2011 (3) TMI 1632 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 30,57,000/- related to construction expenses of a bungalow.
2. Addition of Rs. 1,40,922/- related to cash deposits in the bank account of the assessee's wife.
3. Addition of Rs. 50,000/- related to investment in construction of a house in Kerala.

Summary:

Issue 1: Deletion of Addition of Rs. 30,57,000/- Related to Construction Expenses of a Bungalow

The Revenue's appeal against the deletion of Rs. 30,57,000/- addition made by the Assessing Officer (AO) u/s 158BC(c) of the Income-tax Act, 1961, was dismissed. The AO had added this amount based on loose papers found during a search, which indicated expenses on carpentry and painting for a bungalow in Kerala. The assessee contended that these papers were mere quotations and not actual bills, supported by affidavits from the carpenter and other contractors. The Commissioner of Income-tax (Appeals) found no corroborative evidence from the AO to support the addition and deleted it. The Tribunal upheld this decision, noting the lack of reliable evidence and the proper explanation provided by the assessee.

Issue 2: Addition of Rs. 1,40,922/- Related to Cash Deposits in the Bank Account of the Assessee's Wife

The assessee's cross-appeal contended that the Commissioner of Income-tax (Appeals) erred in confirming an addition of Rs. 1,40,922/- out of Rs. 9,32,565/- representing cash deposits in his wife's bank account. The Commissioner of Income-tax (Appeals) had held that since the income from the business carried out in the name of the wife was assessed in the hands of the husband, the deposits should also be considered in the husband's hands. The Tribunal found no error in this approach and dismissed the Revenue's appeal in the case of the wife. However, it was noted that amounts of Rs. 36,000/- and Rs. 46,000/- for assessment years 1999-2000 and 2000-01 respectively had already been declared by the assessee. Thus, the Tribunal directed the deletion of these amounts from the addition, sustaining only Rs. 58,922/- out of Rs. 1,40,922/-.

Issue 3: Addition of Rs. 50,000/- Related to Investment in Construction of a House in Kerala

The assessee's appeal against the addition of Rs. 50,000/- for the assessment year 1998-99, related to investment in the construction of a house in Kerala, was dismissed. The Tribunal found no substantiating material on record to support the assessee's claim that this amount had been disclosed as income towards the construction of the house. Therefore, the addition was affirmed.

Conclusion:

The Tribunal dismissed the Revenue's appeals (ITA Nos 612/PN/04 and 615/PN/04) and partly allowed the assessee's appeal (ITA No 695/PN/04), with the decision pronounced in the open Court on March 31, 2011.