K.k. Salgotra v. Commissioner Of Income Tax-I,Chandigarh

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 329 of 2006Date of decision: 2.12.2010. K.K. Salgotra --- Appellant Versus Commissioner of Income Tax-I,Chandigarh. --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Mr. S.K. Mukhi, Advocate for the appellant-assessee Ms. Urvashi Dhugga, Standing Counselfor the respondent-Revenue --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act,1961 (for short “the Act”) has been filed by the assessee against theorder dated 30.12.2005, passed by the Income Tax AppellateTribunal Chandigarh Bench ‘B’, Chandigarh (in short “the Tribunal”) inITA (SS) A. No.22/CHANDI/2004, for the block period 1.4.1987 to20.11.1997. The appeal was admitted for determination of the following substantial question of law by this Court: “Whether on the facts and in the circumstances of thecase the Income Tax Appellate Tribunal was justified onfacts and in law in confirming the action of the authoritiesbelow by erroneously applying the provisions of section158BB(c) of the Income Tax, 1961 and thereby treatingthe salary income as Undisclosed Income which dulystood disclosed before the action u/s 132 was taken?” The facts of the case necessary for adjudication and asnarrated in the appeal, are that pursuant to a search operationcarried under Section 132(1) at the residential premises of theassessee on 20.11.1997 and consequent upon issuance of noticeunder Section 158BC(a) read with Section 142(1), the assessee filedreturn for the block period 1.4.1987 to 20.11.1997 on 20.8.1999.Thereafter, statutory notices under Sections 143(2) and 142(1) of theAct were issued to the assessee and consequently, the assessmentwas finalised whereby the assessing officer, by its order dated29.11.1999, made certain additions and disallowances, whichincluded the addition of Rs.3,47,470/- made under Section 158BB(c)of the Act. On appeal carried by the assessee, the Commissioner ofIncome-tax (Appeals) [for short “the CIT(A)”] granted partial relief,inasmuch as, out of the addition of Rs. 3,47,470/-, the CIT(A) videorder dated 13.2.2004, sustained the addition of Rs. 1,82,600/- onaccount of undisclosed amount, i.e. the amount of salary of Rs.1,41,600/- and rental income of Rs. 41,000/-. The Revenue feeling aggrieved by the order of the CIT(A), preferred appeal before the Tribunal. The assessee also, filedcross appeal and the both were disposed of on 23.12.2005 by theTribunal. The Tribunal after considering the submissions made on theissues concurred with the approach of the CIT(A), insofar as thequestion of sustaining the addition of Rs. 1,82,600/- is concerned. We have heard learned counsel for the parties and haveperused the record. The sole thrust of the submissions made before thisCourt by the counsel for the appellant is that addition of Rs.1,82,600/- made by the assessing officer was legally not sustainableand the same was erroneously affirmed by the CIT(A) and theTribunal. The counsel submitted that the authorities below failed toappreciate that the assessee had already disclosed the salaryamount of Rs. 1,41,600/- to the Income Tax Department through hisemployer, i.e. the U.T. Administration, and balance of Rs. 41,000/- onaccount of rental income voluntarily disclosed by the assessee beforethe ADI. The assessee placed reliance on Dr. Mrs. AlkaGoswami v. Commissioner of Income Tax. (2004) 268 ITR 178(Gauhati), Commissioner of Income Tax v. Jugal Kishore Gupta,(2008) 16 DTR Judgments 85 (Allahabad), Commissioner ofIncome Tax vs. Ashim Krishna Mondal, (2004) 270 ITR 160(Calcutta) and Commissioner of Income Tax v. J.K. Narayanan,(2007) 293 ITR 179 (Madras) in support of his submissions. Learned counsel for the Revenue supported the orderpassed by the Tribunal. It was argued on behalf of the Revenue thatthe assessee had the taxable income for the assessment years 1991-92, 1992-93, 1993-94 and 1994-95 and in spite of that, he hadnot filed returns. He referred to the following chart showing theincome of the assessee during the aforesaid assessment years, asunder: The point for determination in this appeal is, whether inthe absence of any return having been filed by the assessee,especially when he had taxable income in terms of salary