GUDWILL HOUSING LIMITED Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS Income Tax Appeal, under Section 260A of the Income Tax Act, 1961 (for short 'the Act'), is directed against the order dated 30.05.2007 passed by the Income Tax Appellate Tribunal, Bangalore Bench -A (for short 'the Tribunal) disposing of ITA Nos.1441 -1443 of 2004 pertaining to the assessment years 1996 -97, 1999 -2000 and 1998 -99. The Tribunal also decided other four appeals filed by the revenue by the very same order. However, we are not concerned with the same, since the order disposing of those appeals, is not the subject matter of the instant appeal. The appeals before the Tribunal were directed against the orders of Commissioner of Income Tax (Appeals) (for short, 'CIT(A)') dated 17.03.2004 and 25.03.2004, whereby CIT(A) had partly allowed the appeals filed by the assessee. The appeals before the CIT(A) were directed against the assessment order dated 30.01.2003 passed by the Income Tax Officer, Ward -11(2), Bangalore (for short, 'Assessing Officer').

(2.) THIS Court while admitting the appeal on 29.1.2008 formulated the following substantial question of law for consideration:

(3.) BRIEFLY stated the facts against which, the substantial question of law, as framed vide order dated 29.01.2008, arises for our consideration are that the appellant -assessee constructed a building, during the relevant assessment years and had filed return of income declaring nil income. In the building constructed by the assessee, one M/s.Monalisa Interior Decorators Private Limited (for short, 'Monalisa'), had purchased the premises for running their own office. A search was conducted of the premises of Monalisa under Section 132 of the Act on 24.12.1999. During the search, a fax message was seized revealing some payment made by Monalisa to the assessee. The amount that was disclosed in the fax was Rs.12,52,750/ -. On the basis thereof, it was revealed that the amount disclosed by the assessee in his return, having received from Monalisa, was only Rs.4,97,417/ -. In this backdrop, the Assessing Officer issued notice under Section 148 of the Act, reopening the assessment for the assessment years 1996 -97, 1998 -99 and 1999 - 2000 and added the amount of Rs.37,59,689/ - for the assessment year 1996 -97, Rs.6,05,000/ - for the assessment year 1998 -99 and Rs.7,16,642/ - for the assessment year 1999 -2000. The Tax liability, on the basis of the additions was determined as Rs.19,58,498/ -, Rs.3,75,357/ - and Rs.3,95,147/ - respectively. This order was challenged by the assessee in appeals before CIT(A). The CIT(A) confirmed the order passed by the Assessing Officer insofar as these additions are concerned.