Salary income declared after search proceedings would be deemed as undisclosed even if tax was deducted there from

ASSTT. CIT V. MINOOBHAI D. IRANI [2014] 47 taxmann.com 289 (Gujarat)

Where return was filed by assessee after block assessment proceedings were initiated by the AO, the intention of assessee was not to disclose income and, therefore, same was required to be treated as an undisclosed income as per section 158B(b).

Facts:

The issue that arose for consideration of the High Court was:

Whether non-disclosure of the salary income (by not filing the return of income) on which the tax was deducted at source, could be treated as "undisclosed income" within the meaning thereof in Section 158B(b)?

The High Court held in favour of revenue as under:

• The Supreme Court in Asstt. CIT v. A.R. Enterprises [2013] 29 taxmann.com 50 held that since the tax to be deducted at source is also computed on the estimated income of an assessee, such deduction cannot result in the disclosure of the total income for the relevant assessment year'.
• The assessee filed the return declaring the income only when the block assessment proceedings were initiated by the AO. It indicated that there was no intention on the part of assessee to disclose the income.
• Therefore, the salary income was required to be treated as undisclosed income within the meaning thereof in section 158B(b). The Tribunal had materially erred in not treating the income earned by way of salary as 'undisclosed income'.