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The Tax Publishers2012 TaxPub(DT) 2287 (Karn-HC) : (2012) 046 (I) ITCL 0530 INCOME TAX ACT, 1961 --Search and seizure--Block assessmentUndisclosed income--On search of the premises of one 'G' it was found that assessee had received certain payment pertaining to its tenants and accordingly proceedings were initiated under sections 158BC read with section 158BD. Assessee contended that in respect of the said tenants, deduction had been made at source and, therefore, the department was aware of the transaction and the transaction could not have included the undisclosed income. However, assessing officer rejected assessee's contention and passed an order adding the undisclosed income. Tribunal held that there was no undisclosed income, as admittedly deduction had been made for making the payment and wherefore the department had the knowledge of payment and income could not be said to be undisclosed and accordingly disallowed the addition made by assessing officer. Held: Was justified. Income Tax Act, 1961, Section 158BD Income Tax Act, 1961, Section 158BC IN THE KARNATAKA HIGH COURT V.G. SABHAHIT & S.N. SATYANARAYANA, JJ. CIT v. R. Sridhar IT Appeal No. 3034 of 2005 28 November, 2011 Section 158BD, read with section 158BC, of the Income-tax Act, 1961 - Block assessment in search cases - Undisclosed income of any other person Appellant by : E.R. Indrakumar and E. Sanmathi Indrakumar Respondent by : A. Shankar and M. Lava JUDGMENT *V.G. Sabhahit, J.* This appeal is filed by the revenue being aggrieved by the order passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'ITAT' for short). Bangalore, in No. 176/Bang/1997, wherein the appeal filed by the revenue has been rejected by order dated 4-5-2005. 2. The material facts in brief leading upto this appeal is as under: The assessee has submitted his return and on search of the premises of one Gopalakrishna, it was found that the assessee has received certain payment pertaining to J.S.S. College, Police Training College, House Building Society, Mysore and accordingly notice was issued to the assessee and proceedings were initiated under sections 158-BC read with section 158-BD of the Income Tax Act, 1961 (hereinafter referred to as the 'Act' for short). It was contended by the assessee that in response to the notice no incriminative material was found against the assessee and in the search made in the premises of Gopalakrishna and there was no basis for initiating proceedings under sections 158-BC read with section 158-BD of the Act. It was also contended that in respect of the said tenants, deduction had been made at source and therefore the department was aware of the transaction and the transaction could not have included the undisclosed income. However, the assessing officer by order dated 31-10-1997 rejected the contentions of the assessee and pass an order adding the undisclosed income in a sum of Rs. 73,10,704 and order issuance of demand notice for payment of tax of Rs. 43,86,422. Being aggrieved by the same, appeal was preferred by the assessee before the ITAT in ITA (SS) A. No.176 (Bang)/1997. The ITAT by order dated 4-5-2005.upheld the initiation of proceedings under sections 158-BC read with section 158-BD of the Act. There was no undisclosed income, as admittedly deduction has been made for making the payment and wherefore the department had the knowledge of payment and income cannot be said to be undisclosed and accordingly disallowed the addition made by the assessing officer amounting to Rs. 78,10,704. Being aggrieved by the order, appeal was preferred by Sridhar, as the original assessee, S. Ramachandran had died during the pendency of the assessment. Being aggrieved by the order by the ITAT dated 4-5-2005, this appeal is filed by the revenue. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2287 (Karn-HC) : (2012) 046 (I) ITCL 0530

INCOME TAX ACT, 1961

--Search and seizure--Block assessmentUndisclosed income--On search of the premises of one 'G' it was found that assessee had received certain payment pertaining to its tenants and accordingly proceedings were initiated under sections 158BC read with section 158BD. Assessee contended that in respect of the said tenants, deduction had been made at source and, therefore, the department was aware of the transaction and the transaction could not have included the undisclosed income. However, assessing officer rejected assessee's contention and passed an order adding the undisclosed income. Tribunal held that there was no undisclosed income, as admittedly deduction had been made for making the payment and wherefore the department had the knowledge of payment and income could not be said to be undisclosed and accordingly disallowed the addition made by assessing officer. Held: Was justified.

Income Tax Act, 1961, Section 158BD

Income Tax Act, 1961, Section 158BC

IN THE KARNATAKA HIGH COURT

V.G. SABHAHIT & S.N. SATYANARAYANA, JJ.

CIT v. R. Sridhar

IT Appeal No. 3034 of 2005

28 November, 2011

Section 158BD, read with section 158BC, of the Income-tax Act, 1961 - Block assessment in search cases - Undisclosed income of any other person

Appellant by : E.R. Indrakumar and E. Sanmathi Indrakumar

Respondent by : A. Shankar and M. Lava

JUDGMENT

V.G. Sabhahit, J.

This appeal is filed by the revenue being aggrieved by the order passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'ITAT' for short). Bangalore, in No. 176/Bang/1997, wherein the appeal filed by the revenue has been rejected by order dated 4-5-2005.

2. The material facts in brief leading upto this appeal is as under:

The assessee has submitted his return and on search of the premises of one Gopalakrishna, it was found that the assessee has received certain payment pertaining to J.S.S. College, Police Training College, House Building Society, Mysore and accordingly notice was issued to the assessee and proceedings were initiated under sections 158-BC read with section 158-BD of the Income Tax Act, 1961 (hereinafter referred to as the 'Act' for short). It was contended by the assessee that in response to the notice no incriminative material was found against the assessee and in the search made in the premises of Gopalakrishna and there was no basis for initiating proceedings under sections 158-BC read with section 158-BD of the Act. It was also contended that in respect of the said tenants, deduction had been made at source and therefore the department was aware of the transaction and the transaction could not have included the undisclosed income. However, the assessing officer by order dated 31-10-1997 rejected the contentions of the assessee and pass an order adding the undisclosed income in a sum of Rs. 73,10,704 and order issuance of demand notice for payment of tax of Rs. 43,86,422. Being aggrieved by the same, appeal was preferred by the assessee before the ITAT in ITA (SS) A. No.176 (Bang)/1997. The ITAT by order dated 4-5-2005.upheld the initiation of proceedings under sections 158-BC read with section 158-BD of the Act. There was no undisclosed income, as admittedly deduction has been made for making the payment and wherefore the department had the knowledge of payment and income cannot be said to be undisclosed and accordingly disallowed the addition made by the assessing officer amounting to Rs. 78,10,704. Being aggrieved by the order, appeal was preferred by Sridhar, as the original assessee, S. Ramachandran had died during the pendency of the assessment. Being aggrieved by the order by the ITAT dated 4-5-2005, this appeal is filed by the revenue.