2001 (5) TMI 162 - AT - Income Tax

Summary

Issues Involved:
1. Treatment of income under the head "Salary," "Commission," "House Property," "Capital Gains," and "Other Sources" as undisclosed income.
2. Addition of Rs. 5,12,400 as unexplained investment in house property.

Issue-wise Detailed Analysis:

1. Treatment of Income as Undisclosed Income:

The appellant-assessee contested the AO's decision to treat the entire income for the assessment year 1995-96 under the head "Salary" and "Commission," income from house property, capital gains, and income from other sources as undisclosed income. The assessee argued that the delay in filing the return was due to the search and seizure operations, which resulted in the books of account and other details being in the possession of the Revenue. The counsel for the assessee contended that the income had been regularly disclosed in previous years, and the delay was not intentional. The appellant had paid advance tax, TDS, and self-assessment tax for the assessment year 1995-96.

The Departmental Representative argued that the taxable income should be considered as undisclosed income if the return was not filed within the due date, as per clause (c) of section 158BB of the IT Act.

The Tribunal considered the rival submissions and relevant details, including the payment of advance tax and TDS. It concluded that there was no intention on the part of the assessee to hide the income from the IT Department. The Tribunal held that the income of the assessee could not be treated as undisclosed income, as it did not fall within the ambit of section 158B. The Tribunal directed the AO not to treat the income under the head "Salary," "Commission," "House Property," "Capital Gains," and "Other Sources" as undisclosed income and to exclude the same from the block assessment.

2. Addition of Rs. 5,12,400 as Unexplained Investment:

The AO added Rs. 5,12,400 as unexplained investment in the house property situated at 43, Cantt. Road, Lucknow, based on the DVO's report. The DVO estimated the cost of construction/additions from 1992 to 1995. The assessee objected, stating that the land was purchased in 1967, and the building was constructed in 1970, with additions and renovations carried out up to 1982. The assessee argued that there was no evidence to support the DVO's estimation and that the DVO did not consider the registered valuer's report from 1983.

The Departmental Representative supported the AO's decision, relying on the DVO's expert report.

The Tribunal found that the AO and the DVO did not refer to any seized material to correlate the cost of construction within the block period. The Tribunal noted that the DVO and the AO did not properly consider the registered valuer's report from 1983, which covered additions and alterations up to 1982-83, beyond the block period. The Tribunal held that the addition based on the DVO's report could not be justified without documentary evidence. The Tribunal directed the deletion of the addition of Rs. 5,12,400 as undisclosed investment.

Conclusion:

The Tribunal allowed the appellant-assessee's appeal, directing the AO not to treat the income under various heads as undisclosed income and to exclude the same from the block assessment. The Tribunal also directed the deletion of the addition of Rs. 5,12,400 as unexplained investment in the house property.