1999 (12) TMI 45

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....s demanded treating the undisclosed income as Rs. 1,14,88,410. On appeal to the Income-tax Appellate Tribunal, the Tribunal partly allowed the appeal. An addition of Rs. 16,82,100 made towards the alleged unaccounted commission to V. R. Koneru, a non-resident Indian, and the addition of Rs. 95,93,200 made towards the alleged unexplained share capital investments in the names of friends and relatives of the directors and the additions made to two other minor items were deleted. The Assessing Officer was directed to reframe the assessment in the light of the appellate order. Learned senior standing counsel for the Income-tax Department has urged that the findings of the Tribunal are vitiated by perversity in approach and on account of plac....

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....nto account the unfructified transaction though clandestine it was. Coming to the second item of dispute, at the time of search, the directors of the company admitted that a sum of Rs. 74.2 lakhs was undisclosed income representing investments made by them in the names of their friends and relatives. The Assessing Officer called for details of the investments made by friends and relatives in respect of the balance amount of Rs. 95.93 lakhs. A statement giving the details along with the confirmation letters of the shareholders was filed. The Assessing Officer did not accept the confirmation letters for the reason that they were in stereotyped forms and moreover they did not contain the necessary particulars regarding the extent of agricul....

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....c worth and tenor of such letters. If crucial facts throwing light on the source of investment are not discernible from the letters, the Tribunal could have very well eschewed those letters from consideration. But, this is a matter of appreciation of evidence and we do not think that a substantial question of law arises on that account. Moreover, we fail to see how merely by reason of unsatisfactory explanation relating to the source of investment by the shareholders, the money invested on shares should be treated as income of the assessee. If the ostensible shareholders failed to explain the means of investment, that should have been treated as unexplained income in their hands. In order to add it to the income of the assessee there must b....