Payment of advance tax does not amount to disclosure of income
29th January, 2013
The Supreme Court of India has held that payment of Advance Tax by an assessee, by itself, would not tantamount to disclosure of income for the relevant assessment year.
Deciding on a batch of Special Leave Petitions, the Court examined ‘Total income’, ‘undisclosed income’ and ‘current income’ as provided in various sections of the Indian Income Tax Act, 1961. It stated that advance tax is paid on an estimation of income and is based on current income, not total income. The Apex Court observed that it would be a misconstruction of the law to construe the undisclosed income for purposes of Chapter XIVB as an “estimate” of the total income, which is assessable and chargeable to tax. The statutory obligation to file return has to be fulfilled to disclose income.
The assessee had contended that income in respect of which advance tax had been paid, though after initiation of search proceedings, cannot be treated as undisclosed income for the purpose of application of Chapter XIVB of the Act (Block assessment).