2008 (8) TMI 897 - HC - Income Tax

Block assessment u/s 154B - Addition as undisclosed income - basis of certain bank statements discovered during the post search inquiry - Gift received from non-resident individuals found in the course of a search. HELD THAT - The Tribunal placed reliance on the decision of this Court in CIT v. Ravi Kant Jain 2001 (3) TMI 52 - DELHI HIGH COURT hold that the computing of undisclosed income pursuant to a search operation can only be done on the basis of evidence found as a result of search. It is therefore clear that the assessment in the block period can only be done on the basis of the evidence found as a result of search. Following the same we feel that the finding returned by the Tribunal in the impugned judgment with regard to the bank statements cannot be interfered with. In Vishal Aggarwal 2005 (5) TMI 33 - DELHI HIGH COURT the Tribunal in a similar situation had returned the finding that there was nothing in the assessment order to show that any evidence was found during the search to suggest that the gifts were bogus. The gifts having been declared in the returns of income fell outside the purview of Chapter XIV-B of the Income Tax Act 1961. In such a similar situation this Court in Vishal Aggarwal (Supra) did not interfere with the findings and conclusions returned by the Tribunal and was of the view that no substantial question of law arose for the consideration of this Court. We also take a similar view and find that no interference with the impugned order of the Tribunal is called for on this ground also. The appeal is dismissed.

Summary

Issues:
1. Addition based on bank statements discovered during post search inquiry.
2. Addition on account of alleged bogus gifts received from non-resident individuals.

Analysis:

Issue 1: Addition based on bank statements
The first issue pertains to the addition made by the Assessing Officer based on bank statements discovered during the post search inquiry. The appellant challenged this addition of Rs. 3,10,000 as undisclosed income. The Commissioner of Income-tax (Appeals) deleted this addition, stating that the bank statements were not recovered during the search and thus could not be considered as evidence for the addition. The High Court upheld this decision, emphasizing that the assessment in the block period must be based on evidence found as a result of the search, as per the statutory provisions.

Issue 2: Alleged bogus gifts from non-resident individuals
The second issue raised by the appellant concerned the additions made by the Assessing Officer on the grounds that gifts of Rs. 6,50,000 received from non-resident individuals were bogus. The Commissioner of Income-tax (Appeals) also deleted this addition, noting that during the search, only gift deeds and affidavits supporting the gifts were found, with no incriminating material indicating the gifts were bogus. The Tribunal concurred, highlighting that the documents supporting the gifts were already available with the assessee and that there was no evidence found during the search to suggest the gifts were not genuine. The High Court referred to previous judgments emphasizing that for undisclosed income assessment in search cases, incriminating material must be found during the search, which was not the case here. Therefore, the Tribunal's decision to delete the addition on the alleged gifts was upheld.

In conclusion, the High Court dismissed the appeal, affirming the decisions of the Commissioner of Income-tax (Appeals) and the Tribunal in deleting the additions made by the Assessing Officer.