2012 (5) TMI 834 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 12.50 lacs by CIT(A) for investment outside books.
2. Deletion of addition of Rs. 1,62,283 by CIT(A) for interest income not shown in return.
3. Confirmation of addition of Rs. 5 lacs by CIT(A) for advance outside books.
4. Confirmation of addition of Rs. 55,200 by CIT(A) for interest income on advance.
5. Validity of additions based on documents found during search operations.

Summary:

Issue 1: Deletion of addition of Rs. 12.50 lacs by CIT(A) for investment outside books

The revenue's grievance was that the CIT(A) erred in deleting the addition of Rs. 12.50 lacs, which the Assessing Officer (AO) added on the grounds of investment outside the books of account. The Tribunal found that the document in question was not found from the possession of the assessee but from his father's briefcase. The AO did not call the father for an explanation, failing to discharge the initial onus. The Tribunal concluded that the evidence was insufficient to establish the assessee's ownership of the investment, thus deleting the addition.

Issue 2: Deletion of addition of Rs. 1,62,283 by CIT(A) for interest income not shown in return

The revenue also contested the deletion of Rs. 1,62,283, which the AO added as interest income on the alleged investment. Since the primary addition of Rs. 12.50 lacs was deleted, the consequential interest income addition was also deleted.

Issue 3: Confirmation of addition of Rs. 5 lacs by CIT(A) for advance outside books

The assessee's appeal contested the confirmation of Rs. 5 lacs as an advance outside the books to Arneja & Co. The Tribunal noted that the document was a photocopy found in the father's briefcase, and the assessee consistently denied any dealings with Arneja & Co. The Tribunal found no corroborative evidence linking the assessee to the transaction and deleted the addition.

Issue 4: Confirmation of addition of Rs. 55,200 by CIT(A) for interest income on advance

The assessee also contested the addition of Rs. 55,200 as interest income on the alleged advance. Since the primary addition of Rs. 5 lacs was deleted, the consequential interest income addition was also deleted.

Issue 5: Validity of additions based on documents found during search operations

The Tribunal examined whether the entries in a diary found during a search at a third party's premises (Shri Brij Mohan Gupta) could be used to make additions in the assessee's case. The Tribunal found that the diary entries were in a coded language and not conclusively linked to the assessee. The Tribunal emphasized that the burden of proof was on the revenue to establish the connection, which was not done. The Tribunal upheld the CIT(A)'s deletion of additions based on these entries.

Conclusion:

The appeal filed by the assessee is allowed, and the appeal filed by the revenue is dismissed.