2006 (7) TMI 530 - AT - Income Tax

Summary

Issues:
Appeal against addition of undisclosed income of Rs. 12,00,000 for block assessment period 1-4-1988 to 11-12-1998.

Analysis:
1. The assessee appealed against the addition of Rs. 12,00,000 as undisclosed income by the Assessing Officer, which was confirmed by the CIT(A). The money was seized from the assessee's domestic servant, who claimed it was for purchasing land. However, the Assessing Officer found discrepancies in the explanation provided by the assessee regarding the source of the cash.

2. The assessee argued that the money was intended for land purchase, not business purposes, and challenged the CIT(A)'s presumption of unaccounted cash. The Assessing Officer's refusal to accept the cash book entries was questioned, citing precedents like Anand Autoride Ltd. v. Jt. CIT and Chuharmal v. CIT for support.

3. The Departmental Representative supported the lower authorities, asserting that the seized money was unaccounted income of the assessee. The servant's inconsistent statements and lack of evidence supporting the land purchase claim were highlighted, emphasizing the need to consider surrounding circumstances as per Sumati Dayal v. CIT.

4. After reviewing the submissions and evidence, the Tribunal noted that the money seized from the servant was owned by the assessee and intended for land purchase, which did not materialize. The lack of conclusive evidence supporting the land deal and the servant's changing statements raised doubts about the transaction's authenticity.

5. The Tribunal found that the onus was on the assessee to prove the seized money was not his income. Citing the principle of human probabilities, the Tribunal upheld the addition of Rs. 12,00,000 as undisclosed income, as the surrounding circumstances indicated the money was related to the assessee's business activities.

6. Consequently, the Tribunal dismissed the assessee's appeal, affirming the CIT(A)'s decision to sustain the addition of Rs. 12,00,000 as the assessee's undisclosed income for the block assessment period.