COMMISSIONER OF INCOME TAX Vs. KUNDANMAL BABULAL JAIN

JUDGEMENT

(1.) THIS appeal is filed by the revenue challenging the order passed by the Tribunal, which has upheld the order passed by the Commissioner of Income Tax (Appeals), where it has held that when the identical income is accepted under VDIS, the same could not be assessed in the hands of the assessee -individual.

(2.) A search and seizure operation under Section 132 of the Income Tax Act (for short hereinafter referred to as 'the Act') was conducted on 21.10.1997 in the case of Sri Kundanmal Babulal - the assessee at his residential premises at No.47, R.T. Street, Chickpet, Bangalore and also at his business premises at No.14, Devatha Market, Bangalore. Simultaneously, survey under Section 133A of the Act was conducted on 21.10.1997 at the business premises of his son Sri B. Praveen Kumar at No.118, Devatha Market, Bangalore.

(3.) THE assessee is trading in Sarees in proprietary concern in the name of M/s. B. Praveen Kumar at No.14, Devatha Market, Bangalore. His son is also running a proprietary concern in the name of M/s. Prathik Creations at No.118, Devatha Market, Bangalore, dealing in shirt and pant pieces. On the date of search, the assessee and his family members had filed their regular returns of income up to assessment year 1995 -96 only. Returns for the assessment years 1996 -97 and 1997 -98 were not filed. In the course of search, certain incriminating documents were seized, which revealed that the unaccounted business had been carried on by the assessee and his son only as proprietary concerns. There was no material to link the business activities of the assessee with any HUF. Sworn statements were recorded on the day of search by the assessee and his family members. In the statement recorded, they have categorically admitted that the unaccounted business had been carried on by himself and his son only as a proprietary concerns in their individual capacity. Notices were issued and they were asked to file their income tax returns in their individual capacity.