COMMISSIONER OF INCOME-TAX Vs. K.P. CHANDRADASAN

JUDGEMENT

(1.) The departmental appeal filed under Section 260A of the Income-tax Act arises from the order of the Income-tax Appellate Tribunal disposing of an appeal from a block assessment made under Section 158BC of the Income-tax Act. The question arising for consideration is whether the assessee was entitled to exclusion of additional income returned for the assessment years 1995-96 and 1996-97 and the income in respect of which tax was deducted at source for the assessment year 1997-98 in the computation of income for the block period 1-4-1986 to 5-3-1997 under Section 158BB of the Act. The assessment under Chapter XIV-B was initiated pursuant to a search carried out on 5-3-1997 in the premises of the assessee. As on the date of search, the assessee had already filed return for the assessment year 1995-96. However, subsequent to the date of search, the assessee filed a revised return on 6-3-1997 disclosing a further income of Rs. 68,143 for the said year. For the assessment year 1996-97, though the time for filing return was over as on the date of search, the assessee had not filed return. However, after the date of search, the assessee filed regular return on 31-3-1997. Even before the block assessment was taken up, the Assessing Officer based on the revised return filed for the assessment year 1995-96 and the regular return filed for the assessment year 1996-97, completed the assessments by issuing intimation under Section 143(1)(a) of the Act. So far as assessment year 1997-98 is concerned, since the search was on 5-3-1997, relevant previous year had not expired and the time for filing return for the said assessment year was also not over. In view of the completion of the assessment, though after the search was made, the assessee claimed exclusion of additional income offered in the revised return filed for the year 1995-96 and the income returned for the year 1996-97 from the block assessment. So far as the assessment year 1997-98 is concerned, the assessee claimed exclusion of the income on the ground that by virtue of deduction of tax on contract payments, such income was accounted, and therefore excludable from the block period assessment.

(2.) The Assessing Officer, however, rejected the claim for the reason that revised return filed for the year 1995-96 and original return filed beyond the due date for filing the return for the year 1996-97 were not to be considered for the purpose of exclusion of the income from the block assessment. So far as the assessment year 1997-98 is concerned, the Assessing Officer took the view that assessee has not written the books of account including the contract receipts, out of which the estimated income arises, and therefore, the assessee was not entitled to exclusion. Accordingly, the Assessing Officer included the additional income returned for the year 1995-96, the income return and assessed for the year 1996-97 and the income in respect of TDS was made by the awarders for the year 1997-98, in the block assessment made under Section 158BC of the Act. The assessee succeeded in the two levels of appeal before the first appellate authority and before the Tribunal. This appeal is filed against the order of the Tribunal confirming the order in first appeal.

(3.) We have heard learned standing Counsel of the Income-tax Department appearing for the appellant and learned Counsel appearing for the assessee.