Search u/s 132

CIT, Erode Vs K Thangamani (Dated: December 5, 2008) Income tax - Search u/s 132 - assessee is a tax consultant - Revenue conducts a search - finds papers related to bogus TDS certificates and refund collected from Revenue - Reassessment u/s 147 - income earned by fraud added to the assessee's professional income returned in previous years - CIT(A) took the view that only 60% of refund could be added and the income be treated under Residuary head rather than 'professional' - Tribunal takes the view that it is a case of unjust enrichment and since the income was earned by fraudulent means it cannot be assessed - held, ++ The Income Tax Act treats legally earned and tainted income alike. So far as the taxman is concerned, there is nothing like an illegal income. Even if the assessee is prosecuted for committing an offence, the income of the offender is liable for assessment. And it cannot be considered as a defence that the State is becoming a party to the illegal act by sharing the ill-gotten wealth. ++ the primary function of the Income Tax Act is to bring the income of various kinds into the tax net. The Income Tax authorities are not concerned about the manner or means of acquiring income. The income might have been earned illegally or by resorting to unlawful means. Illegality tainted with the earning has no bearing on its taxability. ++ It is not possible for the income tax authorities to act like police to prevent the commission of unlawful acts but it is possible for the tax machinery to tax such income. During such process strict rules of evidence are not applicable to the income tax authorities. Those pieces of evidence which are not sufficient in ordinary legal proceedings to prove a particular fact would be sufficient for the tax officials to assess the income of an individual.: MADRAS HIGH COURT ;