THE COMMISSIONER OF INCOME TAX-II vs. SRI HARRI JOSEPH

The assessee was in appeal before the Tribunal and the Tribunal on the ground of the assessee's mother having filed a return conceding capital gains, set aside the addition of Rs.60 lakhs as against the assessee. By Annexure-A, the assessment of the assessee was completed taking as undisclosed income, various credits in the bank account between 08.08.2005 and 23.11.2005. Out of the total amount of Rs.98,18,244/-, Rs.60,00,000/- according to the assessee represented the unaccounted receipt on the sale of the property by his mother. The property is said to have actually fetched Rs.74,00,000/- and the mother, the owner of - 3 - the property, deposited Rs.60,00,000/- in the account of the assessee. The document of conveyance, however, showed a value of only Rs.14,00,000/-. This was admitted by the assessee. A letter produced from the purchaser also confirmed the same. The Tribunal merely on the ground of a return having been filed, reversed the addition with respect of Rs.60,00,000/-.

The assessment year is 2006-07. The sale of the property was in the previous year of the assessment year. The return of income filed by the mother was on 27.08.2013. Though the return was filed, there was nothing done by the Department on the same especially since six years had elapsed by the time the return was filed. If at all, the Department could take up proceedings, for the assessment year 2006-07, it could have been only prior to 31.03.2013. The return was filed by the mother, on 27.08.2013. In such circumstance, it cannot be said that the income that was added on to the assessee had already suffered capital gains tax at the hands of the mother. The fact remains that the amounts were credited to the account of the assessee and it remained as undisclosed income insofar as the assessee having returned only Rs.1,17,830/- in the subject assessment year.

The learned Counsel for the assessee would in fact point out an order issued under Section 271(1)(c) of the Income Tax Act, 1961 wherein the Income Tax Officer had found that since there was an explanation offered for the source of Rs.60,00,000/-, the assessee could be absolved from penalty to that extent. It is, hence, the submission of the assessee that the explanation could be taken note of for the purpose of assessment also. It is to be noticed that the mother, who was the owner of the property who sold the property, did not return the income from the sale of the property. The amounts also were credited to the accounts of the assessee, who also did not disclose the income before the Assessing Officer. In such circumstances, there cannot be said to be a double taxation on the very same income. The mother obviously did not file any return within time for the assessment year 2006-07. The return filed on 27.08.2013 could not also be processed by the Department for reason of expiry of six years. In such circumstances, the assessee having admitted to the credit of the amounts, it has to be taken as income earned in the said year and assessed accordingly. We set aside the order of the Tribunal to that extent and restore - 5 - that of the first appellate authority, answering the question of law in favour of the Revenue and against the assessee.