1998 (2) TMI 142 - AT - Income Tax

Tribunal partially allows appeal, deletes Rs. 26,84,652 addition by AO. Emphasizes evidence over assumptions.

The Tribunal allowed the appeal in part, deleting the addition of Rs. 26,84,652 made by the AO during block assessment proceedings. The Tribunal ... - Issues Involved:The appeal against the order passed by the Asstt. CIT, (Inv). Circle (1), Surat, u/s 158BC of the IT Act, 1961 for the block period of asst. yrs. 1989-90 to 1995-96 and 1st April, 1995 to 14th Feb., 1995.Details of the Judgment:Issue 1: Addition of Rs. 26,84,652The assessee disputed the addition of Rs. 26,84,652 made during the assessment proceedings for the period falling within the block period. The AO considered Circular No. 717 and found incriminating papers for a specific period. The assessee argued that only two papers were found, relating to transactions of minimal value, and these transactions were referable to other branches. The AO made the addition based on presumptions and assumptions, which the assessee contested citing a Tribunal decision.Issue 2: Interpretation of Circular and Tribunal DecisionThe Tribunal considered Circular No. 717 and a Tribunal decision which emphasized that assessments u/s 158BC should be limited to undisclosed income found as a result of search, without drawing presumptions. The Tribunal noted that the AO made a substantial addition based on assumptions, contrary to the circular and legal principles. Consequently, the Tribunal deleted the impugned addition of Rs. 26,84,652, allowing the appeal in part.This judgment highlights the importance of adhering to legal provisions and circulars while making additions during block assessments u/s 158BC of the IT Act, emphasizing the need for concrete evidence rather than presumptions or assumptions in determining undisclosed income.