Smt. Krishna Khanuja vs Asst. Commissioner of Income Tax

This is assessee''s appeal u/s 260A of the Income Tax Act calling in question tenability of an order dated 8.2.2008 passed by the Income Tax Appellate Tribunal, Indore Bench, Indore in the matter of restricting the grant of set off/adjustment to the appellant assessee.

Late Sardar Singh Rajput was a resident of Ganjbasoda and was carrying out various activities pertaining to giving money on loan i.e. money lending and by calling for security for the loan advanced in the form of ornaments, both silver and gold. He was also carrying out various activities connected to money lending. In the premises of Late Sardar Singh Rajput situated in Ganjbasoda a raid was conducted by the Income Tax department. In the meanwhile, Sardar Singh Rajput expired and the present applicant the legal heir came into picture. Assessment was conducted and in the assessment process the assessee surrendered the entire amount of unaccounted income seized in the raid and filed a return under Form 2B and the entire undisclosed income was declared as income for the assessment year in question. The amount comes to Rs. 1,84,75,571/-. Assessment proceedings were held and assessment orders were passed and both the assessee and the department filed appeals before the Commissioner, Appeals and thereafter before the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal having decided the matter as indicated herein above, present appeal is filed by the assessee and the only question posed for consideration of this Court is the following:-

Whether on the facts and circumstance of the case the assessee was entitled to full set off/adjustment of Rs. 1,11,20,958/- representing interest income on account of having already offered for tax the assets of Rs. 1,84,75,571/- representing application/utilization of the interest income ?

Shri Sumit Nema, learned counsel for the assessee appellant argued that once the entire undisclosed income was accepted then the adjustment and set-off to the extent of Rs. 1,11,20,955/- representing interest income on the amount should have been granted instead of restricting it to only Rs. 20 Lacs. Referring to findings recorded by the Tribunal, various judgments of the Income Tax Tribunals in this regard, some of which is relied upon in the order and another judgment of Calcutta High Court in the case of Commissioner of Income Tax Vs. Ashim Krishna Mondal, , Shri Sumit Nema argued that once the assessee has disclosed the entire income and when the same was accepted and assessed for tax, then the assessee is entitled to full set off and no interest on the income on account of interest should be imposed and in restricting the same it is said that an error has been committed.

Shri Sanjay Lal refuted the aforesaid and submitted that the Appellate Authorities having already granted substantial relief to the appellant. Based on the totality of the circumstances no other indulgence into the matter is called for.

We have heard learned counsel for the parties and perused the record. From the record, it is seen that while recording the finding with regard to the interference into the matter, learned Appellate Tribunal has taken note of certain judgments of the Indore Bench of the Tribunal in the case of (2006) 100 ITD 301 and has come to the conclusion that the entire addition may be required to be deleted but having considered so it has restricted the deletion only to the extent of Rs. 20 Lacs. It is not known as to why the principles laid down in the said judgment referred to has not been followed. Similarly the principles laid down by the Calcutta High Court in the case of Ashim Krishna Mondal (supra) which also support the contentions advanced by Shri Sumit Nema. As the learned Tribunal has restricted the adjustment only to the extent of Rs. 20 Lacs and inspite of having taken note of the order of Tribunal has not granted full set off, we are of the considered view that the matter should be remanded back to the Tribunal for reconsideration of the matter and taking a decision afresh after considering the judgments pertaining to entitlement of the assessee for claiming full set off.

In view of the above, we remand the matter to the Tribunal with a direction to consider the question of adjustment to the assessee to the tune of Rs. 1,11,20,959/- with regard to the undisclosed income which was surrendered, the remand is only to the limited extent as indicated herein above i.e. with regard to the question in this appeal, all other questions decided are not re-opened, they have attained finality.

With the aforesaid, the matter stands disposed of.

c.c. as per rules.