2011 (11) TMI 758 - AT - Income Tax

Summary

Issues Involved:
1. Re-opening and validity of assessments.
2. Estimation of income from house property.
3. Treatment of sale of old building materials as revenue receipt.
4. Deposits in bank accounts.
5. Credit in the name of P.A.T. Anbalagan.
6. Estimation of agricultural income.
7. Deposits in bank accounts and unexplained creditors.
8. Addition representing the difference between the cost of construction disclosed by the assessee and as estimated by the DVO.
9. Receipt of gifts on the inaugural function of the Kalyanamandapam.
10. Excess claim of interest on liability.

Detailed Analysis:

1. Re-opening and Validity of Assessments:
The appellant did not press the grounds relating to the re-opening and validity of the assessments. Consequently, these grounds were dismissed as not pressed.

2. Estimation of Income from House Property:
The assessee claimed the property as self-occupied, but the Assessing Officer assumed it was rented and added notional rent. The Tribunal found no evidence of the property being rented and noted it was the only house owned by the assessee. Thus, the addition under 'income from house property' was deleted.

3. Treatment of Sale of Old Building Materials as Revenue Receipt:
The assessee claimed Rs. 20,000 as proceeds from the sale of demolished building materials, which was recorded in the capital account. The Tribunal noted the existence of the building in earlier balance sheets and its absence in the current year, proving the demolition. Therefore, the amount was not treated as income, and the addition was deleted.

4. Deposits in Bank Accounts:
The assessee explained the deposits of Rs. 16,652 and Rs. 5,000 as agricultural income and realization of sundry debtors, respectively. The Tribunal accepted the explanation, noting the agricultural income disclosed and accepted by the Revenue, and deleted the addition.

5. Credit in the Name of P.A.T. Anbalagan:
No serious arguments were presented by the assessee's representative on this issue. Consequently, it was dismissed.

6. Estimation of Agricultural Income:
The assessee owned 10.23 acres of agricultural land and had disclosed agricultural income for over 20 years. The Tribunal found substantial evidence supporting the existence of agricultural operations and income. The addition made by treating the estimated agricultural income as 'income from other sources' was deleted.

7. Deposits in Bank Accounts and Unexplained Creditors:
The assessee produced confirmation letters from creditors, but the Assessing Officer disallowed the investments due to lack of additional evidence. The Tribunal noted the age of the transactions and the responses from creditors, accepting the confirmation letters as adequate evidence. The addition was deleted.

8. Addition Representing the Difference Between the Cost of Construction Disclosed by the Assessee and as Estimated by the DVO:
The assessee disclosed Rs. 39,85,062 for the construction of a Kalyanamandapam, while the DVO estimated Rs. 72,32,100. The Tribunal found CPWD rates inappropriate for the village location and noted the lack of cooperation during the original assessment. Considering the elapsed time and disclosed investment, the addition was deleted.

9. Receipt of Gifts on the Inaugural Function of the Kalyanamandapam:
The assessee disclosed gifts of Rs. 1,35,435, reduced to Rs. 95,435 by the CIT(A). Due to the difficulty in producing evidence after many years, the Tribunal granted an additional relief of Rs. 45,435, restricting the addition to Rs. 50,000.

10. Excess Claim of Interest on Liability:
No serious arguments were presented on this issue. Consequently, it was dismissed.

Conclusion:
The appeals resulted in partial allowances and deletions of various additions, with ITA Nos. 399 to 404/Mds/2011 being partly allowed and ITA Nos. 405 to 409/Mds/2011 being allowed. The order was pronounced on 18/11/2011.