and rentaltaken together, the benefit of disclosed income in respect of suchincome could be allowed to the assessee. We are unable to accept the submissions made by thecounsel for the assessee. A perusal of order of the Tribunal clearlydepicts that the assessee had already been allowed benefit asclaimed by him in respect of assessment years 1988-89, 1989-90,1990-91 where the income of the assessee was below taxable limit.The benefit was also extended to the assessee for the assessmentyears 1995-96 and 1996-97 where after allowing tax rebateadmissible to the assessee, he had not filed the return as thereexisted no tax liability. However, the assessee was not held entitledto similar benefit in respect of assessment years 1991-92 to 1994-95 as in spite of having taxable income and tax payable, no income taxreturn was filed by the assessee. Learned counsel for the assessee was unable to controvertthat after having the addition of the rental income in the salary theassessee had the taxable income for the assessment years 1991-92to 1994-95, but he did not file return. Further, the relevant findingsrecorded by the Tribunal in that behalf are as under: “38. For assessment years 1991-92, 1992-93, 1993-94and 1994-95, the salary and rent received by theassesses the maximum limit not chargeable to tax. TheCommissioner of Income Tax (Appeals) has upheld theaddition on the ground that the words “undisclosedincome” would represent that the income which has notbeen or would not have been declared for the purpose ofthe Act. 39.In our considered view, since the assessee has notfiled the return of income for the respective assessmentyears notwithstanding the fact that there was anobligation upon him to file the return of income, theincome for the respective assessment years falls withinthe definition of undisclosed income. Section 158BB(c)also provides for nil deduction in respect of theassessment years in which no return has been filed. Thesaid section reads as under: “158BB(c) Where the due date for filing a return ofincome has expired, the return of income has notbeen filed at nil.” 40. From clause (c), it is evident that the assessee whohas failed to file the return of income for any assessment year included in the block period, the Assessing Officer isbound to assess the income not disclosed by theassessee as undisclosed income and deductionpermissible to the assessee as provided under theStatute is nil. Therefore, the addition of Rs. 1,82,600/-sustained by the Commissioner of Income Tax (Appeals),in our view, is in order. The ground raised by theassessee in this regard is accordingly dismissed. Learned counsel for the assessee was unable to pin-point any fault in the approach of the Tribunal which may warrantinterference by this Court. The assessee had already been grantedbenefit by treating the income for the assessment years 1988-89,1989-90, 1990-91, 1995-96 and 1996-97 as disclosed income.However, the counsel for the assessee was not able to demonstrateas to how the judgments relied upon by him help the assessee,especially when it was not controverted that in spite of having taxableincome, the assessee had not filed the returns of income for theassessment years 1991-92 to 1994-95. Finding no merit in the appeal, the substantial question oflaw is answered against the assessee and in favour of the Revenue. The appeal is accordingly dismissed. Learned counsel for the assessee was unable to pin-point any fault in the approach of the Tribunal which may warrantinterference by this Court. The assessee had already been grantedbenefit by treating the income for the assessment years 1988-89,1989-90, 1990-91, 1995-96 and 1996-97 as disclosed income.However, the counsel for the assessee was not able to demonstrateas to how the judgments relied upon by him help the assessee,especially when it was not controverted that in spite of having taxableincome, the assessee had not filed the returns of income for theassessment years 1991-92 to 1994-95. Finding no merit in the appeal, the substantial question oflaw is answered against the assessee and in favour of the Revenue. The appeal is accordingly dismissed. (AJAY KUMAR MITTAL) JUDGE Income Tax Appeal No. 329 of 2006 7 December 2, 2010 *rkmalik* (ADARSH KUMAR GOEL) JUDGE