1997 (11) TMI 122 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of the addition of Rs. 50,000 made by the Assessing Officer (AO).
2. Validity of the reassessment proceedings initiated u/s 148.
3. Evaluation of statements and evidence provided by the parties involved.

Summary:

1. Deletion of the Addition of Rs. 50,000:
The revenue's appeal contested the deletion of Rs. 50,000 by the DC(A), which was initially added by the AO as concealed income. The AO based the addition on the statement of Sh. Subash Gupta, who admitted that the draft was purchased from the firm's funds but not recorded in the books. The DC(A) deleted the addition, citing that the later statements by Sh. Subash Gupta and Sh. Gulshan Kumar Gupta indicated the money belonged to Sh. Gulshan Kumar Gupta, not the firm. The DC(A) found no justification for not accepting the later statements and emphasized that the provisions of section 69 were not applicable as the investment was not made by the firm.

2. Validity of the Reassessment Proceedings Initiated u/s 148:
The reassessment proceedings were initiated based on the information received from the ADI about the unexplained investment in the purchase of the draft. The assessee filed a return declaring the originally assessed income in response to the notice u/s 148. The DC(A) allowed the appeal, noting that the AO did not bring any material evidence to show that the investment was made by the firm, thus invalidating the reassessment proceedings.

3. Evaluation of Statements and Evidence Provided by the Parties Involved:
The AO relied on the initial statement of Sh. Subash Gupta, which was later contradicted by Sh. Gulshan Kumar Gupta's statement. The DC(A) accepted the later statements, citing legal precedents that an initial admission is not conclusive and can be retracted with proper evidence. However, the Tribunal found that the initial statement made on oath by Sh. Subash Gupta carried more weight and the subsequent retraction was not supported by cogent evidence. The Tribunal noted that the assessee failed to provide evidence of the sale proceeds purportedly belonging to Sh. Gulshan Kumar Gupta. Consequently, the Tribunal set aside the DC(A)'s order and restored the addition of Rs. 50,000 made by the AO.

Conclusion:
The Tribunal allowed the revenue's appeal, emphasizing the significance of the initial statement made on oath and the lack of supporting evidence for the subsequent retraction. The addition of Rs. 50,000 was restored, and the reassessment proceedings were deemed valid.