2005 (3) TMI 389 - AT - Income Tax

Summary

Issues:
Appeal by Revenue against deletion of addition on account of undisclosed investments/loans/advances and interest earned by the assessee for the block period 1st April, 1988 to 19th Nov., 1998.

Analysis:
1. The Revenue contested the deletion of additions totaling Rs. 29,18,975 made by the Assessing Officer (AO) on the grounds of undisclosed investments/loans/advances and interest earned by the assessee during the block period. The search at the premises of the assessee and her husband revealed documents, including Annex. 8 in the handwriting of the assessee, which the AO used as the basis for the additions. The assessee claimed that all documents belonged to her husband, who admitted to the entries in Annex. 8 and filed a petition before the Settlement Commission for taxation of the income related to it.

2. The Commissioner of Income Tax (Appeals) [CIT(A)] held that since the issue of Annex. 8 was before the Settlement Commission in the husband's name, no addition should be made in the assessee's hands. The Revenue argued that the AO had jurisdiction to assess the income in the assessee's hands as the proceedings before the Settlement Commission were in the husband's name without specific reference to Annex. 8.

3. The assessee's counsel emphasized that the husband's petition before the Settlement Commission and his affidavit confirmed ownership of the seized documents, including Annex. 8. The statements of both the assessee and her husband declared that Annex. 8 related to the husband's transactions, with the wife assisting in maintaining the records. The Tribunal analyzed these statements and corroborating evidence to determine ownership of the seized document.

4. The Tribunal noted that the husband's unequivocal confirmation of the wife's statement regarding Annex. 8, along with his affidavit and the Settlement Commission's order, established ownership of the document in his hands. The Settlement Commission specifically addressed the issue of kitties related to Annex. 8, further supporting the husband's ownership claim. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the additions in the assessee's assessment.

5. The cross-objection by the assessee supported the CIT(A)'s order, leading to its dismissal as no additional relief was sought. Ultimately, both the Revenue's appeal and the assessee's cross-objection were dismissed, affirming the deletion of the additions in the assessee's assessment for the block period.