2004 (12) TMI 298 - AT - Income Tax

Summary

Issues:
1. Addition of Rs. 5.69 lakhs on account of undisclosed investment in IVPs.
2. Deletion of addition of Rs. 3,52,600 made on account of difference in FDRs.

Analysis:

Issue 1 - Addition of Rs. 5.69 lakhs on account of undisclosed investment in IVPs:
The appeal by the Revenue pertains to the block period from 1st April, 1989 to 27th July, 1999, following a search action under section 132 of the IT Act. The key contention revolves around a loose paper found during the search containing entries of Indira Vikas Pattar (IVPs) worth Rs. 33.42 lakhs, out of which IVPs worth Rs. 27.73 lakhs were actually found. The Assessing Officer (AO) made an addition of Rs. 5.69 lakhs based on the assumption that the assessee might have sold or placed the remaining IVPs elsewhere. However, the CIT(A) deleted this addition, emphasizing the lack of concrete evidence supporting the existence of undisclosed investments. The Tribunal concurred, highlighting that during search proceedings, it is essential to establish possession or ownership of assets directly or indirectly, which was not evidenced in this case. Therefore, the deletion of the addition by the CIT(A) was upheld.

Issue 2 - Deletion of addition of Rs. 3,52,600 made on account of difference in FDRs:
The second ground of appeal concerns the deletion of an addition of Rs. 3,52,600 due to a variance in Fixed Deposit Receipts (FDRs) mentioned in the paper and those actually found. The AO added this amount based on the difference between the paper entry and the FDRs discovered. However, the CIT(A) overturned this addition, aligning with the decision on the IVPs addition. The Tribunal echoed this reasoning, emphasizing the absence of tangible evidence indicating the existence of additional FDRs beyond what was found during the search. Consequently, the deletion of this addition was deemed justified by the Tribunal, affirming the CIT(A)'s decision. As a result, the appeal by the Revenue was dismissed, upholding the deletions made by the CIT(A) regarding both the undisclosed investment in IVPs and the variance in FDRs.