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Issues Involved:
1. Inclusion of Rs. 3,02,46,840 as income from undisclosed sources. 2. Validity of the assessment based on seized floppies. 3. Admission and subsequent retraction of income by the assessee. 4. Application of Sections 234B and 234C. Issue-wise Detailed Analysis: 1. Inclusion of Rs. 3,02,46,840 as Income from Undisclosed Sources: The appellant challenged the taxability of Rs. 3,02,46,840, arguing that this sum neither accrued nor was received by them. They contended that the lower authorities erred in determining this alleged income without any evidence or material, making such determination perverse in law. The appellant emphasized that no income could accrue or be considered received based merely on an admission by the assessee, particularly when the admission was made under duress and in difficult circumstances. 2. Validity of the Assessment Based on Seized Floppies: The appellant's counsel highlighted that the assessment was based on floppies seized from another individual, Mr. Anil Jain. The appellant argued that the floppies did not belong to them and that the transactions recorded therein were not related to them. The assessment was made on the presumption that the appellant had admitted ownership of these floppies before the FERA authorities, which was factually incorrect as no such admission was made. The Tribunal found that there was no material evidence connecting the floppies to the appellant and that the assessment was based on erroneous premises. 3. Admission and Subsequent Retraction of Income by the Assessee: The appellant initially offered Rs. 1 crore as income from undisclosed sources in their return to buy peace and avoid litigation, attaching several caveats and conditions. During the assessment proceedings, the appellant retracted this offer, stating that the offer was made under duress and was not an admission of actual income. The Tribunal noted that an admission could be retracted and that the retraction made by the appellant was valid. The Tribunal emphasized that an assessment must be based on material evidence and not merely on an admission, especially when retracted. 4. Application of Sections 234B and 234C: The Tribunal directed that the charging of interest under Sections 234B and 234C should be consequential to the final assessment. Since the primary addition of Rs. 3,02,46,840 was deleted, the interest calculations under these sections would need to be adjusted accordingly. Conclusion: The Tribunal concluded that the assessment of Rs. 3,02,46,840 was without any basis and lacked material evidence. The addition was deleted, and the appeal of the assessee was allowed. The Tribunal also directed consequential relief regarding the charging of interest under Sections 234B and 234C.
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