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Issues Involved:
1. Justification of treating Rs.90,93,600 as undisclosed income. 2. Consideration of factual position regarding payments made by cheques. 3. Legality and factual correctness of the Assessing Officer's order. Summary: Issue 1: Justification of treating Rs.90,93,600 as undisclosed income The Assessing Officer concluded that the assessee paid Rs.90,93,600 in cash to Shri Vijay Sehgal for 5052 shares of M/s Leader Valves Ltd., treating it as undisclosed income. This conclusion was based on an agreement dated 29-4-1995 found during a search, which stated a consideration of Rs.1,01,04,000. The assessee admitted to the agreement but claimed the price was tentative and included compensation for control over the company. Witnesses initially supported the cash payment claim but later resiled, stating their earlier statements were based on hearsay. The Tribunal found that the addition was not based on concrete evidence but on suspicion and conjecture, noting that subsequent payments were made by cheques, ruling out the theory of prior cash payments. The Tribunal directed the deletion of the addition of Rs.90,93,600. Issue 2: Consideration of factual position regarding payments made by cheques The assessee argued that only Rs.10,10,400 was paid by cheques by the date of the search, with the balance paid later by cheques, extending over a year. The Tribunal noted that the entire balance amount of Rs.90,93,600 was indeed paid by cheques after the search, which contradicted the theory of prior cash payments. The Tribunal emphasized that no evidence was found to support the claim of cash payments, and the subsequent cheque payments were documented and verifiable. Issue 3: Legality and factual correctness of the Assessing Officer's order The Tribunal found that the Assessing Officer's order was based on suspicion and lacked concrete evidence. The statements of witnesses, which were the primary basis for the addition, were later retracted, and no receipts or documents were found to substantiate the claim of cash payments. The Tribunal highlighted that the entire sale consideration was eventually paid by cheques, and the addition of Rs.90,93,600 as undisclosed income was not justified. The Tribunal directed the deletion of the addition, allowing the appeal of the assessee. Separate Judgment by Judicial Member: The Judicial Member partially disagreed, suggesting that an addition of Rs.49,90,000 should be sustained based on the initial statements of witnesses and the unexplained investments found during the search. However, the Third Member supported the view of the Accountant Member, leading to the deletion of the entire addition.
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