1999 (12) TMI 867 - AT - Income Tax

Issues Involved:

1. Addition of Rs. 62,500 to professional receipts.
2. Estimated disallowance of Rs. 20,000 from salary and bonus expenses.
3. Disallowance of Rs. 1,19,952 out of interest claimed.
4. Taxation of "Peak" credits in 110 bank accounts.
5. Additional grounds on "Peak" deduction from previous assessment year.
6. Charging of interest u/s 234A and 234B.
7. Department's appeal on reliefs allowed by CIT(A).

Summary:

1. Addition of Rs. 62,500 to Professional Receipts:
The CIT(A) sustained the addition of Rs. 62,500 made by the AC by estimating the professional receipts at Rs. 5,00,000 against the admitted receipts of Rs. 4,37,500. The assessee contended that the monthwise details of professional income were furnished, and no understatement was noticed by the AC. The Tribunal set aside the assessment on this issue for fresh consideration.

2. Estimated Disallowance of Rs. 20,000 from Salary and Bonus Expenses:
The CIT(A) confirmed the estimated disallowance of Rs. 20,000 made by the AC out of expenses incurred on salary and bonus. The assessee argued that higher expenditure was incurred due to increased reliance on assistants. The Tribunal set aside the assessment on this issue for fresh consideration.

3. Disallowance of Rs. 1,19,952 out of Interest Claimed:
The CIT(A) sustained the disallowance of Rs. 1,19,952 out of interest claimed by the assessee on the ground that the relevant borrowals were from concerns whose names appeared in Annexure A-3. The Tribunal set aside the assessment on this issue for fresh consideration, subject to the AO's findings on the genuineness of the concerns.

4. Taxation of "Peak" Credits in 110 Bank Accounts:
The CIT(A) upheld the AO's decision to bring to tax the "Peak" of the credits appearing in 110 bank accounts, reducing the addition from Rs. 12,86,70,053 to Rs. 3,05,40,285. The Tribunal held that the statement recorded from the assessee on 20th Dec., 1991, was valid under s. 132(4) and had evidentiary value. The Tribunal directed that the peak be worked out by arranging the transactions datewise and reducing the peak of the earlier year from the peak of the current year. The assessment was set aside for verification of the genuineness of the assessee's retraction and fresh consideration.

5. Additional Grounds on "Peak" Deduction from Previous Assessment Year:
The assessee raised additional grounds that the "Peak" included in the IT assessment for the asst. yr. 1990-91 should be deducted from the "Peak" arrived at for the asst. yr. 1991-92. The Tribunal accepted this contention and directed the AO to consider it while working out the peak.

6. Charging of Interest u/s 234A and 234B:
The assessee contended that interest u/s 234A should not be charged as the return was voluntarily filed, and no notice under s. 142(1) was served. The Tribunal rejected this contention, holding that interest is compensatory and applicable for delayed filing of returns. The Tribunal also rejected the contention that interest u/s 234B should be charged only on the returned income, not the assessed income.

7. Department's Appeal on Reliefs Allowed by CIT(A):
The Department appealed against the relief of Rs. 1,70,000 and Rs. 4,00,000 allowed by the CIT(A) without verifying facts, deletion of Rs. 20 lakhs addition, and setting aside the addition of Rs. 12,86,70,053. The Tribunal restored the addition of Rs. 5,70,000 for unproved credits, set aside the deletion of Rs. 20 lakhs being the alleged advance to Shri Bhupen Chedda, and directed fresh consideration of the addition of Rs. 3,05,40,285 based on the Tribunal's directions in the assessee's appeal.

Conclusion:
The Tribunal set aside the assessment on the main issues for fresh consideration by the AO, directed verification of the genuineness of the concerns, and upheld the validity of the statement recorded under s. 132(4). The appeals by both the assessee and the Department were partly allowed.

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