THE ASSISTANT COMMISSIONER OF INCOME TAX, CHENNAI versus M/S A.R. ENTERPRISES

Citation: [2013] 1 S.C.R. 295 · Decided: 14-01-2013 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2013] 1 S.C.R. 295 
THE ASSISTANT COMMISSIONER OF INCOME TAX, 
CHENNAI 
v. 
M/S A.R. ENTERPRISES 
(Civil Appeal No. 2688 of 2006) 
JANUARY 14, 2013 
[D.K. JAIN, H.L. DATTU AND 
JAGDISH SINGH KHEHAR, JJ.] 
INCOME TAX ACT, 1961 
A 
B 
c 
Chapter XIV-B - Scope of - Explained - ss. 158 BB, 158 
BC and 158 BO read with ss. 132 and 139 -Detection of 
undisclosed income of assessee during search of another 
concern - Plea of assessee that since it had paid Advance 0 
Tax, its income could not be said to be undisclosed - Held: 
Payment of Advance Tax, which is based upon estimated 
income, cannot tantamount to the disclosure of the total 
income, which must be declared in the return - Disclosure of 
total income by filing of return u/s 139 is mandatory even after E 
payment of Advance Tax by an assessee - In view of the fact 
that the assessee had not filed its return of income by the due 
date, Assessing Officer was correct in assuming that the 
assessee would not have disclosed its total income. 
s. 158 -
"Undisclosed income" - Held: Undisclosed 
F 
income is defined by s. 158B as that income "which has not 
been or would not have been disclosed for the purposes of 
this Act" - The only way of disclosing income, on the part of 
an assessee, is through filing of a return, as stipulated in the 
Act and, therefore, an "undisclosed income" signifies income 
G 
not stated in the return filed - Income to be deemed as 
undisclosed - Explained 
s. 158 -
"Undisclosed income" and tax deducted at 
295 
H 
296 
SUPREME COURT REPORTS 
[2013] 1 S.C.R. 
A source - Held: Since the tax to be deducted at source is also 
computed on estimated income of an assessee for relevant 
financial year, mere deduction of tax at source, also, does not 
amount to disclosure of income, nor does it indicate the 
intention to disclose income most definitely when the same 
B is not disclosed in the returns filed for assessment year 
concerned. 
The respondent-assessee, a firm which came into 
existence in June 1992, on discovery of some documents 
C in a search operation carried out in premises of another 
concern on 23.2.1996, was found to have not filed return 
of its taxable income for the assessment year 1995-96. 
The assessing officer initiated action u/s 158 BO of the 
Income Tax Act, 1961, and rejected the plea of the 
assessee that since in relation to assessment year 1995-
D 96 it had already paid Advance Tax in three instalments, 
income for that period could not be deemed to be 
undisclosed. The assessing officer proceeded to 
compute total undisclosed income for the block period 
1993-94 to 1995-96 (upto the date of search) treating the 
E income returned by the assessee for the period 1995-96 
as nil in terms of s.158 BB(1)(c) of the Act. The Tribunal 
and the High Court held that the payment of Advance Tax 
itself implied disclosure of income on which Advance Tax 
F 
was paid. 
In the instant appeals filed by Revenue, the question 
for consideration before the Court was: whether payment 
of Advance Tax by an assessee would by itself 
tantamount to disclosure of income for the relevant 
G assessment year; and whether such income could be 
treated as undisclosed income for the purpose of 
application of Chapter XIVB of the Act? 
Allowing the appeals, the Court 
H 
HELD: Scope of Chapter VIV-B and its provisions: 
ASSISTANT COMMISSIONER OF INCOME TAX, 
297 
CHENNAI v. A.R. ENTERPRISES 
1.1. Chapter XIV-8 of the Income Tax Act, 1961 
A 
consisting of ss.1588 to 1588H was inserted by the 
Finance Act, 1995 with effect from 1.07.1995. The heading 
of Chapter XIV-8 reads "Special Procedure for 
Assessment of Search Cases". It was introduced for the 
assessment of undisclosed income determined as a 
B 
result of search carried out u/s 132 of the Act or 
requisitioning of documents or assets u/s 132A of the 
Act. The chapter is a self-contained code and gets 
attracted as a result of search proceedings initiated by 
the .income tax authorities u/s 132 of the Act, c 
notwithstanding any other provisions of the Act except 
to the extent provided for in the Chapter. In the instant 
case, resort to this Chapter was required to be made 
since on conduct of search at the premises of the other 
concern, documents of the respondent-assessee were 
0 
recovered, that indicated non-disclosure of income by the 
latter. In such a scenario, s.15880 gets attracted. [para 
11-12] [309-8-G] 
1.2. A bare reading of s.15880 makes it clear that the 
condition precedent f

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