2003 (4) TMI 84 - HC - Income Tax

Search and seizure - (i) Whether Tribunal was justified in deleting the on account of business income of the assessee by holding that there was no partnership firm in existence during that year especially in view of the seized books of account which clearly reveal that the assessee was continuously doing pawning business outside its books of account right from the year 1981 to the date of search? - (ii) Whether Tribunal was justified in deleting the addition made on account of undisclosed investment made by the assessee in the pawning business? - (iii) Whether Tribunal was justified in deleting the addition made on account of interest earned by the assessee from pawning business for the assessment years 1986-87 to 1996-97 by holding that no addition was called for because there was no material on record to justify the action of the Assessing Officer? - There is no any infirmity in the appreciation of evidence made by the Tribunal or the reasons assigned by it for deleting the additions made by the Assessing Officer. Therefore none of the questions of which determination has been sought by the Revenue can be treated as a substantial question of law.

Summary

Issues:
1. Deletion of addition of Rs. 25,000 made on account of business income for the assessment year 1986-87.
2. Deletion of addition of Rs. 6,15,000 made on account of undisclosed investment in pawning business for the assessment year 1986-87.
3. Deletion of addition of Rs. 21,00,000 made on account of interest earned from pawning business for the assessment years 1986-87 to 1996-97.

Analysis:
1. The Revenue appealed for the determination of the addition of Rs. 25,000 on business income for the assessment year 1986-87. The Tribunal found that the partnership firm came into existence on April 1, 1986, and thus, the addition by the Assessing Officer was unjustified. The Tribunal also noted that no proper opportunity of being heard was given to the assessee, leading to the deletion of the addition.

2. Regarding the addition of Rs. 6,15,000 as undisclosed investment in pawning business for the assessment year 1986-87, the Tribunal found that the Assessing Officer did not provide a fair opportunity for the assessee to present their case. The documents used for the addition were not properly confronted to the assessee, leading to the deletion of this addition as well. The Tribunal further stated that no business was conducted by the assessee in that year due to the non-existence of a partnership firm.

3. The addition of Rs. 21,00,000 on interest earned from pawning business for the assessment years 1986-87 to 1996-97 was also deleted by the Tribunal. The Tribunal highlighted that the Assessing Officer's calculations were based on conjectures and surmises, lacking a proper basis. It was emphasized that no evidence supported the contention that the assessee earned the interest income as estimated. The Tribunal ruled that estimated additions cannot be justified in a block assessment, leading to the deletion of this addition.

In conclusion, the Tribunal found no substantial question of law in the Revenue's appeal, leading to the dismissal of the appeal.