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Issues Involved:
1. Addition of Rs. 50,00,000 as unexplained investment. 2. Validity of notice, charging of interest under s. 158BFA(1), and initiating proceedings under s. 158BFA(2). Detailed Analysis: 1. Addition of Rs. 50,00,000 as unexplained investment: The primary issue in this appeal was the addition of Rs. 50,00,000 advanced to Mr. P. Balakrishna, which was treated as unexplained investment. The assessee, engaged in money lending, pawn broking, and jewelry business, was subjected to a survey on 13th July 1999, where he admitted to advancing Rs. 50,00,000 from his income and agreed to pay the due income tax. This was confirmed in a letter to the DDI (Inv) on the same day. A subsequent search on 19th July 1999 led to a notice under s. 158BC, and the assessee filed a return for the block period, declaring an undisclosed income of Rs. 1,26,100. The AO assessed Rs. 50,00,000 as undisclosed income for the block period, which was upheld by the CIT(A), who reasoned that the unaccounted advances were only brought to light due to the search. The assessee's counsel argued that the disclosure during the survey should be considered as disclosed income, citing the Tribunal's decision in Smt. Sivabala Devi vs. Asstt. CIT, which held that information disclosed during a survey under s. 131 should not be treated as undisclosed income for block assessment purposes. The Departmental Representative countered that the transaction was not recorded in the books of account and was admitted by the assessee as being out of concealed income. The Tribunal analyzed the definition of "undisclosed income" under s. 158B(b) and the computation method under s. 158BB(1). It noted that the due date for filing the return for the assessment year 1999-2000 had not expired at the time of the search and that the income declared during the survey was included in the regular return. The Tribunal concluded that income declared during a survey under s. 133A loses its character as undisclosed income during a subsequent search under s. 132, as it is no longer undisclosed. This principle was supported by the Supreme Court's decision in CIT vs. Tarsem Kumar, which held that known and certain property does not need to be searched or seized. The Tribunal also referenced the Chennai Tribunal's decision, which emphasized that disclosure under s. 131 is sufficient for the purposes of the IT Act. Based on these findings, the Tribunal held that the addition of Rs. 50,00,000 as undisclosed income was not justified and should be deleted. 2. Validity of notice, charging of interest under s. 158BFA(1), and initiating proceedings under s. 158BFA(2): These grounds were not pressed before the Tribunal and were therefore dismissed for want of prosecution. Conclusion: The appeal was partly allowed, with the deletion of the Rs. 50,00,000 addition as unexplained investment, while the grounds relating to the validity of notice and charging of interest were dismissed.
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