for the Appellant : Sri J.V. Prasad Counsel for Respondent : Sri S. Ravi < Gist : > Head Note : ? Citations: (2013) 350 ITR 489 (SC) THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE M. SATYANARAYANA MURTHYI.T.T.A. Nos.114 AND 123 of 2001, AND I.T.T.A.No.33 OF 2002 COMMON JUDGMENT: (Per Hon’ble Sri Justice L. Narasimha Reddy) These three appeals filed under Section 260-A of the IncomeTax Act, 1961 (for short, ‘the Act’) arise under similarcircumstances. Hence, they are disposed of through a commonorder. The Revenue is the appellant. The respondents are theassesses under the Act. The searches were conducted on30.11.1996 for the preceding ten years. In the course of blockassessment, it was found that the respondents have paid advancetax for some assessment years, but did not file returns. Theassessing officer took the view that the income for thecorresponding years for which the returns were not filed partakesthe character of undisclosed income and accordingly tax waslevied. Aggrieved by that and other measures taken by the IncomeTax Officer (ITO) in the respective orders of assessment, therespondents preferred the appeals before the Tribunal. Through itsorders under appeals, the Tribunal accepted the contention of therespondents, namely, that the failure to file a return by the assessee,who paid the advance tax, cannot lead to a situation of treating theincome as the undisclosed one. Reliance was placed upon anorder passed by itself in relation to another case. On certain otheraspects, the Tribunal rejected the contention of the respondents. Heard Sri J.V. Prasad, learned Counsel for the appellants,and Sri S. Ravi, learned Senior Counsel for the respondents. The principal contention urged on behalf of the appellants isthat the view taken by the Tribunal, as to the manner in which theincome of an assessee for an assessment year as regard which thereturns were not filed, albeit the advance tax paid, is contrary tolaw. It is urged that the failure to file income tax return may itselflead to the conclusion of non-disclosure of income for thecorresponding year and mere payment of the advance tax does notchange the situation. Reliance is also placed upon the recentjudgment of the Hon’ble Supreme Court in Commissioner ofIncome Tax v. B.R.Shah and others[[1]]. In the block assessment undertaken against the respondents,several aspects cropped up. One of it was about the manner inwhich the income for a year as regards which the returns were notfiled, must be treated. The respondents appeared to have remaineda bit complacent on the ground that they have already paid theadvance tax. The payment of advance tax by itself does notabsolve the obligation of an assessee to file returns. It is only whena return is filed, that an assessing officer would be in a position toexamine the details of income, expenditure and deductible incomesetc. There existed some lack of clarity in law on this aspect, whenthe Tribunal decided the matter. That ambiguity is set at rest withthe judgment of the Hon’ble Supreme Court in B.R. Shah’s case(supra). Their Lordships held that payment of advance tax does notabsolve an assessee from an obligation to file return disclosing totalincome for the relevant assessment year. The consequences wouldbe that income for that year would be treated as an undisclosedone. On this short point, the appeals deserve to be allowed. However, allowing of appeals would not put the controversy at rest. There existed some lack of clarity in law on this aspect, whenthe Tribunal decided the matter. That ambiguity is set at rest withthe judgment of the Hon’ble Supreme Court in B.R. Shah’s case(supra). Their Lordships held that payment of advance tax does notabsolve an assessee from an obligation to file return disclosing totalincome for the relevant assessment year. The consequences wouldbe that income for that year would be treated as an undisclosedone. On this short point, the appeals deserve to be allowed. However, allowing of appeals would not put the controversy at rest. The other details have to be worked out. It is too well known thateven where a block assessment is made under Chapter XIVB of theAct, the assessment must be made as if it is an ordinary one.Section 158BH of the Act mandates this. Remand becomesnecessary for working out the details. While accepting the contention of the respondents as regardsthe manner in which the income for a year for which no declarationwas filed even after paying the advance tax, the Tribunal rejectedthe contention of the respondents on certain other aspects. Oncewe feel it appropriate to remand the matter to the Tribunal, it isessential that the remand is on all the controversies or issues. It isdifficult to segregate the issues or to treat the findings on them asfinal. It is not uncommon that the finding on one issue would haveits impact on the other. Now that the view taken by the Tribunal onan important aspect is not found to be correct, the remaining issuesalso must be examined afresh. We, therefore, allow the appeals and set aside the respectiveorders under appeals. The matters are remanded to the Tribunal forfresh consideration and disposal on every aspect that is urgedbefore it, duly giving opportunity to both the parties. There shall beno order as to costs. The miscellaneous petitions, if any, filed in these appealsshall stand disposed of. ____________________ L. NARASIMHA REDDY, J. __________________________ M. SATYANARAYANA MURTHY, J. 02.07.2014Note:- L.R. copy to be marked. (B/o) KH [1](2013) 350 ITR 489 (SC)