2007 (9) TMI 184 - HC - Income Tax

Tribunal deleted additions made by A.O. on account of undeclared payments made for purchase of immovable property case has already been addressed by the tribunal and finding of fact recorded by tribunal couldn t be made subject matter of reference

Summary

Issues:
Refusal of reference by Income-tax Appellate Tribunal under section 256(2) of the Income-tax Act for questions related to block assessment years 1986-87 to 1996-97.

Analysis:
The Revenue filed reference applications under section 256(2) of the Income-tax Act, seeking reference of questions to the High Court. The Income-tax Appellate Tribunal had earlier refused to refer questions arising from block assessment years 1986-87 to 1996-97. The Tribunal had deleted additions of Rs. 1,55,000 and Rs. 60,000 made by the Assessing Officer for investment in immovable property, stating lack of material for such additions.

The Revenue argued that the Tribunal wrongly refused to refer the questions based on section 158BB of the Income-tax Act, which allows computation of undisclosed income based on available material. On the other hand, the assessee's counsel contended that the Tribunal had thoroughly considered the matter, and the questions were not referable. The Tribunal had made additions based on inferences, not incriminating documents collected during search.

The Court examined section 158BB and noted that additions can only be made with evidence from search or requisition, not on inferences. It observed that the Tribunal's decision aligns with the principle that additions require incriminating material from the search. As the additions were based on inferences without such material, they did not fall under section 158BB. The Court upheld the Tribunal's order, stating that the factual findings cannot be referred and dismissed the reference petitions by the Revenue.

In conclusion, the High Court dismissed the reference applications, affirming the Tribunal's decision to refuse reference of questions related to block assessment years. The Court emphasized the necessity of incriminating material for additions under section 158BB and upheld the Tribunal's findings that additions based on inferences were not permissible.