Documents, books of accounts found after the search could be used to ascertain the true income of assessee
Jan 16, 2010 Income Tax
Those trying to evade the taxman may find that showing a lower income has just got tougher. The Bombay high court on Thursday, in a significant ruling, held that the income-tax department can rely on any relatable document when it comes to a block assessment. A bench headed by Justice D Y Chandrachud essentially made it easier for the tax officials to add or join other monies into the `income’ bracket based on surveys or search and seizures. So far, the documents that the I-T department could rely on to add amounts were on the basis of papers, bullion and money found during a search and seizure or only search operation.
In the case before the HC, the I-T department had challenged an order of the Income Tax Appellate Tribunal, which held that documents in a survey could not be used to show a higher income if the search showed otherwise. The person being assessed was one Jerry Verghese and the I-T department had added Rs 69 lakh towards his income on the basis of two different documents.
The ITAT had ruled against the department and said the additions were not permissible and rejected the assessing officer’s order.
But while overruling the ITAT decision, the HC clarified that documents which relate to the search can indeed be relied on for assessing a person’s true income.
The HC after hearing Beni Chaterjee for the I-T department and Percy Pardhiwala for Verghese, however, dismissed the IT department’s appeal after holding that in this particular the documents were not related to the search.
The order comes as a boost to the I-T department and would mean that documents such as books of accounts found after the search could be used to ascertain the true income of an individual now.
CAclubindia
