2003 (1) TMI 267 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the search and seizure u/s 132.
2. Admissibility and voluntariness of the assessee's statements.
3. Genuineness of the gifts received.
4. Estimation of business profits and undisclosed income.

Summary:

1. Validity of the Search and Seizure u/s 132:
Grounds related to the validity of the search u/s 132 were not pressed by the assessee and were dismissed.

2. Admissibility and Voluntariness of the Assessee's Statements:
The assessee argued that the statements admitting the gifts as non-genuine were obtained under coercion and pressure. The Tribunal noted that the initial statement recorded on 25-11-1999 was a preliminary statement and not under section 132(4). The Tribunal emphasized that an admission is not conclusive and can be rebutted by the assessee with substantial evidence.

3. Genuineness of the Gifts Received:
The Tribunal examined the evidence provided by the assessee, including gift deeds, affidavits from the donor, and bank statements. The donor, a leading industrialist, had sold property and the proceeds were used for the gifts. The Tribunal found that the gifts were disclosed and accounted for in the books of the donor and the donee, thus falling outside the definition of undisclosed income u/s 158B(b). The Tribunal concluded that the gifts were genuine and the addition of Rs. 61,80,000 as undisclosed income was unjustified and liable to be deleted.

4. Estimation of Business Profits and Undisclosed Income:
The Assessing Officer estimated the business income from six benami concerns at a net profit rate of 5%, resulting in an undisclosed income of Rs. 1,31,76,257. The Tribunal found that the sister concern of the assessee, engaged in similar business, had shown a net profit rate of less than 3%, which was accepted by the Department. The Tribunal held that the net profit rate of 5% was unsubstantiated and not reasonable. The Tribunal accepted the net profit rate of 2.67% as shown by the sister concern, resulting in a lower undisclosed income than declared by the assessee.

Conclusion:
The Tribunal deleted the addition of Rs. 61,80,000 on account of non-genuine gifts and held that the total undisclosed income for the block period should be Rs. 86,82,110 as declared by the assessee. The appeal was disposed of with these observations.