INCOME TAX ACT, 1961

Section 158BC

Search and seizure - Block assessment - -

During the course of search, assessee admitted deposits in financial firms and withdrawals thereof in fictitious names and thus AO taxed undisclosed income in assessee's individual hands, which assessees themselves claimed in returns filed in pursuance of notices issued under section 158BC. CIT(A) upheld addition. Assessee filed appeal before Tribunal pleading that undisclosed income did not belong to assessee in her individual capacity but it could be attributed to HUF of Dr. N. Rajkumar, one of the assessees. Tribunal upheld assessee's contention merely because HUF of assessee might have existed. Revenue challenged this by way of appeal before High Court. Held: Merely because assessees' names were included in the Financial Firms alleged to have been run by HUF and name of one of assessees, Dr. N. Rajkumar was included as Managing Parter of the Firms run by Family, it did not mean that entire undisclosed income could be attributed to such Financial Firms and even their Deposits and Withdrawals in the fictitious names could be believed as Gospel Truth forming basis of explained cash available at the beginning of Block Period in the hands of HUF of assessee Dr. Rajkumar. If such explanations were to be treated as pieces of evidence and believable facts in Search cases, such false and flimsy defences could be created in almost all Search cases rendering all the assessments of undisclosed income nugatory exercise altogether. Admission of assesses, which was the best evidence against assessees it was quite surprising as to how ground raised before Tribunal, prompted Tribunal to reverse findings of AO and CIT(A) and, therefore, order passed by Tribunal could not be sustained.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 1-4-1996 to 4-6-2002

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