Commissioner of Income Tax vs Ram Gopal Agarwal

Learned counsel for the revenue has raised two issues before us.

In respect of the first issue, it is submitted that the value of the property in Sainik Farms, as per the report given by the DVO, was much higher than what was disclosed by the assessee.

It was admitted before the Commissioner (Appeals) as well as before the Income Tax Appellate Tribunal (hereinafter referred to as ''the Tribunal'') that no incriminating document was found during the course of search which could suggest any sort of investment made in the Sainik Farms property by the assessee.

It has been noted by the Tribunal, by relying upon a judgment of the Madhya Pradesh High Court in Commissioner of Income Tax Vs. Khushlal Chand Nirmal Kumar, that for the purposes of Chapter XIV-B of the Income Tax Act, 1961 evidence must be found during search, which would lead to a conclusion that the assessee had some undisclosed income. The Madhya Pradesh High Court also referred to a circular issued by the CBDT being Circular No. 8 of 2002, dated 27-8-2002 (2002) 178 CTR (St) 9 in which it has been mentioned that block assessment of undisclosed income is to be based on the evidence found during the search and material or information gathered in post search inquiries made on the basis of evidence found during the search.

This court has taken a view similar to that taken by the Madhya Pradesh High Court in L.R. Gupta and Others Vs. Union of India and Others, and Commissioner of Income Tax, Delhi-II Vs. Ravi Kant Jain, ) and several other decisions following these two decisions.

Insofar as the present case is concerned, there was no material found during the course of the search which would lead to a conclusion of undisclosed income in respect of the property at Sainik Farms. It is only on the basis of the return filed by the assessee followed by the report of the DVO that the assessing officer concluded that there was some undisclosed income in respect of the property at Sainik Farms.

Under the circumstances, insofar as this issue is concerned, no substantial question of law arises for consideration.

Learned counsel for the revenue says that she would like to look into the issue regarding apportionment of undisclosed income of Rs. 10,59,700. Limited to submissions on this issue, the matter is adjourned to 10-11-2008.