2006 (9) TMI 365 - AT - Income Tax

Summary

Issues Involved:
1. Addition of salary under the head "Income from salary" for the assessment year 2000-01.
2. Addition in business income and reasonableness of income declared.
3. Addition of salary under the head "Income from salary" for the assessment year 1999-2000.

Issue 1: Addition of Salary under the Head "Income from Salary" for the Assessment Year 2000-01:
The case involved the assessee receiving a salary of Rs. 9,30,000 credited by the employer on 31-3-2000. The Assessing Officer taxed the entire amount in the assessment year 2000-01 despite the assessee's claim that part of the salary was for the financial year ending on 31-3-1999. The Assessing Officer rejected the claim, stating that the salary was received on 31-3-2000 and the TDS was paid to the Government account on 27-5-2000. The CIT(A) upheld the Assessing Officer's decision, noting the lack of evidence supporting the assessee's claim regarding the salary for the preceding year. However, the Tribunal found that the salary accrued to the assessee on a monthly basis as per the Board of Directors' resolution, applying Section 15 of the Income-tax Act. It directed the Assessing Officer to recomputed the income considering the accrued salary.

Issue 2: Addition in Business Income and Reasonableness of Income Declared:
The assessee declared a business income of Rs. 14,000, supported by consultancy receipts of Rs. 23,600. The Assessing Officer estimated the net income from consultancy at Rs. 40,000 due to the lack of supporting evidence for the declared amount. The CIT(A) upheld this estimation. However, the Tribunal found the estimation to be based on surmise and conjecture without a proper basis. Consequently, it directed the deletion of the addition made by the Assessing Officer.

Issue 3: Addition of Salary under the Head "Income from Salary" for the Assessment Year 1999-2000:
Similar to the first issue, this case involved the addition of Rs. 3,46,500 under the head "Income from salary" for the assessment year 1999-2000. The Tribunal found the facts and circumstances to be identical to the previous case, directing the Assessing Officer to recomputed the income for the relevant year based on the accrued salary.

In conclusion, the Tribunal allowed both appeals of the assessee, directing the Assessing Officer to reconsider the computation of income in light of the accrued salary and the lack of proper basis for estimating consultancy income.