2002 (1) TMI 1264 - AT - Income Tax

Summary

Issues Involved:

1. Addition of undisclosed cash found during the search.
2. Addition of unexplained investment in properties.
3. Addition of unexplained investment in household items.
4. Addition of discrepancy in loose papers.
5. Addition of gifts received from various parties.
6. Addition of unexplained investment in jewelry.

Issue-wise Detailed Analysis:

1. Addition of undisclosed cash found during the search:
The assessee contested the addition of Rs. 5,69,000 as unexplained cash found during the search. The Assessing Officer (AO) did not accept the claim that Rs. 69,000 was withdrawn from M/s. Remy Industries and added the entire amount as unexplained cash. The Tribunal found that Rs. 17,400 belonged to the daughter of the assessee and Rs. 20,000 could be kept for emergencies, thus treating Rs. 40,000 as unexplained income. Regarding the cash found at West Punjabi Bagh, the Tribunal noted that the premises were occupied by the assessee's son and other family concerns, and thus the cash should not be added to the assessee's income but could be considered in the hands of the son or other family concerns. The majority view upheld the deletion of Rs. 5,29,000, while the dissenting view suggested restoring the matter to the AO for further verification.

2. Addition of unexplained investment in properties:
The AO added Rs. 39,62,000 based on a letter found during the search, indicating investments in properties. The assessee had declared Rs. 30 lakhs as undisclosed income. The Tribunal held that the AO's action of adopting the higher figure was unjustified and restricted the addition to Rs. 30 lakhs, considering the letter as authentic evidence under Section 132(4A) and the provisions of Chapter XIV-B of the Income-tax Act.

3. Addition of unexplained investment in household items:
The AO added Rs. 1 lakh based on the assessee's surrender during the search, which was confirmed by the Authorized Representative. The assessee failed to reconcile the household items with the balance sheets of various companies. The Tribunal upheld the addition, finding it reasonable and justified.

4. Addition of discrepancy in loose papers:
The assessee had included Rs. 50,000 as unexplained investment while filing the return for the block assessment period. The Tribunal upheld this addition.

5. Addition of gifts received from various parties:
The assessee argued that the gifts were disclosed in regular assessment returns and balance sheets filed before the search. The Tribunal, referring to a previous order, held that the gifts could not be considered as undisclosed income under Chapter XIV-B and deleted the addition.

6. Addition of unexplained investment in jewelry:
The AO added Rs. 8,25,000 based on the assessee's statement during the search, surrendering Rs. 20 lakhs as unexplained investment in jewelry. The Tribunal found that the jewelry belonged to the assessee's wife and daughter-in-law, who had already disclosed Rs. 11,75,000 as unexplained investment. The majority view deleted the addition in the assessee's hands, while the dissenting view suggested restoring the matter to the AO for further verification.

Separate Judgments:
The Accountant Member and Judicial Member concurred on several points but differed on the treatment of cash found at West Punjabi Bagh and the addition of unexplained investment in jewelry. The Third Member concurred with the Accountant Member, leading to the deletion of the additions in the assessee's hands and the partial allowance of the appeal.