2010 (6) TMI 798 - AT - Income Tax

Summary

Issues Involved:
1. Principle of natural justice violated.
2. Retraction of statements.
3. Addition of Rs. 1.50 crores.
4. Treating Smt Sushila Malge as benamidar.

Summary:

1. Principle of Natural Justice Violated:
The Tribunal noted that the Assessing Officer (A.O) did not follow the direction of the Hon ITAT passed on 11.1.2008, which specifically required the A.O to provide copies of statements and evidence to the assessee. The A.O's failure to furnish the statement recorded u/s 132(4) dated 14.7.1996 and other documents, despite repeated requests, was deemed a violation of the principles of natural justice. The Tribunal emphasized that the orders of the Tribunal are binding on all tax authorities and must be complied with.

2. Retraction of Statements:
The A.O made the addition of Rs. 1.50 crores based on a statement recorded u/s 132(4) on 14.7.1996, which the assessee subsequently retracted and clarified on 17.7.1996. The Tribunal noted that the A.O did not properly consider the retraction and clarification letters dated 17.7.1996 and 30.7.1996, which indicated that the initial statement was not binding.

3. Addition of Rs. 1.50 Crores:
The A.O estimated the undisclosed income of Rs. 1.50 crores, ignoring the details and explanations provided by the assessee regarding bank credit entries and loan confirmations. The Tribunal found that the determination of the undisclosed income was not based on the analysis of the evidence seized during the search operations but rather on the alleged offer made by the assessee in the statement given u/s 132(4) on 14.7.1996.

4. Treating Smt Sushila Malge as Benamidar:
The A.O treated the assessee's wife, Smt Sushila Malge, as a benamidar and assessed the income shown in her hands as the income of the assessee. The Tribunal found that the A.O failed to appreciate that Smt Sushila Malge had been assessed to tax for over ten years and merely because her husband managed her business affairs, it could not be concluded that she was a benamidar without any material evidence.

Conclusion:
The Tribunal set aside the assessment orders and restored the matter to the A.O with clear directions to frame the assessment de-novo after supplying the copies of the statements recorded on 13 and 14th July 1996 u/s 132(4) of the Act. The Tribunal also imposed a cost of Rs. 5000/- on the A.O for non-compliance with the Tribunal's specific directions and violation of judicial discipline. The appeals filed by both the assessees were allowed for statistical purposes.