Reassessment and on-money addition upheld where seized diary showed understated property consideration and the protective addition failed.

Reassessment under section 147(a) was treated as valid because the assessee had waived the objection before the first appellate authority, and the seized diary contained specific material showing understatement of the property consideration and failure to disclose fully and truly all material facts. The fact that the department had possession of the diary before completion of the original assessment did not mean the incriminating contents were before the assessing authority. The addition for alleged on-money payment was sustained because the diary entries, read with the agreement and wealth-tax records, supported the inference of higher consideration, while the assessee's explanation was not credibly rebutted. The corresponding protective addition in the husband's hands was cancelled once the substantive addition survived in the wife's case.

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Issues: (i) Whether the reassessment initiated under section 147(a) of the Income-tax Act was valid. (ii) Whether the addition of Rs. 1,85,900 towards alleged on-money payment for purchase of the property was sustainable, and whether the corresponding protective addition in the husband's hands could survive.

Issue (i): Whether the reassessment initiated under section 147(a) of the Income-tax Act was valid.

Analysis: The reassessment was upheld because the assessee had waived the objection before the first appellate authority and could not reopen it before the Tribunal. Independently, the seized diary contained specific details of the property transaction showing understatement of the purchase consideration, which constituted material indicating failure to disclose fully and truly all material facts. Mere possession of the diary by the department before completion of the original assessment did not mean that the precise incriminating contents were already before the assessing authority in the original proceeding.

Conclusion: The reassessment under section 147(a) was valid and the objection failed.

Issue (ii): Whether the addition of Rs. 1,85,900 towards alleged on-money payment for purchase of the property was sustainable, and whether the corresponding protective addition in the husband's hands could survive.

Analysis: The seized diary recorded the property, the seller, the date and the higher consideration of Rs. 3,76,121, whereas the agreement and wealth-tax records reflected a much lower apparent consideration. The assessee's explanation of a mistaken entry was not accepted because it was unsupported by credible evidence and was inconsistent with the vague answers given at the time of search. The contents of the seized document discharged the initial burden on the Revenue, and the assessee failed to rebut the inference that on-money had been paid. Since the addition was sustained in the wife's hands on substantive basis, the protective addition in the husband's hands could not stand.

Conclusion: The addition in the wife's hands was sustained, while the protective addition in the husband's hands was cancelled.

Final Conclusion: The Tribunal upheld the reopening and the substantive addition in the wife's case, but deleted the corresponding protective addition in the husband's case.

Ratio Decidendi: A reassessment is valid where seized material reveals a specific understatement of consideration and the assessee fails to rebut the inference drawn from such incriminating evidence; once the substantive addition is sustained in one person's hands, the corresponding protective addition in another's hands cannot survive.

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