The Commissioner Of Income Tax Chennai v. Mrs.s.s.kaladevi

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 26.02.2007 CORAM: THE HONOURABLE MR.JUSTICE P.D.DINAKARANandTHE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN Tax Case (Appeal) No.126 of 2007 The Commissioner of Income TaxChennai. .. Appellant versus.. Respondent ----- Mrs.S.S.Kaladevi PRAYER: Tax Case Appeal filed under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal, Madras 'C'Bench , dated 9.6.2006 made in IT(SS) A.No.61/Mds/2004 – Block AssessmentPeriod: 1991-92 to 2000-01 + broken period and against the order of theCommissioner of Income Tax (Appeals) I Chennai-34, dated 5.3.2004 made inITA.206/02-03 against order dated 31.1.03 of the Deputy Commissioner ofIncome Tax Central Circle-II Madurai made in GIR .No. K.7001. For appellant :Mr.J.Naresh Kumar forM/s.Pusya SitaramanStanding Counsel JUDGMENT (Judgment of the Court was made by CHITRA VENKATARAMAN,J.) The appeal is by the Revenue seeking admission of the Tax Case basedon the following substantial question of law: "Whether in the facts and circumstances of the case, theTribunal was right in holding that if income from aparticular year is below taxable income, the same cannotbe included in block assessment, even in cases where nobooks of accounts or other documents were maintained? "Tribunal was right in holding that if income from aparticular year is below taxable income, the same cannotbe included in block assessment, even in cases where nobooks of accounts or other documents were maintained? " 2. It is seen that a search took place in the case of the assessee'shusband on 5.1.2001. It is further stated that a perusal of the seizedmaterials and statements recorded from the assessee and connected personsrevealed that the assessee had derived undisclosed income liable to betaxed in a block assessment. Consequently, notice was issued underSection 158 BD read with Section 158 BC, calling upon the assessee tofile the returns of the income in Form 2B for the block period 1.4.1991 to5.1.2001 relevant for the Assessment Years 1991-92 to 2000-01 and 2001-2002 (part). Rejecting the contention of the assessee, the AssessingAuthority arrived at the total undisclosed income at Rs.5,28,470/- asagainst the declared income of Rs.2,44,435/-. 3. Aggrieved by the assessment, the assessee preferred an appealbefore the Commissioner of Income Tax (Appeals). Considering theretrospective effect given to the provisions of Section 158B(b) under theFinance Act of 2002 with effect from 1.7.1995, the appellate authoritydirected the assessing authority to call for specific details from theappellant as regards the claim for deduction under Section 80L and passnecessary orders thereon. The appellate authority rejected the contentionthat there was no undisclosed income. However, the appellate authoritypartly allowed the appeal. 3. Aggrieved by the assessment, the assessee preferred an appealbefore the Commissioner of Income Tax (Appeals). Considering theretrospective effect given to the provisions of Section 158B(b) under theFinance Act of 2002 with effect from 1.7.1995, the appellate authoritydirected the assessing authority to call for specific details from theappellant as regards the claim for deduction under Section 80L and passnecessary orders thereon. The appellate authority rejected the contentionthat there was no undisclosed income. However, the appellate authoritypartly allowed the appeal. 4. Aggrieved by this order, the assessee went on further appealbefore the Tribunal. The Tribunal held that the assessing officer hadincluded the income earned in the assessment year 1991-92 to 1996-97 onthe ground that the returns of income were not filed. TheTribunal also referred that Section 158 BB(1)(c) was inserted with effectfrom 1.7.1995, according to which, the income which does not exceed themaximum amount not chargeable to tax for any previous year falling in theblock period, shall be reduced from the aggregate of total income of theprevious years falling within the block period; set aside the order andremitted the case back to the assessing officer to verify the income notchargeable to tax for the previous years which were included in the blockassessment. The Tribunal also held that the assessing authority had notmentioned anything about the method of accounting followed by theassessee. In the circumstances, the Tribunal remanded the matter back forfresh consideration, directing the assessing authority to consider theissue as regards the method of accounting employed by the assessee. 5. Aggrieved by the remand order, the Revenue has come on appeal.Learned Standing Counsel submitted that the Commissioner of Income Tax(Appeals) held that the assessee had not maintained any Books of Accountsand as such, not entitled to any relief; considering the amendment maderetrospectively to the provision under Section 158B(b) and Section 158BB(1)(c) of the Income Tax Act. 6. Learned Standing Counsel submitted that the Tribunal erred inoverlooking the provisions that the question of exclusion of the incomebelow the taxable limit will arise only where the assessee maintains theBooks of Accounts. He submitted that since in the present case no booksof Accounts are maintained, the said Clause would not be applicable tothis case. 7. Without going into the other aspects of this matter, it may beseen that the assessee's contention before the authorities below was thatsince the income for the period upto 5.1.2001 were only from salary incomeand income from house property and below the taxable limit, the questionof denying the relief did not arise. The authorities below had taken theview that considering the provisions of Section 158 BB(1)(c), the reliefof exclusion was available only for the income as reflected in the regularBooks of Accounts maintained before the date of search. Considering thefact that the income undisclosed was below the taxable limit and havingregard to the fact that the matter is remitted by the Tribunal forverification of the same in terms of Section 158BB(1)(c), we confirm theorder of the Tribunal remanding the matter, for the assessing authority toconsider the claim of the assessee de novo and pass orders in accordancewith law. In the circumstances, we do not find any ground to admit thisappeal. Accordingly, this appeal is dismissed. There will, however, be noorder as to costs. ksv Sd/-Assistant Registrar, To: /true copy/Sub Assistant Registrar. 1. THE COMMISSIONER OF INCOME TAXCHENNAI. 2. THE ASSISTANT REGISTRAR,INCOME TAX APPELLATE TRIBUNAL, MADRAS C BENCH BESANT NAGAR, CHENNAI-34. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) II CHENNAI. 4. THE COMMISSIONER OF INCOME TAX (APPEALS)I CHENNAI-34. 5. THE DEPUTY COMMISSIONER OFINCOME TAX CENTRAL CIRCLE II,BIBI KULAM, MADURAI-2 ksv Sd/-Assistant Registrar, To: /true copy/Sub Assistant Registrar. 1. THE COMMISSIONER OF INCOME TAXCHENNAI. 2. THE ASSISTANT REGISTRAR,INCOME TAX APPELLATE TRIBUNAL, MADRAS C BENCH BESANT NAGAR, CHENNAI-34. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) II CHENNAI. 4. THE COMMISSIONER OF INCOME TAX (APPEALS)I CHENNAI-34. 5. THE DEPUTY COMMISSIONER OFINCOME TAX CENTRAL CIRCLE II,BIBI KULAM, MADURAI-2 + One cc to M/s. Pusya Sitaraman Advocate SR 11538KM (co)sg 16/3/07 Tax Case (Appeal) No.126 of 2007 Dated: 26.02.2007