2005 (3) TMI 713 - AT - Income Tax

Summary

Issues:
Validity of block assessment and additions of Rs. 67,125 and Rs. 75,000.

Validity of Block Assessment:
The appeal challenged the validity of the block assessment, arguing that the items found in the locker were known to the department before the search, and thus not undisclosed income. The CIT(A) upheld the validity of the block assessment, citing that the items were detected during a valid search. However, all additions were not sustained except for two, which are under appeal.

Addition of Rs. 67,125:
The addition pertained to a site purchased in the name of the assessee's son, a goldsmith by profession. The son's capability to make the purchase was highlighted, emphasizing that he was a skilled artisan from a family of goldsmiths. The CIT(A) confirmed the addition based on probability, not concrete evidence. The Tribunal found no material indicating the purchase was made by the assessee and emphasized that block assessment must rely on search-detected material. The addition was deemed unwarranted and deleted.

Addition of Rs. 75,000:
This addition was an estimate of income, not based on seized documents but filed in a return. The Tribunal noted that the income was earned outside the block period and could not be taxed in block assessment. The provisions of section 158BB were deemed inapplicable as the income was not undisclosed. The Tribunal concluded that the income of Rs. 75,000 was available to explain an investment in gold and should be set off accordingly. The addition was considered unjustified and deleted.

In conclusion, the Tribunal deleted the additions of Rs. 67,125 and Rs. 75,000 made in the block assessment, partially allowing the appeal.