2002 (8) TMI 797 - AT - Income Tax

Issues Involved:

1. Admission of Additional Ground of Appeal
2. Estimation of Business Income for Assessment Year 1986-87
3. Undisclosed Income from Pawning Business for Assessment Year 1986-87
4. Interest on Pawning Business for Assessment Years 1986-87 to 1996-97
5. Investment in Pawning Business for Assessment Years 1989-90 to 1996-97
6. Estimation of Profit on Labour/Job Work/Sale of Gold for Assessment Years 1991-92 to 1996-97
7. Addition on Account of Purchase from Babu Lal for Assessment Year 1996-97
8. Credit for Surrendered Amount During Block Period

Summary:

1. Admission of Additional Ground of Appeal:
The Tribunal admitted the additional ground raised by the assessee, stating that the assessee has every right to raise this issue before the Tribunal. The issue is relevant and vital for the decision of the present appeal, and no further investigation is required. The Tribunal cited the Supreme Court case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383, which held that the Tribunal had jurisdiction to examine a question of law arising from the facts found by the Income-tax authorities.

2. Estimation of Business Income for Assessment Year 1986-87:
The assessee contended that no partnership firm existed for the assessment year 1986-87, and the income was wrongly estimated at Rs. 25,000. The Tribunal found that the partnership firm M/s Faqir Chand Chaman Lal came into existence only in the year relevant to the assessment year 1987-88. The Tribunal concluded that the Assessing Officer was not justified in estimating the income at Rs. 25,000 for the assessment year 1986-87 and deleted the addition.

3. Undisclosed Income from Pawning Business for Assessment Year 1986-87:
The Assessing Officer added Rs. 6,15,000 as undisclosed income from pawning business. The Tribunal found that the Assessing Officer did not give proper opportunity to the assessee to explain the entries in the seized documents. The Tribunal held that no addition could be made for the assessment year 1986-87 on account of pawning business as there was no partnership firm in existence. The addition of Rs. 6,15,000 was deleted.

4. Interest on Pawning Business for Assessment Years 1986-87 to 1996-97:
The Assessing Officer estimated interest income at Rs. 2,00,000 each for the assessment years 1986-87 to 1995-96 and Rs. 1,00,000 for the assessment year 1996-97. The Tribunal found that the addition was based on conjectures and surmises without any concrete evidence. The Tribunal deleted the addition, stating that no addition in block assessment can be made on an estimated basis.

5. Investment in Pawning Business for Assessment Years 1989-90 to 1996-97:
The Assessing Officer added Rs. 4,64,908 as undisclosed investment in pawning business, divided equally over the assessment years 1989-90 to 1996-97. The Tribunal found that the Assessing Officer did not give proper opportunity to the assessee to explain the case. The issue was remanded back to the Assessing Officer for fresh consideration after giving proper opportunity to the assessee.

6. Estimation of Profit on Labour/Job Work/Sale of Gold for Assessment Years 1991-92 to 1996-97:
The Assessing Officer applied a net profit rate of 10% on receipts amounting to Rs. 53,74,416, resulting in an addition of Rs. 5,62,410. The Tribunal found that the Assessing Officer did not consider the past history of the case and the receipts already shown by the assessee in regular returns. The issue was remanded back to the Assessing Officer for fresh consideration, taking into account the figures already disclosed by the assessee.

7. Addition on Account of Purchase from Babu Lal for Assessment Year 1996-97:
The Assessing Officer added Rs. 4,959 as undisclosed investment for the purchase of gold jewellery from Babu Lal. The Tribunal found that the Assessing Officer did not properly consider the assessee's explanation. The issue was remanded back to the Assessing Officer for fresh consideration after giving due opportunity to the assessee.

8. Credit for Surrendered Amount During Block Period:
The assessee claimed that credit for Rs. 1,00,000 surrendered during the block period was not given. The Tribunal remanded the issue back

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