2003 (3) TMI 259 - AT - Income Tax

Summary

Issues:
Department's appeal against deletion of addition of Rs. 1,27,461 by CIT(A) in relation to assessment order under s. 143(3) r/w s. 147 for asst. yr. 1994-95.

Analysis:
1. The Department appealed against the deletion of an addition of Rs. 1,27,461 by the CIT(A) in the case of the assessee for assessment year 1994-95. The issue arose from a survey conducted under s. 133A where the assessee agreed to declare an income of Rs. 2 lakhs to cover investments in cash, diamonds, and immovable properties. Subsequently, the assessee claimed the additional income to be declared was only Rs. 72,539. The AO, however, added Rs. 1,27,461 to the income declared by the assessee, relying heavily on the initial statement made during the survey.

2. The CIT(A) held that the AO did not provide adequate corroborating evidence to support the addition. The CIT(A) found that the disclosure made by the assessee lacked a basis, and no further material was brought on record to substantiate the higher income figure. The Revenue challenged this decision, arguing that the initial statement by the assessee should be binding, citing precedents from Tribunal Mumbai and Tribunal Ahmedabad.

3. The assessee contended that the ad hoc statement made during the survey lacked a specific basis and that after examining relevant documents, the undisclosed income was found to be much less. The assessee promptly communicated this to the AO through letters. The Department issued a notice under s. 148 long after the return of income was filed, without any failure on the part of the assessee to disclose material facts. The assessee argued that there was no obligation for the initial statement to be binding indefinitely.

4. After considering the arguments, it was concluded that the AO had accepted the original return of income, and the notice under s. 148 was issued without any new material. The Tribunal upheld the CIT(A)'s decision, stating that there was no failure on the part of the assessee to disclose all material facts necessary for assessment. The appeal by the Department was dismissed.

5. The assessee's cross-objection merely supported the CIT(A)'s order without raising any objections. As a result, the cross-objection was deemed legally untenable and dismissed. Ultimately, both the Department's appeal and the cross-objection were dismissed by the Tribunal.