COMMISSIONER OF INCOME TAX Vs. ASHOK DUA

JUDGEMENT

(1.) HAVE been raised by the learned counsel for the appellant. One issue pertains to the addition made by the AO on the basis of certain bank statements discovered during the post -search inquiry. The addition made by the AO was to the extent of Rs. 3,10,000 by way of undisclosed income based on the said bank statements. It is an admitted position that the said bank statements were discovered in the course of a search during the 'post -search inquiry' conducted by the AO.

(2.) THE second issue sought to be raised by the learned counsel for the appellant is with regard to the additions made by the AO to the extent of Rs. 6,50,000 on account of his finding that the gifts of the said amount received from non - resident individuals by the assessee and his minor son were bogus. The admitted position with regard to this issue is that the assessee had disclosed the said gifts in his returns of income for the years 1993 -94 and 1994 -95. It is also an admitted position that no assessment under s. 143(3) of the IT Act, 1961, had been done. However, the returns have been processed under s. 143(1)(a) of the IT Act, 1961. It is also not in dispute that what was discovered or found in the deeds and the affidavits relating to the said gifts by the donors.

(3.) BEING aggrieved by the additions made by the AO on account of said bank statements and the said gifts, the assessee preferred an appeal before the CIT(A). After a detailed discussion of the factual position as also the law applicable, the CIT(A) deleted the additions made by the AO and returned a specific finding that the bank statements on the basis of which the addition of Rs. 3,10,000 was made, were not recovered during the course of a search. Consequently, the CIT (A) was of the view that the same cannot be looked into and, therefore, the addition of Rs. 3,10,000 was deleted. With regard to the gifts, the CIT(A) took the view that all that was discovered in the course of search were the documents which supported the gifts, namely, the gift deeds and the affidavits of the donors. The CIT(A) noted that nothing incriminating was found in the course of search which would go to indicate that the gifts were bogus. He noted that the doubts and suspicions discussed in the assessment order by the AO arose during the course of post -search inquiry. He also noted that except for suspicion, there was no concrete evidence for the AO to hold that the gifts were bogus. It was also noted that, in addition, the gifts already stood discussed (disclosed) in the regular returns of income filed earlier. Consequently, the CIT(A) held that as the conclusion of the AO was unsupported by any adverse material found or seized during the search, the gifts were outside the purview of the block assessment of undisclosed income as defined under s. 158B(b) of the IT Act, 1961. Accordingly, he deleted the addition of Rs. 6,50,000 attributable to the said gifts.