1990 (1) TMI 111 - AT - Income Tax

Summary

Issues:
1. Justification of deletion of addition of Rs. 1,20,828 made by the ITO as the assessee's income from undisclosed sources.

Analysis:
The appeal by the Department was against the CIT(A)'s order relating to the assessment year 1978-79. The ITO estimated the assessee's income based on a search and seizure operation, leading to an addition of Rs. 1,20,828 as income from undisclosed sources. The CIT(A) deleted this addition, prompting the Department's appeal. The primary contention was that the exercise book containing the entries did not belong to the assessee, and the credits noted were related to various firms, not solely to the assessee. The CIT(A) found the addition unjustified as the book did not belong to the assessee, and the ITO had not treated all entries as the assessee's income. The CIT(A) also analyzed specific credit entries, concluding they were adequately explained and did not warrant inclusion in the assessee's income.

The Departmental Representative argued that the CIT(A) should not have deleted the addition without proper explanation from the assessee and without following procedural rules. However, the assessee's counsel contended that no new evidence was presented, and the ownership of the entries in the exercise book was not established to invoke Section 68. The Tribunal found no evidence proving the exercise book belonged to the assessee, and the ITO failed to connect the entries to the assessee. The Tribunal also noted discrepancies in the ITO's treatment of income from trucks and partnerships, further supporting the deletion of the addition.

The Tribunal concluded that the CIT(A) rightly deleted the addition as there was no evidence linking the entries to the assessee, and the ITO's actions lacked proper basis. The Tribunal rejected the Department's appeal, affirming the CIT(A)'s decision to delete the addition of Rs. 1,20,828.