2011 (11) TMI 692 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 12,62,707/- based on slips found during search.
2. Deletion of addition of Rs. 91,770/- for unexplained investment.
3. Deletion of addition of Rs. 4,00,000/- for unexplained investment.
4. Deletion of addition of Rs. 34,631/- for unexplained investment in FDR.
5. Deletion of addition of Rs. 7,05,988/- for credit entries in bank account.
6. Cross objection by the assessee regarding the assessment under section 158BC.

Detailed Analysis:

1. Deletion of Addition of Rs. 12,62,707/- Based on Slips Found During Search:
The Department contended that the CIT(A) erred in deleting the addition of Rs. 12,62,707/- without appreciating that the slips were found during a search and seizure operation and the onus under section 132(4A) was not discharged by the assessee. The assessee argued that the slips did not contain any details linking them to her and were likely scribbled by guests. The CIT(A) found that the slips did not indicate the purpose or nature of the figures and were not corroborated with any seized jewellery. The Tribunal upheld the CIT(A)'s decision, noting that the slips were "dumb documents" and the Department failed to link them to the assessee.

2. Deletion of Addition of Rs. 91,770/- for Unexplained Investment:
The Department argued that the CIT(A) erred in deleting the addition of Rs. 91,770/- based on a slip found during the search. The assessee disowned the slip, stating it pertained to Urja Gas Service where her son worked. The CIT(A) accepted this explanation, and the Tribunal upheld the CIT(A)'s decision, noting the slip could not be treated as unexplained expenditure of the assessee.

3. Deletion of Addition of Rs. 4,00,000/- for Unexplained Investment:
The Department contended that the CIT(A) erred in deleting the addition of Rs. 4,00,000/- without considering that no loan from Satwanti Monga was reflected in the statement of affairs. The assessee explained that the investment source was a loan from Satwanti Monga, which was repaid. The CIT(A) found that the payment was made from Satwanti Monga's bank account and was repaid, treating it as an accommodation loan. The Tribunal upheld the CIT(A)'s decision, noting the property purchase was declared in regular returns and the loan was repaid.

4. Deletion of Addition of Rs. 34,631/- for Unexplained Investment in FDR:
The Department argued that the CIT(A) erred in deleting the addition of Rs. 34,631/- for an FDR found during the search. The assessee claimed the FDR was held jointly with her sister-in-law for convenience. The CIT(A) deleted the addition, noting the FDR was not corroborated with evidence showing it belonged to the assessee. The Tribunal, however, found no justification in the deletion and accepted the Department's ground, treating the FDR as undisclosed investment.

5. Deletion of Addition of Rs. 7,05,988/- for Credit Entries in Bank Account:
The Department contended that the CIT(A) erred in deleting the addition of Rs. 7,05,988/- for credit entries in a bank account. The assessee explained the entries, which were not considered by the AO. The CIT(A) found the entries were in the normal course of maintaining a bank account and were declared in returns filed over the years. The Tribunal upheld the CIT(A)'s decision, noting the entries were adequately explained and declared.

6. Cross Objection by the Assessee Regarding the Assessment Under Section 158BC:
The Department contended that the cross objection filed by the assessee was time-barred. The Tribunal found the cross objection was filed after a gap of over three years without an application for condonation of delay. Accordingly, the cross objection was dismissed as time-barred.

Conclusion:
The Tribunal partly allowed the Department's appeal, accepting the ground regarding the FDR of Rs. 34,631/- as undisclosed investment, but rejected other grounds. The cross objection by the assessee was dismissed for limitation.