2000 (12) TMI 215 - AT - Income Tax

Issues Involved:

1. Jurisdiction and validity of the assessment order under Section 158BD read with Section 158BB(1) of the IT Act.
2. Addition of Rs. 3.61 lakhs as income from undisclosed sources for investment in Flat No. 201, Moin Apartment.
3. Addition of Rs. 1,00,05,687 for alleged unexplained investment in shares.
4. Addition of Rs. 72,21,040 for alleged unexplained investment in FDRs.
5. Addition of Rs. 19,55,335 as estimated income on FDRs.
6. Addition of Rs. 3,00,000 as undisclosed income for the assessment year 1994-95.
7. Addition of Rs. 3,00,000 for alleged unexplained investment in the purchase of a Maruti Esteem Vehicle.

Detailed Analysis:

1. Jurisdiction and Validity of Assessment Order:

The appellant contested the jurisdiction and validity of the assessment order under Section 158BD read with Section 158BB(1) of the IT Act, arguing that no notice under Section 158BC was received, rendering the proceedings void and without jurisdiction. The Tribunal noted that the notice under Section 158BD was issued and served on 31st October 1996, and the appellant's counsel did not dispute this fact. The Tribunal emphasized that jurisdiction under Section 158BD can be assumed only after the AO records satisfaction that the assets in question belong to another person and were acquired out of undisclosed income.

2. Addition of Rs. 3.61 Lakhs for Investment in Flat No. 201, Moin Apartment:

The appellant argued that the addition was unjustified as the investment was explained with evidence, including certificates from employers and banking channels. The Tribunal noted that the addition was made on a protective basis in the appellant's hands and on a substantive basis in her husband's case. The appellant provided documentary evidence to support her claim that part of the investment came from her own funds and part from a loan from her father-in-law. The Tribunal decided to admit the additional evidence and set aside the assessment order for a fresh examination of the evidence.

3. Addition of Rs. 1,00,05,687 for Alleged Unexplained Investment in Shares:

The appellant contended that the investments were fully explained by withdrawals from her bank accounts and that the AO failed to establish that the investments were made by the appellant. The Tribunal noted that the addition was made on a protective basis in the appellant's hands and on a substantive basis in her husband's case. The appellant provided evidence of a direct nexus between the funds drawn from an overdraft account and the investments in shares. The Tribunal decided to admit the additional evidence and set aside the assessment order for a fresh examination of the evidence.

4. Addition of Rs. 72,21,040 for Alleged Unexplained Investment in FDRs:

The appellant argued that the deposits in NR NR accounts were made from her savings in Dubai, transferred through banking channels, and supported by documentary evidence. The Tribunal noted discrepancies in the certificates provided by the appellant but decided to admit the additional evidence and set aside the assessment order for a fresh examination of the evidence, including further investigation by the AO.

5. Addition of Rs. 19,55,335 as Estimated Income on FDRs:

The appellant contended that the interest on FDRs in NR NR accounts is exempt under Section 10 of the Act and that she had paid interest on overdrafts taken against such FDRs. The Tribunal directed the AO to consider this submission while making a fresh assessment in accordance with the provisions of law.

6. Addition of Rs. 3,00,000 as Undisclosed Income for the Assessment Year 1994-95:

The appellant argued that no such addition was made in the relevant paragraph of the assessment order. The Tribunal did not provide a specific ruling on this issue but implied that it would be reconsidered during the fresh assessment.

7. Addition of Rs. 3,00,000 for Alleged Unexplained Investment in the Purchase of a Maruti Esteem Vehicle:

The appellant contended that the investment was made from finance obtained from GLFL, supported by relevant documents. The Tribunal noted that the addition was made on a protective basis in the appellant's hands and on a substantive basis in her husband's case. The Tribunal decided to admit the additional evidence and set aside the assessment order for a fresh examination of the evidence.

Conclusion:

The Tribunal allowed the appeal for statistical purposes, admitting the additional evidence and setting aside the assessment order. The AO was directed to make a fresh assessment de novo after allowing the appellant to furnish necessary evidence and conducting further investigations as required. The AO was also instructed to consider the final decision of the SAFEMA authorities and the exemption of interest on NR NR accounts under Section 10(15)(i) while making the fresh assessment.

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