2011 (5) TMI 928 - AT - Income Tax

Summary

Issues Involved:
1. Restriction of addition by CIT(A) from Rs. 1.75 crores to Rs. 13,20,950.
2. Treatment of gift of Rs. 2,50,000 from HUF.
3. Assessment of jewellery found during search.
4. Assessment of cash found during search.
5. Validity of addition based on statements made u/s 132(4).

Summary:

1. Restriction of Addition by CIT(A):
The revenue's grievance is that the CIT(A) erred in restricting the addition to Rs. 13,20,950 against Rs. 1.75 crores added by the Assessing Officer. The CIT(A) deleted the addition of Rs. 1.75 crores on the ground that the Assessing Officer did not reference the seized material to substantiate this addition.

2. Treatment of Gift of Rs. 2,50,000 from HUF:
The revenue contended that the CIT(A) erred in directing the Assessing Officer to treat the gift of Rs. 2,50,000 received by the assessee from HUF as part of the cash amounting to Rs. 13,20,950 found at the time of search. The Assessing Officer added Rs. 2,50,000, arguing that HUF does not fall within the exclusion of relatives provided in section 56(2)(v) of the Income-tax Act, 1961.

3. Assessment of Jewellery Found During Search:
The assessee argued that the jewellery found during the search belonged to various family members and was accounted for in the books. The CIT(A) directed the Assessing Officer to verify the market value of the jewellery as on the date of the search and assess capital gain after allowing indexation for the cost of jewellery. The assessee was aggrieved by this direction.

4. Assessment of Cash Found During Search:
The assessee contended that the cash found during the search was accounted for in the books maintained by various entities. The CIT(A) accepted this explanation partly and directed the Assessing Officer to assess the cash of Rs. 13,20,950 as income of the assessee after verifying the cash balance as per books. The assessee was aggrieved by these directions.

5. Validity of Addition Based on Statements Made u/s 132(4):
The revenue argued that the assessee made a voluntary disclosure of Rs. 1 crore during the search, which was later increased to Rs. 1.75 crores. The assessee did not retract this statement and confirmed it in a letter dated 09.01.2006. The CIT(A) deleted the addition, but the tribunal found that the statement made u/s 132(4) is an admissible evidence and the assessee failed to demonstrate that the statement was mistaken or untrue. The tribunal restored the addition made by the Assessing Officer.

Conclusion:
The tribunal set aside the order of the CIT(A) and restored that of the Assessing Officer, allowing the revenue's appeal and rejecting the assessee's appeal. The decision was pronounced in the open court on 06.05.2011.