2005 (7) TMI 283 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 1,64,000 by CIT(A).
2. Violation of Rule 46A by CIT(A).
3. Sustaining addition of Rs. 35,000 by CIT(A).
4. Assessment framed as barred by limitation.

Detailed Analysis:

1. Deletion of Addition of Rs. 1,64,000 by CIT(A):
The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 1,64,000 made by the AO based on a piece of paper found during a survey operation under Section 133A of the Act. The AO had made the addition on the basis of loose sheets found at the business premises of two firms where family members of the assessees were partners. These sheets contained entries aggregating to Rs. 16,40,000, which the AO divided among ten individuals, including the assessees, attributing Rs. 1,64,000 to each. The CIT(A) deleted the addition, accepting the assessees' argument that the loose sheets were rough notings without specific details or dates and did not mention whether they represented receipts or payments. The Tribunal upheld the CIT(A)'s decision, noting that the survey was conducted at the firms' premises, not the assessees', and the loose sheets did not contain the names of the assessees. The Tribunal concluded that there was no basis for the addition as neither cash nor evidence of undisclosed income was found.

2. Violation of Rule 46A by CIT(A):
The Revenue argued that the CIT(A) violated Rule 46A by accepting additional evidence without providing the AO an opportunity to examine it. The CIT(A) had considered the assessees' explanation that the figures of Rs. 8,70,000 and Rs. 6,90,000 on the loose sheets represented rates quoted by a machine supplier. The Tribunal found no merit in this ground, stating that the assessees had only taken a plea before the CIT(A) without furnishing fresh evidence. The CIT(A) had deleted the addition based on the absence of the assessees' names on the loose sheets and the fact that only Rs. 15,800 in cash was found during the survey, not on the basis of the machine rates explanation. Therefore, the Tribunal confirmed the CIT(A)'s order, rejecting the Revenue's ground.

3. Sustaining Addition of Rs. 35,000 by CIT(A):
The assessees contended that the CIT(A) erred in sustaining the addition of Rs. 35,000 each as their share of alleged investment in shares out of undisclosed sources. The AO had made this addition based on another loose sheet found during the survey, which mentioned "share application" and an amount of Rs. 3,15,000. The CIT(A) upheld the addition, observing that the figures were not rough or vague and were mentioned against specific individuals/concerns of the family members. However, the Tribunal found that the names of the assessees did not appear on the loose sheet, and there was no evidence of any unaccounted investment in shares. The Tribunal held that no addition could be made based on assumptions and presumptions without corroborative evidence. Therefore, the Tribunal set aside the CIT(A)'s order sustaining the addition and deleted the addition of Rs. 35,000 in all cases.

4. Assessment Framed as Barred by Limitation:
The assessees argued that the assessments were barred by limitation. However, this ground was not argued before the Tribunal, and no written submissions were filed on this issue. Consequently, the Tribunal dismissed this ground as such.

Conclusion:
The Tribunal dismissed all appeals of the Revenue and allowed all cross-objections filed by the assessees. The Tribunal upheld the CIT(A)'s deletion of the addition of Rs. 1,64,000 in each case and set aside the CIT(A)'s order sustaining the addition of Rs. 35,000 in each case. The Tribunal also rejected the Revenue's ground regarding the violation of Rule 46A and dismissed the assessees' ground on the assessment being barred by limitation.