1999 (10) TMI 114 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order.
2. Addition of Rs.2,32,204 from plot business.
3. General ground for adding, altering, or amending grounds of appeal.
4. Scope of estimation of undisclosed income under Chapter XIV-B.
5. Application of section 145 in assessing undisclosed income.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order:
The first ground challenges the validity of the assessment order on the basis that adequate opportunity was not given. However, this ground was not pressed at the time of hearing and was accordingly dismissed.

2. Addition of Rs.2,32,204 from Plot Business:
The second ground involves an addition of Rs.2,32,204 from the plot business for different assessment years. The addition was made on the assumption of profit on an average rate basis on the sale of plots. The facts, reasoning, and arguments from both sides were identical to those discussed in a related case (Kisanrao M. Khopade). The decision was to allow this ground in part, directing the Assessing Officer (A.O.) to restrict the additions to the extent of "Excess money" actually found to have been charged based on seized material.

3. General Ground for Adding, Altering, or Amending Grounds of Appeal:
The third ground was a general plea to add, alter, or amend the grounds of appeal. This ground was deemed general in nature and required no comments.

4. Scope of Estimation of Undisclosed Income under Chapter XIV-B:
The primary controversy revolved around whether there is any scope for the estimation of undisclosed income under the provisions of Chapter XIV-B. The Judicial Member disagreed with the Accountant Member's conclusion, arguing that:
- The Legislature did not make the provisions of section 145 applicable to search cases assessable under Chapter XIV-B.
- In the absence of section 145, there is no scope for estimation of undisclosed income under section 143.
- The seized materials (Bharna Register, Diaries, and Loose Papers) were complete records of unaccounted transactions, and the undisclosed income should be restricted to the amounts mentioned in the seized material.
- No defect was found in the cash flow statement prepared by the assessee based on the entries in the Bharna Register, Diaries, and Loose Papers, except for a minor discrepancy.

5. Application of Section 145 in Assessing Undisclosed Income:
The matter was referred to the President of the Income-tax Appellate Tribunal due to a difference of opinion between the Accountant Member and the Judicial Member. The questions referred were:
- Whether the provisions of section 145 can be applied while assessing the undisclosed income on the sale of plots under Chapter XIV-B.
- If not, whether there is any scope for the estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143.

The Third Member, Judicial Member M.A. Bakshi, concurred with the Judicial Member's view, holding that:
- The provisions of section 145 can be applied while assessing the undisclosed income on the sale of plots under Chapter XIV-B.
- There is scope for the estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143.

The matter regarding the computation of undisclosed income on the sale of land was restored to the file of the Assessing Officer, who was directed to recompute the same in accordance with the directions given in the order of the Judicial Member. The appeals were allowed in part.

Conclusion:
The judgment addressed multiple grounds of appeal, primarily focusing on the validity of the assessment order, the addition of income from plot sales, and the scope of estimating undisclosed income under Chapter XIV-B. The final decision involved a detailed analysis of the applicability of section 145 and the scope of estimation under section 143, ultimately leading to a partial allowance of the appeals and a directive for the Assessing Officer to recompute the undisclosed income.