1999 (12) TMI 97 - AT - Income Tax

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Addition of Rs. 20 lakhs and Rs. 25 lakhs based on statements of third parties.
3. Addition of Rs. 28 lakhs related to Hasunagar Co-operative Housing Society land.
4. Levy of surcharge at the rate of 12%.

Summary:

1. Delay in Filing the Appeal:
The appeal was delayed as the assessee initially filed it with the CIT(A) due to a mistaken belief about the appellate jurisdiction. The Tribunal condoned the delay, acknowledging the bona fide mistake and the timely filing of the original appeal.

2. Addition of Rs. 20 Lakhs and Rs. 25 Lakhs:
The AO added Rs. 20 lakhs and Rs. 25 lakhs based on the statements of Shri Sureshbhai and Shri Deepakbhai, and documents seized during search operations. The Tribunal found that these loose papers and statements did not constitute admissible evidence against the assessee. The Tribunal emphasized that the assessee was not allowed to cross-examine the individuals whose statements were used against it. The Tribunal referred to the Supreme Court decision in CBI vs. V.C. Shukla & Ors., stating that loose papers do not qualify as books of accounts regularly kept in the course of business. Consequently, the Tribunal deleted the additions of Rs. 45 lakhs.

3. Addition of Rs. 28 Lakhs:
The AO added Rs. 28 lakhs based on the statement of Shri Ramanbhai Patel, who claimed to have received this amount in cash from the assessee for assigning development rights. The Tribunal found merit in the assessee's contention that such an addition was beyond the scope of s. 158BD r/w s. 158BC since no search operations were conducted at the premises of the individuals whose statements were relied upon. The Tribunal also noted that the statements were recorded at the back of the assessee without an opportunity for cross-examination. The Tribunal deleted the addition of Rs. 28 lakhs, citing both legal and factual grounds.

4. Levy of Surcharge:
Since the Tribunal deleted the additions made on account of undisclosed income, there was no basis for the levy of surcharge. The surcharge levied was accordingly deleted.

Conclusion:
The appeal was allowed, with all the impugned additions and the surcharge being deleted.