Commissioner of Income Tax vs Smt. Shoba Ramalingam

K. Raviraja Pandian, J.—This appeal is filed against the order of the Tribunal Madras ''C Bench dated 19-11-2007 in IT(SS)A No. 209/Mad/2006 in respect of the block assessment period 1996-97 to 2001-02 and from 1-4-2001 to 7-11-2001. The substantial question of law formulated in this appeal is as follows:

Whether on the facts and circumstances of the case, the Tribunal was right in holding that the income shown in the belated return after the date of search is not undisclosed income contrary to the provisions of Section 158BB(1)(c) of the Income Tax Act?

The facts of the case are as follows:

The assessee was a director of the K.K.R. ENT Hospital & Research Institute (P) Ltd. Search u/s 132 took place on 7-11-2001 in the case of Dr. K.K. Ramalingam, managing director of K.K.R. ENT Hospital & Research Institute (P) Ltd. The assessee is the daughter of. Dr. K.K. Ramalingam and she is also a director in M/s KKR Hospital & Research Centre (P) Ltd. The assessee received a salary and hire charges from M/s KKR ENT Hospital & Research Institute (P) Ltd. besides house property income and income from other sources. The assessee maintained regular books of accounts and paid advance tax in respect of the above incomes. For the assessment years 1999-2000 to 2001-02 falling within the block period the assessee did not file returns of income within the due date and ultimately were filed only after the date of search. The assessing officer following the decision of this court in the case of B. Noorsingh Vs. Union of India and Others, treated the income of the above-stated two years as undisclosed income and did not give credit for the advance tax paid in respect of the same, and thus completed the block assessment. Aggrieved by the order of the assessing officer, the assessee filed an appeal before the Commissioner (Appeals), who followed the decision of The Assistant Commissioner of Income Tax Vs. A.R. Enterprises, holding that the total income declared in the regular returns cannot be treated as undisclosed income and held the case in favour of the assessee. The revenue filed appeal against the orders passed by the Commissioner (Appeals)-1 to the Tribunal, which allowed the appeal in favour of the assessee following the decision of this court in the case of A.R. Enterprises (supra). The correctness of the said order of the Tribunal is challenged by the revenue in this appeal.

Learned senior counsel appearing for the revenue has submitted that the issue involved in this appeal is covered by the judgment of this court in the case of Assistant Commissioner v. A.R. Enterprises (supra).

In the case of Assistant Commissioner v. A.R. Enterprises (supra), the facts are identical to the present case. In that case, the assessee was a partnership firm. A search was conducted by the revenue authorities u/s 132 of the Income Tax Act, 1961 on 23-2-1996 in the premises of M/s A.R. Mercantile (P) Ltd. During the course of search, certain books and documents relating to the assessee were seized. On scrutiny, it was noticed that the assessee earned taxable income for the assessment year 1995-96, but no return was filed till the date of search. Therefore, the assessing officer based on the material viewed the same as a detection of undisclosed income and initiated action u/s 158BD of the Act. The assessee filed returns in Form No. 2B admitting the income returned by them for the assessment years 1993-94 and 1995-96 and offered additional income to be assessed under Chapter XIV-B of the Act. The assessee also raised an objection that the assessee has already paid advance tax in three instalments to the tune of Rs. 4,80,000 and the proof of the payment of advance tax was also made available and also brought to the notice of the assessing officer that for the assessment year 1995-96, even though the assessee did not file return, but paid advance tax. Nevertheless, the assessing officer opined that since the assessee failed to file return as on the date of search, there was income, which remained undisclosed. Thus, invoking Chapter XIV-B of the Act, the assessing officer brought the income as an undisclosed income. In those factual circumstances, the Division Bench of this Court, after taking into consideration the judgments of the Division Bench of the Gauhati High Court in Dr. Mrs. Alaka Goswami and Dr. Anil Kumar Goswami Vs. Commissioner of Income Tax, , of the Supreme Court in the case of Commissioner of Income Tax, Bhopal Vs. Shelly Products and Another, , and of the Full Bench of the Gujarat High Court in the case of Saurashtra Cement and Chemical Industries Ltd. Vs. Income Tax Officer, , wherein it was observed that "there cannot be any manner of doubt that when the assessee pays advance tax the advance tax payment is assessed by the assessee on the basis of self assessed income. The advance tax reflects the income admitted by the assessee. When the assessee pays the advance tax he discloses his income at the particular point of time, which may or may not be taxable on a subsequent date, on the return submitted by him u/s 139 or under Sub-section (1) of Section 142 because of the assessee''s tax planning or he may claim exemption and refund of the tax paid, but for doing so he will have to show the income on which the advance tax is paid and then claim refund or complete exemption, as the case may be, as permissible under the relevant statute." Disclosure of the self-assessed income by the assessee would only entitle the assessee to claim refund or exemption from tax as the assessee is required to show the income on the basis of which the advance tax is paid or ultimate claim is made. The moment the advance tax is paid the taxable income at that point of time is disclosed to the revenue by the assessee. It cannot be said by the revenue that the advance tax paid would or may not be the tax payable on the basis of the ultimate assessment made and, therefore, it cannot be taken to be a representation of the income on which the advance tax was paid" held in favour of the assessee.

In view of the decision of this Court, as the question of law formulated in this appeal has already been decided against the revenue, the appeal is dismissed.