Commissioner of Income Tax vs Kerala Roadways Ltd.

D. Murugesan, J.—This tax case (appeal) is at the instance of the Commissioner of Income Tax, Central-II, Chennai, questioning the order of the Income Tax Appellate Tribunal, Chennai, dated 15-7-2009 passed in IT (SS) A. No. 63/Mds/2008.

The substantial question of law, on which the appeal is filed is as follows:

Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in cancelling the assessment under Chapter XIV-B in the light of the specific provision contained in Section 158BB(I)(c), even though the return of income filed after the search, on that basis the assessing officer computed the income as undisclosed income?

The respondent, M/s. Kerala Roadways, is the assessee on the file of the revenue. A search u/s 132 of the Income Tax Act, 1961 was conducted in the business premises and it was noticed that the total undisclosed income admitted in the block return included a total loss of Rs. 2,42,71,600 and the same was set off against undisclosed income of the assessee. As the above amount was wrongly given set off, a proposal was submitted and the earlier order dated 9-3-2007, was set aside with a direction to the assessing officer to verify the figures returned in Form 2B and arrive at the correct undisclosed income. It was noticed that after the search on 22-1-2003, the assessee filed its return for the assessment year 2002-03 only on March 12, 2004 disclosing a total income of Rs. 1,68,90,172. After giving credit for T.D.S. at Rs. 17,89,147, for the advance tax at Rs. 16,15,000 and for self-assessment tax at Rs. 29,62,507, in all totalling a sum of Rs. 63,66,654, the balance amount was treated as undisclosed income. Therefore, the assessing officer, namely, the Deputy Commissioner of Income Tax, Central Circle, by his assessment order dated 31-12-2007, assessed the total income to the tune of Rs. 4,11,61,772.

That order was taken on appeal before the Commissioner (Appeals)-II, Chennai, and the same was allowed on the ground that when the amounts, though were given credit at the time of search, were already disclosed, they cannot be treated as undisclosed income. Accordingly, by his order dated March 25, 2008, allowed the appeal partly and directed the assessing officer to recompute the undisclosed income after giving an opportunity to the appellant to file revised Form 2B.

That order was taken again on appeal before the Income Tax Appellate Tribunal by the revenue and the same was rejected.

Mr. J. Nareshkumar, learned Counsel appearing for the revenue, would submit that in the given facts and circumstances of the case, as the assessee has filed its return only after the search, the provision of Section 158BB(1)(ca) would alone apply and the provision of Section 158BB(1)(c)(A) has been wrongly applied.

We have considered the above submission and also perused the order of the Commissioner (Appeals) and the Appellate Tribunal.

Both the Commissioner (Appeals) and the Appellate Tribunal had placed reliance on the judgment of this Court in The Assistant Commissioner of Income Tax Vs. A.R. Enterprises, holding that the income disclosed on account of payment of advance tax cannot be held to be undisclosed income for the purpose of block assessment. This position of law is not in dispute.

Though the learned Counsel for the revenue has made an attempt to argue relying on the decision of a learned single judge in the case of B. Noorsingh Vs. Union of India and Others, , wherein the learned judge took a different stand, we are not inclined to accept the said submission, as the very same judgment was also considered by the Division Bench in The Assistant Commissioner of Income Tax Vs. A.R. Enterprises, . For the above conclusion, the Division Bench has also relied upon the earlier judgments of the Guwahati High Court and the Supreme Court. We find no reason to take a different view than the one taken by the other Division Bench.

As both the Commissioner (Appeals) and the Appellate Tribunal have relied upon the Division Bench judgment in The Assistant Commissioner of Income Tax Vs. A.R. Enterprises, , we do not find any error in the orders impugned. Accordingly, we are not inclined to entertain this appeal and the same is, therefore, dismissed. No costs.