2011 (12) TMI 618 - AT - Income Tax

Summary

Issues involved:
The issues involved in this judgment are:
1. Deletion of addition made by the Assessing Officer (AO) based on declaration made by the assessee during survey action u/s.133A.
2. Treatment of DEPB income and its relevance to the case.
3. Application of legal precedents in determining the case.
4. Validity of the order of the Commissioner of Income Tax (Appeals) [CIT (A)].

Deletion of Addition Based on Declaration during Survey Action u/s.133A:
The revenue challenged the deletion of the addition of `35 lakhs made by the AO as per the declaration by the assessee during a survey u/s.133A. The assessee contended that the declaration was obtained under coercion and force. The AO rejected this plea, stating that no threat or coercion was used during the survey. The AO based the addition on the under-statement of income calculated by the Survey Party. However, the CIT (A) found that the addition was made on an ad-hoc basis without concrete evidence. The CIT (A) held that the addition for previous years should not have been made in the current assessment year. The Tribunal concurred with the CIT (A) and upheld the deletion of the addition, stating that there was no proof of understated income for the relevant assessment year.

Treatment of DEPB Income:
The appellant raised a ground related to DEPB income, which was deemed irrelevant to the present case. The Tribunal dismissed this ground as infructuous, along with the ground related to addition u/s.41(1), as it had no bearing on the assessment made by the AO.

Application of Legal Precedents:
The CIT (A) erred in not appreciating the decision of the Bombay High Court and the Supreme Court, which were directly related to the issue at hand. However, the Tribunal found that the CIT (A) rightly deleted the addition as there was no evidence to support the alleged understatement of income for the relevant assessment year.

Validity of CIT (A) Order:
The Tribunal dismissed the revenue's appeal, confirming the CIT (A)'s decision to delete the addition of `35 lakhs. The Tribunal agreed that the alleged understatement of income had no relevance to the assessment year in question, and therefore upheld the CIT (A)'s order.

This judgment highlights the importance of concrete evidence and adherence to legal provisions in making additions to income during assessments. The Tribunal's decision emphasizes the need for assessments to be based on relevant facts and specific to the assessment year under consideration.