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Issues Involved:
1. Whether the addition of Rs. 60 lakhs based on the entries made in the loose paper of the diary found during the course of search is justified. 2. Whether the Department was justified in making the addition of Rs. 60 lakhs on the basis of one seized paper without any corroborative evidence. 3. Whether the Tribunal can decide an issue which had reached finality and was not agitated by any of the parties to the appeal. Summary: Issue 1: Addition of Rs. 60 lakhs based on diary entries The Assessing Officer (AO) made an addition of Rs. 60 lakhs based on a loose paper seized during a search operation at the assessee's premises. The paper, dated November 15, 1992, contained entries reflecting cash and expenses on silver utensils, gold ornaments, and miscellaneous items. The AO rejected the assessee's explanation that the entries were mere planning for his daughter's marriage, concluding that the entries indicated actual possession of Rs. 60 lakhs on September 26, 1992. Issue 2: Justification of addition without corroborative evidence The Tribunal examined whether the addition was justified without corroborative evidence. The Accountant Member argued that the addition was based on suspicion without substantive proof, noting that the Department did not find any corroborative evidence during the search to support the possession of Rs. 60 lakhs. The Judicial Member, however, contended that the entries in the diary were sufficient evidence under section 68 of the Income-tax Act, and the onus was on the assessee to prove otherwise. Issue 3: Tribunal's authority to decide an issue of finality The Judicial Member expressed concerns about the AO's failure to record specific findings as directed by the Commissioner of Income-tax (Appeals) regarding consignment sales. However, the Accountant Member held that the consignment sales issue had reached finality and was not subject to further debate. Third Member's Decision: The Third Member concurred with the Accountant Member, concluding that the loose paper could not be considered as "books of account" under section 68. The entries were deemed planning rather than actual transactions, as no corroborative evidence was found to support the possession of Rs. 60 lakhs. The addition was thus based on suspicion and was not justified. Conclusion: The Tribunal, by majority opinion, held that the addition of Rs. 60 lakhs was not justified due to lack of corroborative evidence, and the explanation provided by the assessee was plausible. The appeal was allowed, and the addition was deleted.
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