IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN THURSDAY, THE 17TH DAY OF NOVEMBER 2011/26TH KARTHIKA 1933 ITA.No. 184 of 2010 ( ) ======================= (ITA.562(COCH)/2007 of I.T.A.TRIBUNAL,COCHIN BENCH) APPELLANT/RESPONDENT IN ITA ============================ A.P.MOHAMMED, AMBALAPARAMBIL HOUSE CHOOLAM VAYAL KUNNAMANGALAM CALICUT. BY ADV.DR.K.B.MUHAMED KUTTY (SR.) SRI.K.M.FIROZ RESPONDENT/APPELLANT IN ITA ============================== THE INCOME TAX OFFICER, WARD-2(3), RANGE-2 KOZHIKODE. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 17-11-2011 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX ANNEXURE A: TRUE COPY OF ASSESSMENT ORDER DT.27.3.2006. ANNEXURE B: TRUE COPY OF LETTER DT.27.3.2006 FILED BY THE APPELLANT BEFORE THE ASSESSMENT AUTHORITY. ANNEXURE C: TRUE COPY OF MEMORANDUM OF APPEAL DT.2.5.2006 FILED BY THE APPELLANT BEFORE THE FIRST APPELLATE AUTHORITY. ANNEXURE D: TRUE COPY OF THE FIRST APPEAL ORDER DT.21.3.2007. ANNEXURE E: TRUE COPY OF THE APPEAL MEMORANDUM FILED BY THE REVENUE BEFORE THE APPELLATE TRIBUNAL DT.20.4.2007. ANNEXURE F: TRUE COPY OF APPELLATE TRIBUNAL ORDER DT.30.4.2009. TRUE COPY P.S. TO JUDGE C.R. C.N.RAMACHANDRAN NAIR & K.VINOD CHANDRAN, JJ. .................................................................... I.T. Appeal No.184 of 2010 .................................................................... Dated this the 17th day of November, 2011. JUDGMENT Ramachandran Nair, J. The appeal is filed by the assessee against the order of the Tribunal confirming income escaping assessment completed under Section 147 of the Income Tax Act for the assessment year 1998-99. We have heard Senior counsel Dr.K.B.Mohammedkutty appearing for the appellant and Standing Counsel for respondent. 2. The assessee was a partner in a firm wherefrom he was getting taxable income by way of salary for services rendered as working partner and interest on excess maintained in the capital account. According to assessee, there was omission to pay tax for several years and, therefore, he filed a declaration under the Voluntary Disclosure of Income Scheme 1997. Even though income was accounted for six years prior to the financial year 1997-98, the assessee admittedly did not file a proper application under the V.D.I. scheme or remitted the tax ITA 184/2010 2 on the due date. Consequently based on assessee's own declaration of income, the Assessing Officer invoked the provisions of Section 147 and assessed income to tax against which first appeal filed was allowed by the C.I.T.(Appeal) on the ground that assessment is not tenable because income should have been assessed during the assessment years relevant to which disclosures were made. Against the C.I.T.(Appeal)'s order department filed appeal before the Tribunal stating that since the disclosure was made in the financial year 1997-98, the income so disclosed is assessable as income of the assessment year 1998-99. The Tribunal allowed the department's appeal against which this appeal is filed. 3. During hearing Senior counsel submitted that the department had no material to make assessment except the disclosure made by the assessee which was for six years prior to the financial year 1997-98. According to Senior counsel, when assessment is made based on disclosure made by the assessee, the assessment should be in terms of the disclosure so made i.e. declaration of income for six financial years including financial year 1997-98. Senior counsel has also referred to ITA 184/2010 3 decision of the Madhya Pradesh High Court in KHANDELWAL OIL INDUSTRIES VS. COMMISSIONER OF INCOME TAX reported in 223 ITR 176. Even though the contention raised by the appellant's counsel is tenable, what we notice is that income disclosed is not in the form of any deposits or income based on accounts. On the other hand, the income disclosed is nothing but cash and gold held by the assessee. When assessee has not complied with the conditions of V.D.I. Scheme, necessarily the Officer gets powers under Section 147 to make an income escaping assessment, though based on information furnished by the assessee himself. The unexplained cash and gold are assessable under Section 69A in the assessment year relevant for the previous year in which disclosure is made which in this case is 1998-99 as the disclosure was made on 31.12.1997. We, therefore, notice that the assessment under Section 147 read with Section 69A of the Income Tax Act is perfectly in order. Even though Tribunal's order is not rendered on the right reasons, we uphold the order for the reasons above stated. It is seen that penalty proceeding under Section 271(1C) is separately initiated besides demanding interest. We feel there is no ITA 184/2010 4 scope for penalty because assessment itself is based on disclosure made by the assessee and no more addition is made over and above the declared income. So far as interest demanded under Section 234A and 234B is concerned, if interest is charged except with reference to the assessment year concerned i.e. 1998-99, the department will grant waiver of interest over and above what could be charged treating the income as that of the financial year 1997-98. If by chance penalty is levied, on production of copy of this judgment, the order will be rectified and recalled. C.N.RAMACHANDRAN NAIR Judge K.VINOD CHANDRAN Judge pms ITA 184/2010 5