1999 (5) TMI 81 - AT - Income Tax

Tribunal rules on undisclosed income based on seized document, emphasizes need for concrete evidence

DN. Kamani (Huf). Versus Deputy Commissioner Of Income-Tax.

The Tribunal partially allowed the appeal, upholding an addition of Rs. 3.35 lakhs as undisclosed income based on a seized document but deleting an ... Block Assessment, Computation Of Undisclosed Income Issues Involved:1. Legality of the assessment order u/s 143(3)/158BD.2. Validity of the addition based on seized documents.3. Applicability of presumption in determining undisclosed income.4. Justification for addition on the basis of circumstantial evidence.Summary:1. Legality of the Assessment Order u/s 143(3)/158BD:The appeal by the assessee was against the order dated 27-12-1996 of the DCIT, Special Range, Jamshedpur, passed u/s 143(3)/153BD of the IT Act. The assessee contended that no books of account or incriminating documents were found from their possession, thus questioning the authenticity of the document used for the assessment.2. Validity of the Addition Based on Seized Documents:During a search operation u/s 132, a document marked as page 34 of HS-8 was seized from Mr. H.S. Grewal's residence, detailing payments made for a flat. The Assessing Officer noted discrepancies between disclosed sale proceeds and actual payments, leading to an addition of Rs. 45,53,134 as undisclosed income. The Tribunal found the document to be genuine and upheld the addition of Rs. 3.35 lakhs as undisclosed income from Mr. Grewal but did not approve the addition of Rs. 42,18,134 for the remaining flats, citing lack of direct evidence.3. Applicability of Presumption in Determining Undisclosed Income:The Assessing Officer presumed that similar 'on money' payments were received for other flats based on the seized document. However, the Tribunal held that presumption alone, without corroborative evidence, is insufficient for making additions u/s 158BD. The Tribunal emphasized that undisclosed income must be based on concrete evidence rather than presumption or guesswork.4. Justification for Addition on the Basis of Circumstantial Evidence:The Tribunal noted that while the document indicated 'on money' for one flat, there was no evidence to support similar payments for other flats. The Tribunal referenced several judicial decisions disapproving additions based on documents seized from third parties without corroborative evidence. The Tribunal concluded that the addition of Rs. 42,18,134 was based on mere presumption and conjecture, thus not sustainable under the special provisions of Chapter XIV-B.Conclusion:The Tribunal partially allowed the appeal, upholding the addition of Rs. 3.35 lakhs based on the seized document but deleting the addition of Rs. 42,18,134 due to lack of direct evidence. The matter was referred to a Third Member due to differing opinions among the Bench members, who ultimately agreed with the deletion of the larger addition, emphasizing the need for concrete evidence in block assessments under Chapter XIV-B.