SHANTI DEVI KHANDELWAL vs. U O I and ORS

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR. DB INCOME TAX APPEAL NO.58/2002. Smt. Shanti Devi Khandelwal C/o M/s Rajdeep Hotel, Bapu Bazar, Jaipur. Versus 1. Union of India through the Chief Commissioner of Income Tax, New Central Revenue Building, Statue Circle, Jaipur. 2. Deputy Commissioner of Income Tax, Central Circle-1, New Central Revenue Building, Statue Circle, Jaipur. DATE OF ORDER ::: 04.10.2016. HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE BANWARI LAL SHARMA Mr. Aditya Vijay for the appellant. Mr. Anil Mehta for the respondent. 1. By way of this appeal, the appellant assessee has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal preferred by the assessee confirming the order of CIT (Appeals). 2. Counsel for the appellant has contended that a search was conducted at the residence of the assessee on 2.8.1996. The original assessment was completed u/s 158BC/143(3) on 30.08.1997 at an undisclosed income of Rs.14,97,539/-. On appeal, the I.T.A.T., Jaipur in ITSSA No.44/J:P/1997 dated 16.7.1998 has allowed certain relief and restored back to re-examine the issue of undisclosed income for the years for which the assessee is not required to file the return as per provisions of Sec.139(10) of the I.T. Act. Accordingly, the

2 AO, after providing sufficient opportunity of being heard to the assessee, has held that in the assessment year 1990-91, the Tribunal has upheld the addition of Rs.10,000/-, therefore, the income for the assessment year 1990-91 disclosed by the assessee at Rs.17,690/- is now worked out to Rs.27,690/-, which is above the taxable limit and similarly the income for the assessment year 1995-96 disclosed by the assessee at Rs.45,550/- is also above the taxable limit. He, therefore, treated the undisclosed income for the assessment years 1990- 91 and 1995-96 at Rs.73,240/- (Assessment year 1990-91 Rs.27,690/- for the assessment year 1995-96) and passed the order u/s 158BC/143(3)/ set aside on 15.3.2001. 3. While admitting the appeal, following questions of law were framed by this court on 03.07.2002. “Whether in the facts and circumstances of the case the I.T.A.T. was correct in law in having disregarded the definition of undisclosed income as prescribed under section 158B(b) and in having treated the below taxable incomes also as undisclosed incomes? Whether in the facts and in the circumstances of the case, the ITAT can be justified in having taken the view that although tax has been evaded by the appellant only in respect of an amount of Rs.10,000/- yet undisclosed income for the Block Period will be taken at Rs.73,240/-?” 4. Counsel for the appellant has relied upon Section 158B(b) of the Income Tax Act which was made effective from 01.07.1995 and the judgment of this Court in Chain Sukh Rathi

3 Vs. Commissioner of Income Tax & anr.- (2004)170 ITR 368, more particularly, para 13 which reads as under: “When some material was seized connecting the concealed income, the ITO can compute the income on that basis but that should be computed and taxed in accordance with the provisions of Act, 1961. Therefore, the tax exemption limit has to be kept in mind and to that extent, income not chargeable to tax, tax should not be charged on that part of the income.” 5. Counsel for the respondents contended that the view taken by all the authorities is just and proper and he contended that the appeal deserves to be dismissed. 6. We have heard Mr. AdityaVijay, learned counsel for the appellant. 7. The Tribunal has committed error in considering the undisclosed income under the provisions of Section 158B(b) of the Income Tax Act. 8. In view of the judgment of this Court, we are of the opinion that the question no.1 requires to be decided in favour of the assessee. Question no.2, therefore, is not required to be answered. 9. The appeal stands disposed of accordingly. (BANWARI LAL SHARMA), J. (K.S. JHAVERI), J. bblm