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Issues Involved:
1. Inclusion of income from property sale in block assessment. 2. Inclusion of unexplained bank entries in undisclosed income. Issue-wise Detailed Analysis: 1. Inclusion of Income from Property Sale in Block Assessment: The primary issue revolves around whether the income from the sale of a property should be included in the block assessment under Chapter XIV-B of the IT Act, 1961. The property in question was sold on 24th Dec, 1996, the same day a search and seizure operation was conducted at the assessee's residence. The assessee contended that the income from the property sale should be excluded under s. 158BA(3) because the previous year had not ended, and the date for filing the return under s. 139(1) had not expired. Moreover, the assessee argued that the sale consideration was declared at Rs. 38 lakhs voluntarily at the time of search, and the transaction was recorded in documents, thus not falling under undisclosed income. The Revenue, however, argued that the agreement to sell stated a consideration of Rs. 1.10 crores, while the registered sale deeds showed Rs. 9.30 lakhs. The AO had recorded statements from the assessee's brother, friend, and a property dealer, all suggesting the sale consideration was Rs. 1.10 crores. Thus, the Revenue included this in the block assessment. The Tribunal noted that for s. 158BA(3) to apply, the transaction must be recorded in documents before the search. Here, the agreement to sell stated Rs. 1.10 crores, the sale deeds stated Rs. 9.30 lakhs, and the assessee admitted Rs. 38 lakhs. The Tribunal concluded that the undisclosed income existed because the agreement to sell was not signed by the buyers, and the sale deeds did not match the agreement. The Tribunal directed the AO to compute the undisclosed income based on the assessee's admission of Rs. 38 lakhs. 2. Inclusion of Unexplained Bank Entries in Undisclosed Income: The second issue pertains to unexplained bank entries amounting to Rs. 5,60,653, which the AO included as undisclosed income under s. 69A of the IT Act. The assessee argued that the AO did not provide adequate opportunity to explain the deposits due to the assessment's imminent deadline. The learned Departmental Representative conceded that the assessee should be given another opportunity. The Tribunal observed that the assessment was completed within a short period from the issuance of the questionnaire. To ensure justice, the Tribunal set aside the AO's order on this issue and directed the AO to reconsider the matter after providing the assessee an opportunity to explain the bank deposits. Conclusion: The appeal was partly allowed for statistical purposes. The Tribunal directed the AO to compute the undisclosed income from the property sale at Rs. 38 lakhs and to re-examine the unexplained bank entries after giving the assessee a fair opportunity to explain the deposits.
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