1999 (10) TMI 742 - HC - Income Tax

Summary

Issues Involved:
The judgment involves issues related to the admission of new pleas contrary to the facts on record and the justification of the Assessing Officer (AO) in proving unaccounted receipts and extra expenditure incurred by the assessee.

Admission of New Plea - Question No. 1:
The Tribunal examined the acceptance of a new plea regarding the net profit in supervision charges linked to flat bookings, contrary to the Tribunal Rules. The Tribunal clarified that the new plea did not contradict the facts on record, and no additional evidence was presented. Therefore, the rules regarding new evidence were not applicable.

Unaccounted Receipts and Extra Expenditure - Question No. 2:
The Tribunal assessed the AO's obligation to prove unaccounted receipts and extra expenditure incurred by the assessee. The Tribunal found that the Department failed to substantiate the claim of incorrect extra expenditure by the assessee. The Tribunal highlighted discrepancies in the evidence presented by the Department, emphasizing the lack of proof of unaccounted assets or investments exceeding a certain amount.

Division Bench Decision:
The respondent relied on a Division Bench decision that emphasized the importance of determining undisclosed income based on actual investments and costs incurred by the assessee. The decision highlighted that undisclosed sales proceeds cannot automatically be considered income without evidence of undisclosed investments in acquiring goods.

Supervision Charges and Undisclosed Income:
The assessee, a partnership firm, undertook supervision work for cooperative societies and flat bookings. The AO based income additions on seized documents from another individual, which the assessee did not possess. The Tribunal calculated the net profit at a specific rate, considering expenses and receipts, and concluded that the declared undisclosed income by the assessee was not less than the calculated net profit. The Tribunal noted the absence of evidence regarding significant investments by the assessee.

Conclusion:
After evaluating the evidence, the Tribunal and the High Court found no legal questions warranting reference. The application was rejected, and the rule was discharged, with no costs imposed.