2003 (5) TMI 5 - HC - Income Tax

Appeal on unexplained investments in purchases under Income-tax Act disposed with directions for further verification

Radhakishan Ramniranjan Versus Commissioner of Income-Tax And Another.

The appeal against the addition of unexplained investment in purchases under section 69 of the Income-tax Act, 1961 was disposed of with the Court ... Unexplained investment - section 69 - Income from Undisclosed Sources - 'Whether, Tribunal was justified in sustaining an addition of Rs. 85,000 as made by the Assessing Officer being unexplained investment in the purchases under section 69 and whether the finding of the Tribunal is perverse?' - whether the assessee has surrendered any amount on account of excess stock found during the search, the Tribunal should verify the fact whether he has surrendered that amount on account of excess stock found during the search. If he has surrendered any amount against the excess stock, then the very addition is not justified, therefore, the Tribunal was required to verify the fact Issues involved: Appeal against addition of unexplained investment in purchases under section 69 of the Income-tax Act, 1961.Analysis:The appeal in question challenges the addition of Rs. 85,000 as unexplained investment in purchases under section 69 of the Income-tax Act, 1961. The appellant, engaged in a semi-wholesale business of Iron and hardware, declared an income of Rs. 75,270 for the relevant assessment year of 1990-91. A search conducted under section 132(1) of the Act led to the addition of Rs. 85,000 due to loose slips found at a partner's residence. The Commissioner of Income-tax (Appeals) initially deleted this addition, but the Tribunal sustained it, emphasizing that the burden was on the assessee to prove the ownership of the seized loose papers. The Tribunal noted that the partner's possession of the papers implied their connection to the firm, as partners act as agents binding the firm. The Tribunal found no evidence to refute the Assessing Officer's conclusion that the transactions on the slips were related to the firm's business. The Tribunal directed the appellant to verify if any amount was surrendered for excess stock found during the search, suggesting that if the surrendered amount covered the excess stock value, no further addition would be justified. The Tribunal was tasked with verifying if the surrendered amount against excess stock exceeded Rs. 1,20,000 and determining if any additional amount should be added based on the loose slips.The appellant argued that they had surrendered the excess stock value and cash found during the search, contrary to the Tribunal's finding. The Court directed the Tribunal to reexamine whether the appellant had surrendered Rs. 1,20,000 against the excess stock. If the excess stock value did not surpass this amount, no further addition was warranted. The Tribunal was instructed to ascertain if any additional amount should be added based on the loose slips found during the search. Consequently, the impugned order was set aside, and the matter was remanded to the Tribunal for a fresh determination regarding the potential addition based on the loose slips.In conclusion, the appeal against the addition of unexplained investment in purchases under section 69 of the Income-tax Act, 1961, was disposed of with the Court directing the Tribunal to verify the surrender of excess stock value and determine if any further addition was warranted based on the loose slips found during the search.