1999 (12) TMI 830 - AT - Income Tax

Validity of Notice Upheld, Assessing Officer's Additions Deleted for Lack of Evidence

Nilesh R. Shah Versus Assistant Commissioner of Income-tax

The Tribunal held that the notice issued under Section 158BD was valid as the diary found during the search contained details relevant to the assessee's ... - Issues Involved:1. Applicability of Section 158BD.2. Determination of undisclosed income for various assessment years.Summary:1. Applicability of Section 158BD:The assessee contested the applicability of Section 158BD, arguing that the search warrant was issued in the name of A. R. Mercantile Pvt. Ltd., and no records or materials pertaining to the assessee's undisclosed income were seized. The Tribunal held that u/s 158BD, notice can be issued if the Assessing Officer is satisfied that any undisclosed income belongs to a person other than the one searched. It is not necessary for the search to be conducted at the premises of the assessee. Since a diary containing details of shares purchased by the assessee was found during the search, there was a prima facie case for issuing notice u/s 158BD. The assessee's objection to the notice was rejected.2. Determination of Undisclosed Income:Assessment Year 1987-88:The Assessing Officer treated a cash credit of Rs. 9,000 as undisclosed income due to the absence of a confirmatory letter from Smt. Rita B. Sheth. The Tribunal held that since the cash credit was shown in the trial balance filed with the return of income, and no new material was found during the search, the addition was unjustified.Assessment Years 1988-89, 1989-90, and 1990-91:The cash credit of Rs. 9,000 was treated as undisclosed income for each year. The Tribunal found that this was the same cash credit from 1987-88 and held that it could not be treated as undisclosed income for these years.Assessment Year 1991-92:A cash credit of Rs. 12,000 was treated as undisclosed income. The Tribunal held that there was no new information from the search to prove the cash credit was not genuine, and thus, the addition was unjustified.Assessment Year 1993-94:A gift of Rs. 20,000 from Shri Rushmi Kant Patel was treated as undisclosed income. The Tribunal found that the details of the gift were filed with the return of income, and no new material was found during the search to dispute its genuineness. The addition was deleted.Assessment Year 1994-95:Gifts totaling Rs. 1,40,627 were treated as undisclosed income. The Tribunal held that the Assessing Officer did not provide any evidence from the search to prove the gifts were not genuine. The addition was deleted.Assessment Year 1995-96:The Assessing Officer included Rs. 11,74,100 declared by the assessee and Rs. 70,000 for low marriage expenses as undisclosed income. The Tribunal held that since the assessee had paid advance tax and no duplicate books were found, the income declared could not be considered undisclosed. The addition for marriage expenses was also deleted due to lack of evidence.Inadequate Drawings:The Assessing Officer's additions for inadequate household drawings were deleted as there was no evidence or material to support the estimates.Conclusion:The appeal was allowed, and all additions made by the Assessing Officer were deleted.