1998 (2) TMI 164 - AT - Income Tax

Appeal partly allowed, deletions based on insufficient evidence, undisclosed income remanded for further examination.

SK GUPTA. Versus DEPUTY COMMISSIONER OF INCOME TAX.

The appeal was partly allowed, with the deletion of additions of Rs. 3.80 crores and Rs. 1,71,53,938 based on insufficient evidence. The matter of Rs. ... - Issues Involved:1. Addition of Rs. 3.80 crores based on a loose sheet.2. Addition of Rs. 1,71,53,938 based on torn papers.3. Addition of Rs. 10,60,000 on account of gifts received from an NRI.Summary:Addition of Rs. 3.80 Crores Based on Loose Sheet:The AO added Rs. 3.80 crores to the assessee's income based on a loose sheet captioned 'Estimates' found during a search. The assessee contended that the notings were projections and futuristic planning related to his business as an estate agent, broker, builder, and developer. The Tribunal found that the paper did not indicate any actual transactions or contain sufficient information to determine the nature of the transactions, the parties involved, or the dates. The properties mentioned (G-14, Hauz Khas, and M-37, Greater Kailash) were owned by separate entities, and their transactions were duly recorded in their respective books of accounts. The Tribunal concluded that no corroborative evidence was presented to support the AO's findings, and the addition was based on presumptions and surmises. Therefore, the addition of Rs. 3.80 crores was deleted.Addition of Rs. 1,71,53,938 Based on Torn Papers:The AO added Rs. 1,71,53,938 based on torn papers found during the search, which allegedly contained agreements to sell, receipts, and ledger pages. The assessee explained that these were pre-audited trial balances related to M/s Aerens Export Corporation, torn off after the final trial balance was prepared. The Tribunal noted that the papers did not indicate any specific transactions, parties, or dates and were found in a sewer line outside the assessee's residence, where other sewer lines joined. The Department failed to provide corroborative evidence to support the AO's findings. The Tribunal concluded that the addition could not be sustained and rejected the Departmental Representative's request to set aside the assessment for further investigation.Addition of Rs. 10,60,000 on Account of Gifts:The AO added Rs. 10,60,000, treating the gifts received from NRI J.P. Aggarwal as undisclosed income, doubting their genuineness and the donor's capacity. The assessee provided confirmations and explained the gifts were made out of natural love and affection. The Tribunal noted that the identity of the donor was not disputed, and the assessee had provided sufficient evidence regarding the donor's capacity and the genuineness of the gifts. However, the Tribunal found that the AO did not conduct necessary inquiries to rebut the assessee's evidence. The Tribunal directed the AO to re-examine the issue of Rs. 3,00,000 received by the assessee's minors and Rs. 7,60,000 received by the minors of the assessee's brothers, who were independent assessees. The matter was sent back to the AO for fresh examination.Conclusion:The appeal was partly allowed, with the deletion of the addition of Rs. 3.80 crores and Rs. 1,71,53,938, and the matter of Rs. 10,60,000 was remanded to the AO for re-examination.