2009 (5) TMI 19 - HC - Income Tax

Tribunal has held the part of the additions of cash and jewellery found at the time of the Search to be valid and have deleted rest of the heads from the additions made by the Assessing Officer on the ground that no incriminating material was found in the Search and thus resort could not be taken under Chapter XIV-B - Finding of Tribunal that the undisclosed income was not computed on the basis of search material but on the basis of change in opinion of the Assessing Officer is concurrent - no substantial question of law arises revenue s appeal dismissed

Summary

Issues:
- Appeal under Section 260A of Income Tax Act against Tribunal's order deleting certain additions made by Assessing Officer in assessment under Section 158BC.
- Interpretation of provisions of Section 158BB and 158BB(2) regarding additions made by Assessing Officer.
- Correlation between evidence collected from search operation and additions made in assessment.
- Assessment of undisclosed income based on search material or change in opinion of Assessing Officer.

Analysis:

The High Court heard an appeal by the Revenue against the Tribunal's order that had deleted certain additions made by the Assessing Officer in the assessment under Section 158BC of the Income Tax Act. The Assessing Officer had assessed the Assessee's undisclosed income, including various additions such as loan received, gifts, foreign exchange remittance, undeclared income, excess jewellery, and deposits in bank accounts. The Tribunal upheld some additions but deleted others, stating that no incriminating material was found during the search, and hence, Chapter XIV-B could not be applied. The Appellants argued that the Tribunal misinterpreted Section 158BB and 158BB(2). However, the High Court found no perversity in the Tribunal's findings and noted that the Assessment for the Block Period should be based on evidence from the search or requisition. The Income Tax Department failed to establish a correlation between the evidence from the search and the additions made by the Assessing Officer. Both the CIT(A) and the Tribunal agreed that the undisclosed income was not computed based on the search material but on a change in the Assessing Officer's opinion.

Therefore, the High Court concluded that no substantial question of law arose for consideration and dismissed the appeal.