2011 (11) TMI 513 - HC - Income Tax

Search and seizure - Undisclosed income from professional receipt - Held that - Addition made by the AO in a sum of Rs. 16,00,000/- towards the undisclosed income from profession is based upon the estimation made by him which the assessee might have received from the person as the ledger itself does not mention the amount received and wherefore the finding of the AO is based upon is not proved - Tribunal justified in deleting the addition - in favour of assessee. Unexplained investment made in land - Held that - Assessing Officer has not made any enquiry regarding the said material found during search and has merely proceeded on the basis of the presumption under Section 132(4A). The said presumption would arise only when the indiscriminate materials found during the search and having regard to the contents available on record, it cannot be said that the said letter would prove that Plot No . 7-B belong to the assessee, hence addition not justified - in favor of the assessee

Summary

Issues: Appeal against order in Miscellaneous Petition for block assessment years 1989-90 to 1999-2000; Deletion of additions made by Assessing Officer regarding undisclosed income and unexplained investment in land.

Analysis:
1. The appeal was filed by the revenue against the order in Miscellaneous Petition for block assessment years 1989-90 to 1999-2000. The Assessing Officer added undisclosed income of Rs. 8,32,000 regarding the sale of a plot and Rs. 16,00,000 as undisclosed professional income. The Appellate Authority deleted these additions. The first issue was whether the Tribunal was right in deleting the addition made by the Assessing Officer in respect of the undisclosed professional income. The second issue was whether the Tribunal was right in deleting the addition made by the Assessing Officer in respect of unexplained investment made in land under Section 132(4A) of the Act.

2. The Assessing Officer estimated the undisclosed professional income based on a ledger that did not mention the amount received from the person listed in it. The Appellate Authority and the Income Tax Appellate Tribunal found that the estimation was not based on material found during the search and deleted the addition. The court agreed with this finding, citing a previous decision that no estimate of income can be made apart from material found during search. Therefore, the first substantial question of law was answered against the revenue.

3. Regarding the unexplained investment in land, the Assessing Officer relied on a letter found during the search, but did not conduct any further inquiry. The court noted that the letter indicated payment made to a third party and credited to another account, which did not conclusively prove ownership of the plot in question. The Appellate Authority and the Tribunal had deleted the addition of Rs. 8,32,000 towards unexplained investments in land, and the court upheld this decision. Consequently, the second substantial question of law was also answered against the revenue.

4. In conclusion, the court dismissed the appeal, stating that the original records would be returned to the counsel for the appellants. The judgment was a transcription of the decision made by the Division Bench in open court on the specified date.