2010 (3) TMI 932 - AT - Income Tax

Summary

Issues Involved:
1. Unexplained cash found during the search.
2. Unexplained investment in fixed deposits.
3. Unaccounted sales of 24 shops in Kunal Complex.
4. Unexplained investment in the construction of the third floor in Kunal Complex.
5. Unaccounted investment in jewelry.

Detailed Analysis:

1. Unexplained Cash Found During the Search:
The only issue in the assessee's appeal was the addition of Rs. 61,249 as unexplained cash found during the search. The assessee's counsel stated that the assessee was not interested in prosecuting this issue due to the small amount involved. Consequently, this issue was dismissed as not pressed.

2. Unexplained Investment in Fixed Deposits:
The Revenue's appeal contested the deletion of Rs. 6,71,020 added by the Assessing Officer (AO) as unexplained investment in fixed deposits. The AO noted that during the search, fixed deposits in the names of various family members were found but not reflected in the income returns or books of accounts. The Commissioner of Income-tax (Appeals) (CIT(A)) deleted this addition, explaining that the fixed deposits were from explained sources such as income, sale proceeds, and savings. The Tribunal agreed with the CIT(A)'s findings, noting that the interest income from these deposits was declared in the returns and the sources were explained. Thus, the Tribunal dismissed the Revenue's appeal on this issue.

3. Unaccounted Sales of 24 Shops in Kunal Complex:
The Revenue challenged the deletion of Rs. 85,18,776 added by the AO as unaccounted sales consideration of 24 shops in Kunal Complex. The AO treated the total deposits in certain bank accounts during the block period as unaccounted sales. The CIT(A) deleted this addition, explaining that the deposits were from various sources such as interest, dividends, and inter-group transfers, and not solely from the sale of shops. The Tribunal found that the sale proceeds were correctly accounted for and taxed under section 44AD, and the deposits in the bank accounts were not solely from the sale of shops. Therefore, the Tribunal upheld the CIT(A)'s deletion of the addition.

4. Unexplained Investment in the Construction of the Third Floor in Kunal Complex:
The Revenue also contested the deletion of Rs. 7,53,186 added by the AO as unexplained investment in the construction of the third floor in Kunal Complex. The AO estimated the cost of construction based on seized documents but did not consider the actual cost incurred. The CIT(A) deleted this addition, explaining that the cost of construction was from explained sources and part of regular transactions. The Tribunal agreed with the CIT(A)'s findings, noting that the cost of construction was correctly accounted for and the AO's estimation was not accurate. Thus, the Tribunal upheld the CIT(A)'s deletion of the addition.

5. Unaccounted Investment in Jewelry:
The Revenue's appeal also included the issue of Rs. 71,26,000 added by the AO as unaccounted investment in jewelry. The AO interpreted certain notings on loose papers as indicating large purchases of jewelry. The CIT(A) deleted this addition, explaining that the notings were in grams and the amounts were small. The Tribunal found that the jewelry seized during the search was accounted for and belonged to various family members. The Tribunal agreed with the CIT(A)'s findings and upheld the deletion of the addition.

Conclusion:
The Tribunal dismissed the assessee's appeal as not pressed and dismissed the Revenue's appeal on the merits, upholding the CIT(A)'s deletions of the additions made by the AO. The order was pronounced in the open court on March 5, 2010.