2006 (1) TMI 73 - HC - Income Tax

High Court affirms Tribunal's addition to undisclosed income for catering business. Evidence crucial in determining undisclosed income.

The High Court upheld the Income-tax Appellate Tribunal's decision to add Rs. 50,000 to undisclosed income from the catering business for the block ... Block Assessment - 'Whether Tribunal was justified in upholding the addition of Rs. 50,000 on the true interpretation of the provisions of Chapter XIV-B for making an assessment of undisclosed income for the block period without being based on any evidence or material found during the course of the search relatable to this addition of Rs. 50,000?' - it cannot be said that determination of the undisclosed income from catering business for the block period is based on extraneous material, as is sought to be pleaded by learned counsel for the assessee. - in the absence of any infirmity in the appreciation of evidence by the Tribunal, no substantial question of law arises from its order – appeal dismissed Issues:1. Appeal against the order of the Income-tax Appellate Tribunal regarding the addition of undisclosed income.2. Interpretation of provisions of Chapter XIV-B for making an assessment of undisclosed income.3. Justification of estimating income based on evidence found during a search.4. Dispute over the addition of Rs. 50,000 to the undisclosed income from catering business.Analysis:The High Court heard an appeal under section 260A of the Income-tax Act, 1961, challenging the order of the Income-tax Appellate Tribunal regarding the addition of undisclosed income. The appeal questioned the justification of upholding the addition of Rs. 50,000 without concrete evidence during the block period from April 1, 1998, to November 17, 1999. The assessee argued that income computation under section 158BB should solely rely on evidence found during the search, citing previous court decisions. However, the court emphasized that undisclosed income for the block period must be based on evidence from the search or other materials available with the Assessing Officer. The court noted that the Assessing Officer estimated the income from catering business based on statements obtained during the search and diaries seized, which was not challenged. Consequently, the court found that the determination of undisclosed income was not based on extraneous material and dismissed the appeal, stating that no substantial question of law arose from the order.In summary, the court upheld the Tribunal's decision to add Rs. 50,000 to the undisclosed income from the catering business for the block period, emphasizing the importance of evidence found during the search in computing undisclosed income. The court rejected the appeal, stating that no substantial question of law arose from the order, as the determination of undisclosed income was supported by the evidence available with the Assessing Officer and the statements obtained during the search.