2010 (12) TMI 812 - HC - Income Tax

Search and seizure - Undisclosed income - There being no evidence justifying addition mere surrender could not be basis of the addition - The surrender being voluntarily no further evidence was required and surrender itself could have been made the basis of addition - Decided against the assessee

Summary

Issues involved:
1. Addition of surrendered income to the assessee's total income without considering incurred losses.
2. Validity of adding surrendered income without concrete evidence of underbilling.
3. Comparison with a similar case where addition was deleted by the Tribunal.

Detailed analysis:
1. The main issue in this case was the addition of surrendered income to the assessee's total income without considering any incurred losses. The Tribunal observed that the assessee had disclosed a turnover and income that seemed too low compared to the previous year. The Tribunal found that the assessee had surrendered a significant amount as undisclosed income due to under-billing and selling by-products outside the books of account. Despite the CIT(A) deleting the addition, the Tribunal restored it, emphasizing that the addition made by the Assessing Officer was justified based on the assessee's own admission of higher income. The Tribunal concluded that the surrender itself could be the basis for the addition, and the manner of calculation was not crucial as the amount surrendered was significant. The Tribunal set aside the CIT(A)'s order and reinstated the addition challenged by the revenue.

2. Another substantial question of law raised in the appeal was the validity of adding surrendered income without concrete evidence of underbilling. The assessee argued that the surrendered income should not have been added without considering any incurred losses, especially when there was no defect found in the books of account by the Assessing Officer. The assessee contended that mere surrender should not be the sole basis for the addition. However, the Tribunal disagreed, stating that the income disclosed by the assessee was incorrect, and invoices issued were not genuine as per the assessee's admission. The Tribunal held that the voluntary surrender itself could serve as the basis for the addition, and no further evidence was necessary to support the addition.

3. The comparison with a similar case where the addition was deleted by the Tribunal was also considered. In the other case, the Tribunal upheld the deletion of the addition by the CIT(A) based on the lack of evidence against the assessee regarding under-billing. The Tribunal in that case emphasized that sales and purchases were duly vouched and not doubted by the Assessing Officer, leading to the deletion of the addition. However, the Tribunal in the present case noted that the findings in the other case did not impact the current judgment unless the impugned order was proven to be erroneous on merits. The Tribunal clarified that the deletion in the other case could not serve as a precedent unless the current order was shown to be incorrect. Consequently, the Tribunal dismissed the appeal in this case, upholding the addition of the surrendered income to the assessee's total income.