2007 (3) TMI 775 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition on account of undisclosed income from deposits in savings bank accounts of assessee's daughters.
2. Deletion of addition on account of interest income on bank deposits of assessee's daughters.
3. Deletion of addition on account of foreign remittance received by the assessee, his wife, and daughters.
4. Determination of daughters as benamidars of the assessee.
5. Deletion of addition on account of unexplained marriage expenses of the daughters.
6. Deletion of addition on account of unexplained investment and estimated profit in respect of a benami concern.
7. Confirmation of addition on account of deposits in savings bank account of the assessee's wife.
8. Confirmation of addition on account of deposits in the name of Smt. Sita Rani.
9. Confirmation of addition on account of household items.

Issue-wise Detailed Analysis:

1. Deletion of addition on account of undisclosed income from deposits in savings bank accounts of assessee's daughters:
The Department argued that the deposits in the bank accounts of the assessee's daughters were actually the undisclosed income of the assessee, as the daughters were merely benamidars. The Tribunal found that the daughters were independent assessees, and the deposits were declared in their returns of income. The theory of the daughters being benamidars was not substantiated by evidence, and the affidavits filed by the daughters were not rebutted. Therefore, the addition was rightly deleted by the CIT(A).

2. Deletion of addition on account of interest income on bank deposits of assessee's daughters:
The interest income on the bank deposits of the daughters was already declared in their returns of income. Hence, it could not be treated as undisclosed income of the assessee. The Tribunal upheld the deletion of this addition by the CIT(A).

3. Deletion of addition on account of foreign remittance received by the assessee, his wife, and daughters:
The foreign remittances were received by the daughters when they were major and were disclosed in their returns of income. The affidavits of the donors were not considered by the AO, and the peak theory and telescopic theory were not applied. The Tribunal found that the CIT(A) correctly deleted the addition.

4. Determination of daughters as benamidars of the assessee:
The Tribunal found that the daughters were not proved to be benamidars of the assessee. The theory was based on mere suspicion without evidence. Therefore, the ground of the Department was rejected.

5. Deletion of addition on account of unexplained marriage expenses of the daughters:
The AO estimated the marriage expenses based on the statement of one daughter, without any supporting evidence. The CIT(A) considered the affidavits and other submissions and correctly estimated the expenses. The Tribunal upheld the deletion of the addition.

6. Deletion of addition on account of unexplained investment and estimated profit in respect of a benami concern:
The AO concluded that the concern was a benami of the assessee based on the name appearing in the capital account and possession of documents. However, the documents showed that the money came from accounts of Shri Sujeet Sharma, who admitted ownership. The Tribunal upheld the deletion of the addition by the CIT(A).

7. Confirmation of addition on account of deposits in savings bank account of the assessee's wife:
The assessee claimed that the deposits were made by his wife, but there was no direct evidence. The affidavit of the wife was not accepted as it was self-serving. The Tribunal found that the addition was rightly confirmed by the CIT(A).

8. Confirmation of addition on account of deposits in the name of Smt. Sita Rani:
The AO added the amount based on photocopies of KDRs found during the search, which were not confronted to the assessee. The Tribunal remitted the issue to the AO for fresh decision after providing an opportunity to the assessee.

9. Confirmation of addition on account of household items:
The AO made the addition based on the inventory of household items. The assessee's explanations were not substantiated. The CIT(A) granted partial relief, and the Tribunal upheld the order of the CIT(A).

Conclusion:
The Department's appeal (IT(SS)A No. 22/Asr/2002) was dismissed, and the assessee's appeal (IT(SS)A No. 19/Asr/2004) was partly allowed.