COMMISSIONER OF INCOME-TAX Vs. RAMESHWAR LAL AHUJA

JUDGEMENT

(1.) THESE two appeals are directed against the same order of the Income Tax Appellate Tribunal and, therefore, they are being disposed of by a common judgment. One appeal has been filed by the Commissioner of Income Tax and the other one by the assessee, namely, Rameshwar Lal Ahuja.

(2.) THE facts relevant for the disposal of the two appeals may be noticed. The residential premises of assessee, Rameshwar Lal Ahuja, were searched and certain seizures were made, as per the provision of Section 132 of the Income Tax Act, 1961, on June 21, 1996. Simultaneously, a survey under Section 133A of the Income Tax Act was also undertaken in respect of the business premises of M/s. Beauty Palace, M/s. Unique Hotel and M/s. Pushpak Hotel in which the assessee was a partner. On the basis of the material seized during the aforesaid search and seizure operation, a notice under Section 158BC of the Income Tax Act was issued to the assessee on July 3, 1996, calling upon him to furnish return for the block period April 1, 1986, to June 20,1996. The assessee did not respond. Reminders were issued but of no avail. Ultimately, a questionnaire was sent to the assessee along with a notice. It was pointed out in the notice that hearing would take place on June 5, 1997, and in case the assessee did not file return, assessment would be done ex parte. The assessee did not file return but submitted reply to the questionnaire and appeared along with a counsel on June 5, 1997, before the Assessing Officer. The Assessing Officer passed the order of assessment on June 26, 1997, indicating therein the following undisclosed income and holding the assessee liable to pay a sum of Rs. 30,24,756 on account of tax and also ordering the initiation of penalty proceedings under Section 271(1)(b) of the Act:

(3.) THE Income Tax Commissioner in his Appeal No. 2 of 2000 has challenged only this part of the order of the Appellate Tribunal. It is alleged that there was absolutely no material on record indicating that any amount of interest was embedded in the amount of fixed deposits and in any case the interest received/accrued was also the income of the assessee and hence subject to taxation.