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Issues:
1. Jurisdiction for assessment year 1988-89 2. Jurisdiction for assessment year 1989-90 3. Merits of additions for both assessment years 4. Charging of interest under section 215/234B Detailed Analysis: 1. Jurisdiction for assessment year 1988-89: The original assessment for 1988-89 was framed before the search operation, and no disclosure of renovation expenditure was made in the return. The Assessing Officer found evidence of unaccounted renovation expenses during the search. It was deemed that income had escaped assessment, justifying the reopening. 2. Jurisdiction for assessment year 1989-90: The original assessment for 1989-90 was completed after the search operation. Subsequently, it was discovered that unaccounted marriage expenses related to this year were not disclosed. The undisclosed expenses warranted the reopening of the assessment for 1989-90. 3. Merits of additions for both assessment years: The undisclosed income of Rs. 21,30,000 was disclosed during the search. The entire amount was considered for the assessment year 1990-91. The department could not tax the same income in previous years after taxing it in 1990-91. The additions for renovation expenses and marriage expenses were already included in the disclosed amount for 1990-91, hence not justifiable for the earlier years. 4. Charging of interest under section 215/234B: Interest under section 215/234B was deemed not chargeable during reassessment, following the Supreme Court decision in Modi Industries Ltd. v. CIT [1995] 216 ITR 759/82 Taxman 377. In conclusion, the appeals were partly allowed, considering the jurisdictional aspects, merits of additions, and the charging of interest under the mentioned sections. The judgment clarified the treatment of undisclosed income and expenses across different assessment years, ensuring fairness and adherence to legal provisions.
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