2003 (6) TMI 168 - AT - Income Tax

Summary

Issues:
1. Appeal against the decision of CIT(A) sustaining assessment of undisclosed income.
2. Validity of assessment under section 158BC without a search in the assessee's name.
3. Principles of natural justice violation due to lack of show cause notice.
4. Dispute regarding unexplained investment in a property not owned by the assessee.

Issue 1: Appeal against the decision of CIT(A) sustaining assessment of undisclosed income:

The appeals by two assessees of the same group were against the orders of the CIT(A) regarding the block period 1989-90 to 1998-99. The AO computed undisclosed income at Rs. 3,55,000 related to a property purchase discrepancy. The assessee argued that the AO misinterpreted the sale deed clause and lacked evidence for the addition. The Tribunal held that the Revenue had no credible evidence for the addition, deleted the same, and allowed the appeal.

Issue 2: Validity of assessment under section 158BC without a search in the assessee's name:

In the second appeal, the dispute was over an addition of Rs. 3 lakhs based on the assessee's statement during search proceedings about an unexplained investment in a property not owned by them. The assessee challenged the assessment under section 158BC, citing lack of search in their name and violation of natural justice. The Tribunal noted that the property was not owned by the assessee, leading to the addition being unwarranted. The Tribunal directed further verification in the hands of the actual property owner and deleted the addition.

Issue 3: Principles of natural justice violation due to lack of show cause notice:

The assessee argued that the assessment violated principles of natural justice as no show cause notice was issued before the addition. However, the Tribunal primarily focused on the lack of ownership of the property by the assessee, leading to the addition being set aside.

Issue 4: Dispute regarding unexplained investment in a property not owned by the assessee:

The Tribunal acknowledged the lack of ownership of the property by the assessee and directed further examination of the unexplained investment in the hands of the actual property owner. The addition was deleted based on this finding.

In conclusion, the Tribunal allowed the appeals, deleted the additions, and directed further verification in the appropriate case where the actual property owner could address the unexplained investments.