1999 (11) TMI 105 - AT - Income Tax

Summary

Issues:
1. Determination of undisclosed income for the block period 1st April, 1986 to 1st Nov., 1996.
2. Claim for deductions in the computation of undisclosed income.
3. Valuation of gold and silver ornaments seized during the block period.

Analysis:
1. The search operation revealed investments by partners in movable and immovable properties out of undisclosed income. The assessee filed a return declaring undisclosed income. The difference between peak amount and balance in a cooperative bank account was allowed as a set-off against undisclosed investment, reducing the addition for the assessment year 1996-97.

2. The assessee claimed deductions for administrative expenses, interest, rent, Kuri loss, and depreciation. The Tribunal remanded the matter to verify if investments were made from undisclosed income. The claim for Kuri loss was to be considered in regular assessment, and the matter was sent back to the Assessing Officer for further review.

3. The issue of valuation of gold and silver ornaments seized was raised. The assessee argued for a lower valuation based on the average rate over ten years. However, the Tribunal upheld the AO's valuation, citing applicable provisions under Section 158BB(2) of the IT Act. The Tribunal found no justification for adopting the average cost for the block period and rejected the assessee's plea, partially allowing the appeal for statistical purposes.

In conclusion, the Tribunal allowed the set-off against undisclosed investment, remanded the matter for verification of deductions, and upheld the valuation of seized ornaments. The decision provided detailed analysis of the legal provisions and evidence presented, ensuring a fair assessment of the undisclosed income for the block period.