Commissioner of Income Tax vs Dr. Sangeeta Verma and Dr. K.B. Verma

S.K. Kulshrestha, J.—The above appeals u/s 260A of the IT Act, 1961 (for short, ''the Act''), have been filed against the common order dt. 30th Oct., 2002 of the Tribunal, passed in appeal IT(SS)A No. 4/Ind/1999 and IT(SS)A No. 5/Ind/1999 for the block period 1st April, 1986 to 20th Dec, 1996 by the Tribunal, Indore, by which the Tribunal has deleted the addition made by the AO with regard to the income of the assessee during the said block period falling below the income exigible to Income Tax.

Both the appeals have been admitted on the following question of law:

Whether the Tribunal, was justified in holding that no additions can be made in the hands of the assessee pursuant to a notice/return submitted u/s 158BD of the IT Act for want of any material available against the assessee ?

It is not disputed before us that certain documents were unearthed in the search conducted on 20th Dec, 1996 under the provisions of Section 132 of the Act in which agreement to sell pertaining to an agricultural land indicating consideration in the sum of Rs. 46.46 lacs was found. On the basis that the price indicated by the said document was higher than the sale price shown by the assessee, the proceedings were initiated. Since the assessee was one of the co-owners of the agricultural land, notice, as required by Section 158BD, was served on the assessee and the assessee filed return for the block period declaring total undisclosed income as NIL. The AO completed the assessment on 23rd Feb., 1999 in the case of Dr. Sangeeta Verma and assessed undisclosed income for the block period at Rs. 14,74,750 and raised tax demand of Rs. 8,84,850. On appeal, however, the Tribunal added the income returned for the years 1993-1994 to 1996-1997 to the undisclosed income of the block period observing that the income of these years pertained to income from other sources and had no nexus with the documents found during the search. The income below the taxable limits was deducted from the undisclosed income u/s 158BB(1)(c). On the ground that the return was filed after the date of the search and seizure and such deduction was not permissible under the provisions of Section 158BB(1)(c), the Department has filed these appeals.

In ITA. No. 31/2003, after service of the notice u/s 158BD, the assessee filed return declaring income for the block period as NIL. The assessment was completed on 12th Feb., 1998 and demand was raised in the sum of Rs. 5,82,704.

Learned Counsel for the appellant does not dispute that even if both the cases are taken together in respect of the disputed demand, the demand raised is below 1 lac and in the context of these admitted facts, learned senior counsel for the respondents has invited attention to CBDT circular to the effect that in case where the tax liability is less than Rs. 100,000, the Department should not file any appeal. In this connection, our attention has been invited to Asstt. CIT v. Aradhana Oil Mills (2002) 30 ITC 446 (DB), in which this Court has observed that when no explanation was furnished why the Department had filed an appeal when the tax effect was less than the minimum prescribed by the circular, the appeal was dismissed. Learned Counsel has also invited the attention to Commissioner of Income Tax Vs. Purshottamlal Tamrakar Uchehra, , in which construing Section 158BB(1)(ca), the Division Bench of this Court has ruled that even from the block period if during certain years the liability does not accrue on the ground that the income evidenced by the books of account is below the taxable limit, such income is not taxable. Learned Counsel, therefore, contends that firstly, the Department was estopped from agitating the matter in view of the Board''s circular which is binding on the Department and even assuming that the Department, in ignorance or patent violation of the said circular, has filed this appeal, Ion merits, since the liability relates to the years in which the income was not [taxable, being below the taxable limits, nothing survives in these appeals for decision of this Court.

Insofar as the question of applicability of Section 158BB(1)(ca) is concerned, attention has also been invited to a recent decision of this Court in IT Appeal No. 87/2003 (CIT v. Pankaj Kumar Jain) decided on 29th March, 2006, in which it has been held that since Section 158BB(1)(ca) was brought on record only in the financial year 2002-03, w.e.f., 1st April, 2003, though with retrospective effect from 1st July, 1995, it was not expected that the authorities considering the cases prior to the period when the said provision was brought on the statute book, could have contemplated that such a provision would be brought on the statute book and rejected the claim of the assesses on the ground that the return was filed or the income was disclosed after the date of the search and seizure. In the present case, in ITA No. 30/2003, he has passed order on 23rd Feb., 1999, while in ITA No. 31/2003, the order was passed by him on 12th Feb., 1998. Learned Counsel submits that both these dates being anterior to the date of the amendment, at that point of time, the provisions contained in Section 158BB(1)(ca) were not on the statute. However, it has frankly been conceded that on the date the Tribunal was considering the matter in appeal, the provision was on the statute book and was applicable retrospectively from 1st July, 1995.

Be that as it may, in the present case, without considering as to the retrospective applicability of the provision contained in Section 158BB(1)(ca) of the Act on the ground that the provision was brought on statute while the matter was pending before the Tribunal, the fact remains that the Revenue is proposing to tax the income which is not taxable otherwise, being below the taxable limits. Thus, in view of the decision in CIT v. Purshottamlal Tamrakai Uchehra (supra), the said income would not be taxable irrespective of the fact whether the same has been disclosed after the search or seizure or before. Under these circumstances we do not see any merit in the above appeals filed by the Department .

The appeals are dismissed but with no order as to costs.