1996 (3) TMI 535 - AT - Income Tax

Summary

Issues Involved:
1. Legality of the block assessment order u/s 158BC.
2. Addition of Rs. 5,25,90,000 as unexplained investment.
3. Opportunity of hearing before approval u/s 158BG.
4. Ownership and possession of seized gold.
5. Unexplained investment in the renovation of house.

Summary:

1. Legality of the block assessment order u/s 158BC:
The appellant argued that the block assessment order dated 14-11-1996 is void and illegal as no opportunity of hearing was granted by the Commissioner before approving the assessment order. The Tribunal admitted these additional grounds as they pertain to legal issues not requiring fresh facts.

2. Addition of Rs. 5,25,90,000 as unexplained investment:
The assessing officer made an addition of Rs. 5,25,90,000 for unexplained investments in gold and house renovation. This included:
- Rs. 3,05,50,000 for gold brought by passengers at Delhi International Airport.
- Rs. 2,17,40,000 for gold brought by passengers in November.
- Rs. 3,00,000 for house renovation.

3. Opportunity of hearing before approval u/s 158BG:
The Tribunal held that the Commissioner's approval u/s 158BG is an administrative procedure intended to safeguard the assessee from excessive or arbitrary additions by the assessing officer. Therefore, there is no mandatory requirement for the Commissioner to grant an opportunity of being heard to the assessee before granting approval.

4. Ownership and possession of seized gold:
The Tribunal sustained the addition of Rs. 2,44,22,090 for the value of 49 kgs of gold seized from the appellant's possession in Room No. 206, Agarwal Hotel, Ahmedabad. The appellant failed to discharge the onus of proving that he was not the owner of the gold. The Tribunal rejected the appellant's claim of being merely a carrier and noted discrepancies in his statements.

5. Unexplained investment in the renovation of house:
The Tribunal deleted the addition of Rs. 3,00,000 towards unexplained investment in house renovation, considering it a pittance compared to the sustained addition of Rs. 2,44,22,090, and held that the investment is explained from the undisclosed income brought to tax.

Conclusion:
The Tribunal partly allowed the appeal, sustaining the addition of Rs. 2,44,22,090 and deleting the rest of the additions made by the assessing officer.