ITAT emphasizes VDIS declarations, rejects AO's additions for undisclosed investments & deposits.

The ITAT allowed both appeals by the assessee, emphasizing the importance of considering declarations under VDIS, 1997. For the Assessment Year 1996-97, the addition of Rs. 3 lakhs made by the Assessing Officer was deleted as the declared sum under VDIS covered investments in land, motor cycle, and cash. Similarly, for the Assessment Year 1998-99, the addition of Rs. 1,26,723 for unexplained deposit in the bank account was deleted as it was part of the declared cash amount under VDIS, 1997.

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Issues:
1. Addition made by Assessing Officer for Assessment Year 1996-97 without giving credit for declaration under VDIS, 1997.
2. Addition made by Assessing Officer for Assessment Year 1998-99 on account of unexplained deposit in bank account.

Analysis:

Issue 1:
The assessee challenged the addition made by the Assessing Officer for the Assessment Year 1996-97, estimating business income at Rs. 3 lakhs without considering the declaration under VDIS, 1997. The Assessing Officer proceeded ex-parte under Section 144 r.w.s. 147 of the Income Tax Act due to non-filing of return. The CIT (Appeals) upheld the addition, stating the absence of a certificate under Section 68(2) of VDIS, 1997. The ITAT found that the assessee declared Rs. 3,20,000 under VDIS, 1997 for investments in land, motor cycle, and cash. The Assessing Officer's estimation lacked specifics on household expenses and goods investment. Referring to Section 68 of VDIS, 1997, the ITAT held that no addition could be made for the declared sum of Rs. 3,20,000. Thus, the addition of Rs. 3 lakhs was deleted.

Issue 2:
For the Assessment Year 1998-99, the Assessing Officer added Rs. 1,26,723 as unexplained deposit in the bank account, treated as unexplained cash credit under Section 68 of the Act. The CIT (Appeals) upheld this addition. The ITAT noted the assessee's declaration of Rs. 1,57,500 under VDIS, 1997 for cash, covering the amounts for both 1996-97 and 1997-98. As the cash in the bank was part of the declared amount, the ITAT ruled that no addition could be made for the declared cash. Consequently, the addition of Rs. 1,26,723 was deleted in this case as well.

In conclusion, both appeals by the assessee were allowed by the ITAT, emphasizing the importance of considering declarations under VDIS, 1997 while making additions for undisclosed income or deposits.

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