Addition on Undisclosed Income under the Income Tax Act cannot be made based on mere voluntary Disclosure: Madras HC Dismisses Income Tax Appeal [Read Order]
![Addition on Undisclosed Income under the Income Tax Act cannot be made based on mere voluntary Disclosure: Madras HC Dismisses Income Tax Appeal [Read Order]](https://www.taxscan.in/wp-content/uploads/2023/10/Addition-on-Undisclosed-Income-Income-Tax-Act-Income-tax-Madras-High-Court-Dismisses-Income-Tax-Appeal-voluntary-Disclosure-Income-Tax-Appeal-TAXSCAN-1.jpg "Addition on Undisclosed Income under the Income Tax Act cannot be made based on mere voluntary Disclosure: Madras HC Dismisses Income Tax Appeal [Read Order]")
The Madras High Court has held that the addition of undisclosed income under the Income Tax Act, 1961 cannot be made based on mere voluntary disclosure and dismissed the Income Tax appeal. BMN Steels Emporium (Chennai), the petitioner challenged the three writ petitions filed challenging the impugned notices for the assessment years 2015-16, 2016-17 and 2017-18. The short...
The Madras High Court has held that the addition of undisclosed income under the Income Tax Act, 1961 cannot be made based on mere voluntary disclosure and dismissed the Income Tax appeal.
BMN Steels Emporium (Chennai), the petitioner challenged the three writ petitions filed challenging the impugned notices for the assessment years 2015-16, 2016-17 and 2017-18. The short question that arises for consideration is whether the impugned assessment proceeding made solely based on the statement obtained from the petitioner during the survey under Section 133A of the Income Tax Act, 1961 (“IT Act”) can be sustained.
The petitioner is a company engaged in the business of trading carbon and alloy steel iron bars. During the relevant assessment years, the petitioner had filed its return in terms of the IT Act. A survey under Section 133A of the IT Act was conducted on the premises of the petitioner on 08.03.2019 and statements were obtained during the said survey wherein the petitioner had offered a low net profit percentage @ 1.09 % as against a net profit percentage of 3 % (mistakenly mentioned as 5%) offered by others in the same line of business.
Based on the said statement, notices were issued under Section 148 of the IT Act on 31.03.2021, to which, the petitioner submitted its objection interalia raising the issue of jurisdiction of the assessing authority to issue notices solely based on the statement obtained under Section 133A of the IT Act.
It was submitted that the impugned notices under Section 148 dated 31.03.2021 are challenged on the basis that a statement under Section 133A of the Act, cannot be the sole basis for making assessment.
A single judge bench of Justice Mohammed Shaffiq observed that there is merit in the submission made by the counsel for the respondent that the writ petitions at this stage are premature and thus ought not to be entertained.
To Read the full text of the Order CLICK HERE
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