2002 (10) TMI 263 - AT - Income Tax

Summary

Issues Involved:
1. Adoption of revised undisclosed income at Rs. 6,60,633 instead of Rs. 7,00,000.
2. Deletion of addition of Rs. 42,500 on account of unexplained investment in shares.

Summary:

Issue 1: Adoption of Revised Undisclosed Income
The Revenue challenged the CIT(A)'s direction to adopt the undisclosed income revised at Rs. 6,60,633 instead of the originally returned Rs. 7,00,000. The Assessee had initially declared an undisclosed income of Rs. 7.00 lakhs but later revised it to Rs. 6,60,633 during assessment proceedings. The Assessing Officer verified and found this revised figure correct but made an additional unwarranted addition of Rs. 42,500 to exceed the returned income. The CIT(A) directed the Assessing Officer to adopt the revised figure of Rs. 6,60,633, considering the provisions of Chapter XIV-B, which provide for the determination of undisclosed income based on evidence found during the search. The Tribunal upheld the CIT(A)'s decision, stating that the undisclosed income should be assessed based on the actual evidence and not merely on the income declared in the return. The Tribunal emphasized that the second proviso to clause (a) of section 158BC does not prevent the Assessee from disputing the returned income during assessment or appellate proceedings.

Issue 2: Deletion of Addition of Rs. 42,500
The Assessing Officer added Rs. 42,500 to the Assessee's income on account of unexplained investment in shares, based on the Assessee's statement recorded u/s 132(4). The Assessee contended that the investment was made from withdrawals recorded in rough diaries, which had already been subjected to tax. The CIT(A) deleted the addition, accepting the Assessee's explanation. The Tribunal upheld the CIT(A)'s decision, noting that the Assessing Officer had verified and found correct the Assessee's working of undisclosed income, which included the withdrawals used for purchasing the shares. The Tribunal concluded that the Assessing Officer was not justified in making the addition based solely on the Assessee's statement without disputing the explanation provided.

Conclusion:
The Tribunal dismissed the Revenue's appeal and the Assessee's cross-objection, upholding the CIT(A)'s decisions on both issues. The undisclosed income was correctly determined at Rs. 6,60,633, and the addition of Rs. 42,500 for unexplained investment in shares was rightly deleted.