2017 (1) TMI 882 - HC - Income Tax

Validity of the search u/s 132 - Block assessment u/s 158BD - addition on gold ornaments - Held that - The assessing officer has not considered the case in its entirety, i.e. The gifts received other than the details given by the assessee because the assessee was asked to give the details of persons those who have gifted five or more sovereigns of gold, a reasonable estimation of 1500 grams of gold cannot be ruled out. Therefore, we allow the claim of the assessee to this extent. The difference is to be treated as assessee s undisclosed income. Undisclosed source of income - Held that - The conclusions of the Tribunal sustaining the finding of the Assessing Officer that the assessee could not explain the source of ₹ 3,00,000/- is entirely based on the factual materials which were available before him. Therefore, the Tribunal was fully justified in treating ₹ 3,00,000/- as the undisclosed income of the assessee. Addition on purchase of Maruti Zen Car - Held that - Additions were made by the assessing officer only after applying his mind. The mere fact that it has been reproduced verbatim of the previous assessment order does not mean that the assessing officer had not applied his mind. It is the duty of the assessee to explain the source of the money that came into his account. The only explanation of assessee s daughter that the demand drafts were purchased in the name of her father because it was easy to get the car on priority basis if it was booked in her father s name, of course, is an explanation to be accepted provided the source of the money was properly explained with such precision. It has not been done so. In the facts and circumstances of the case, we are of the view that this addition made by the assessing officer is to be confirmed. Protective assessment - Double addition - as contended by the assessee that many of the items of income which were assessed in the hands of the assessee were already assessed in the hands of his wife - Held that - It is well settled that where there is a doubt as to the assessment of a person amongst two, parallel proceedings can be taken against both and alternative assessment may also be completed. Therefore, the fact that a protective assessment has been completed against the assessee s wife does not ipso facto mean that assessment of such items of assets at the hands of the assessee is unsustainable. On the other hand, if the assessment at the hands of the assessee is sustained, the assessment of the very same assets at the hands of the assessee s wife, would have to necessarily fail. In such circumstances, we reject the contention now raised before us by the learned Senior Counsel for the assessee. Addition from profit from land deal at Palakkad by Sree Sankaracharya University and certain items of properties purchased by the Sree Sankaracharya University at Attukal in Thiruvananthapuram district - Held that - These two additions were deleted by the Tribunal on the basis that the conclusions of the Assessing Officer were purely based on surmises and without any evidence. While the bonafides of the aforesaid transactions entered into by the assessee, during his tenure of the Vice Chancellor of the University are open to doubt, there is no evidence whatsoever to conclude for the Assessing Officer or the Tribunal or this court to arrive at a conclusion that the differential amounts mentioned above have actually reached the hands of the assessee to be treated as his undisclosed income to be taxed at his hands. In this case, although there are communications which are sufficient to suspect the bonafides of the deals that cannot take the place of all principles to saddle the assessee with the tax liability which requires proof of undisclosed income at the hands of the assessee. Thus the finding of the Tribunal deleting the additions made in respect of Palakkad and Attukal properties are well found both factually and legally.

Issues Involved:
1. Validity of the search under Section 132 and the block assessment.
2. Justification of the estimate of 'undisclosed income'.
3. Legality of the inclusion of undisclosed income already considered in another block assessment.
4. Burden of proof and assessment of income from specific transactions.
5. Deletion of additions by the Tribunal in the Revenue's appeal.

Detailed Analysis:

1. Validity of the Search and Block Assessment:
The assessee challenged the validity of the search and the subsequent block assessment under Section 132 of the Income Tax Act. The Tribunal upheld the search's validity and the block assessment, determining that the procedural requirements were met.

2. Justification of the Estimate of 'Undisclosed Income':
The Tribunal confirmed the estimate of 'undisclosed income' for the block period, rejecting the assessee's claim that the amounts did not fall within the definition of "undisclosed income" as per Section 158B(b) of the Act. The Tribunal's findings were based on factual materials, and no question of law arose from these conclusions.

3. Inclusion of Undisclosed Income Already Considered in Another Block Assessment:
The assessee contended that certain items of income assessed in his hands were already assessed in his wife's hands under Section 158BD. The Tribunal noted that the assessment against the assessee's wife was a protective assessment. It is permissible to conduct parallel proceedings and make alternative assessments when there is doubt about the assessment of a person. Therefore, the Tribunal rejected the contention that the same set of assets could not be assessed in the assessee's hands.

4. Burden of Proof and Assessment of Income from Specific Transactions:
The Tribunal addressed several specific transactions:

- Gold Ornaments: The Tribunal partly accepted the assessee's claim regarding the gold ornaments but rejected contradictory contentions. It allowed the claim to the extent of 1500 grams of gold, considering the family's social status and background.
- Unexplained Source of ?3,00,000: The Tribunal confirmed the addition of ?3,00,000 as undisclosed income, finding that the assessee and his wife could not explain the source of this amount.
- Purchase of Maruti Zen Car: The Tribunal upheld the addition related to the purchase of the car, as the assessee could not adequately explain the source of the funds used for the purchase.

5. Deletion of Additions by the Tribunal in the Revenue's Appeal:
The Revenue appealed against the deletion of two additions by the Tribunal:

- Profit from Land Deal at Palakkad: The Tribunal deleted the addition of ?20,87,200, finding that the Assessing Officer's conclusions were based on surmises without evidence. The Tribunal noted that there was no proof that the differential amount reached the assessee's hands.
- Properties Purchased by Sree Sankaracharya University at Attukal: The Tribunal deleted the addition related to the purchase of properties, amounting to ?16,99,500. The Tribunal found that the Assessing Officer's conclusions were based on assumptions and lacked evidence.

The Tribunal's findings on these issues were factual and did not raise any question of law. The court confirmed the Tribunal's order, dismissing the appeals.

Conclusion:
The appeals were dismissed, upholding the Tribunal's decisions on all issues. The findings were based on factual assessments, and no substantial question of law was involved.

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