1997 (5) TMI 402 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition on account of undisclosed investment in jewellery.
2. Addition on account of unexplained marriage expenses.
3. Addition on account of assumed low household expenses.
4. Addition on account of cash found during the search.
5. Addition on account of jewellery based on loose papers.
6. Addition on account of unexplained investment for purchase of drafts.
7. Levy of interest under sections 139 and 217 of the Income-tax Act.

Detailed Analysis:

1. Deletion of Addition on Account of Undisclosed Investment in Jewellery:
The Revenue objected to the deletion of the addition of Rs. 1,16,307 by the Commissioner (Appeals) concerning undisclosed investment in jewellery. The Revenue argued that the jewellery seized did not tally with the returns of wealth filed by the assessee and his family members. The Commissioner (Appeals) deleted the addition by presuming that the balance jewellery belonged to the female members of the family. The Tribunal upheld the Commissioner (Appeals)'s decision, stating that in a joint family, the presumption under section 132(4) cannot be invoked against one person only unless it is established that the assets were found in the control or possession of that person. The Tribunal found that the Revenue did not justify the addition without bringing any material on record.

2. Addition on Account of Unexplained Marriage Expenses:
The assessee contested the addition of Rs. 1,46,094 for unexplained marriage expenses of his two sons. The Tribunal noted that the onus under section 69C of the Income-tax Act initially lies on the Revenue to establish the quantum of expenses and that such expenses were incurred by the assessee. The Tribunal found that the authorities had not verified the assessee's explanation regarding the expenses incurred by the in-laws of his sons. The Tribunal remanded the issue back to the Assessing Officer for fresh verification.

3. Addition on Account of Assumed Low Household Expenses:
The assessee challenged the addition of Rs. 53,000 on account of low household expenses. The Tribunal held that the onus under section 69A lies on the Revenue to prove that certain expenses were incurred by the assessee. The Tribunal found that the authorities had based their estimation on assumptions without evidence. The Tribunal deleted the addition, stating that the Revenue failed to establish with evidence that the expenses were incurred by the assessee.

4. Addition on Account of Cash Found During the Search:
The assessee contested the addition of Rs. 66,220 on account of cash found during the search. The Tribunal noted that the authorities had rejected the assessee's explanation without verifying the availability of cash in the books of the firm Jaikishan Bros. The Tribunal remanded the issue back to the Assessing Officer to verify the availability of cash in the firm's books. The Tribunal accepted the explanation regarding cash belonging to the assessee's wife and daughter-in-law but sustained the addition of Rs. 13,241 claimed as the assessee's past savings.

5. Addition on Account of Jewellery Based on Loose Papers:
The assessee challenged the addition of Rs. 1,34,349 based on loose papers found during the search. The Tribunal held that the presumption under section 132(4) could only be invoked if it was established that the loose papers were found in the possession or control of the assessee. The Tribunal found that the authorities had not established this and had proceeded on hypothetical assumptions. The Tribunal deleted the addition, stating that the authorities had not brought any material to reject the assessee's explanation.

6. Addition on Account of Unexplained Investment for Purchase of Drafts:
The assessee contested the addition of Rs. 33,226 for unexplained investment in drafts. The Tribunal upheld the Commissioner (Appeals)'s decision, which had directed the Assessing Officer to verify the explanation regarding the first draft and rejected the explanation for the other drafts. The Tribunal confirmed the addition, finding no reason to interfere with the Commissioner (Appeals)'s findings.

7. Levy of Interest Under Sections 139 and 217:
The assessee challenged the levy of interest under sections 139 and 217 of the Income-tax Act. The Tribunal directed the Assessing Officer to allow consequential relief on this account.

Conclusion:
The appeal of the assessee was allowed in part, with certain issues remanded back to the Assessing Officer for fresh verification, while the appeal by the Revenue was dismissed.