Law:

Section:

Section 254(1) of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Assessment year 1993-94 - Commissioner (Appeals) set aside order of Assessing Officer disallowing construction expenses debited by assessee as part of disclosure of unaccounted expenditure - Tribunal set aside order of Commissioner (Appeals) - Whether since Tribunal committed an error in exercise of its jurisdiction in setting aside appellate order of Commissioner (Appeals) without taking into consideration reasons for which that order was made, impugned order of Tribunal could not be sustained and Tribunal should be directed to reconsider matter on merits in accordance with law - Held, yes FACTS During the search proceedings under section 132, a disclosure of Rs. 25 lakhs was made in the group of the assessees including the disclosure of Rs. 5 lakhs in the name of the assessee for the accounting year relevant to the said assessment year. An unaccounted expenditure incurred towards construction work of GA Apartments of Rs. 3 lakhs was disclosed in the said disclosure of Rs. 5 lakhs. The assessee debited a sum of Rs. 3,14,964 on account of miscellaneous construction expenses. The Assessing Officer disallowed the said construction expenses and found that the disclosed income of Rs. 3 lakhs had been nullified by debiting miscellaneous construction account and correspondingly crediting to construction account. The Commissioner (Appeals) noted that the appellant had given clear and unequivocal bifurcation of the undisclosed income of Rs. 5 lakhs and had clearly mentioned that Rs. 3 lakhs was spent for construction of GA Apartments. The Commissioner (Appeals) also observed that the fact that the appellant had invested a part of undisclosed income for the purpose of construction of GA Apartments had also been proved by the valuation report of the DVO wherein the cost of construction had been estimated at Rs. 68,12,280 as against the cost of construction disclosed by the appellant in the books of account amounting to Rs. 63,87,693 leaving a difference of Rs. 4,24,687 which apparently represented the undisclosed income of Rs. 3 lakhs. The Commissioner (Appeals) set aside the order of the…

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