2009 (8) TMI 753 - AT - Income Tax

Search And Seizure - Undisclosed income - unaccounted investment in construction of house - plea of the assessee was rejected by the AO observing that the account books prepared by the assessee after search though on the basis of regular documentary evidences like regular sales and purchase bills prepared after the search - assessee has explained the investment made in the construction of the house basing on the material that was available at the time of search but not recorded in the books of account - AO is not able to bring on record any contrary material to the contention of the assessee - appeal of the Revenue dismissed

Summary

Issues involved:
Appeal against deletion of addition of undisclosed income for unaccounted investment in house construction.

Analysis:
The appeal was filed by the Revenue against the order of the CIT(A) deleting the addition of undisclosed income for unaccounted investment in house construction. During a search, the father of the assessee declared an undisclosed investment in house construction. The assessee explained that the sale proceeds from purchases were used for construction, supported by a fund flow statement. The AO rejected the explanation and added the amount as undisclosed income. The CIT(A) overturned this decision, citing precedents where post-search account books were accepted if verifiable. The Tribunal found the assessee's explanation reasonable, as the sources of investment were clarified. The AO failed to provide evidence contradicting the assessee's claims. Therefore, the CIT(A) decision to delete the addition was upheld, and the Revenue's appeal was dismissed.