1992 (10) TMI 78 - HC - Income Tax

Summary

Issues:
1. Addition of unaccounted expenditure incurred during a holiday in Kashmir.
2. Applicability of section 69C of the Income-tax Act, 1961.

Analysis:
The case involved an assessment year of 1964-65 where the Income-tax Officer added Rs. 10,000 to the assessee's income as representing income from undisclosed sources due to alleged unaccounted expenditure during a holiday in Kashmir. The assessee, along with family members, had taken a trip to Kashmir, and the expenses were found to be significantly higher than the disclosed amount. The Appellate Assistant Commissioner upheld the addition, leading to a second appeal to the Income-tax Tribunal. The Tribunal, after considering the monthly drawings of the assessee and family, reduced the addition to Rs. 5,000, stating that it was a fair estimate for the unexplained portion of the expenses incurred during the trip.

Regarding the first issue of sustaining the addition of Rs. 5,000 for unaccounted expenditure, the Tribunal found that the expenses disclosed by the assessee were insufficient considering the size of the family and the nature of the trip. The Tribunal acknowledged that the addition made by the Income-tax Officer was excessive and decided to reduce it to Rs. 5,000 after deducting certain amounts already considered. The Tribunal's decision was based on factual findings and a reasonable estimation of the expenses incurred during the trip.

On the second issue of the applicability of section 69C of the Income-tax Act, the court held that the questions referred were essentially questions of fact. As the explanation of the assessee regarding the expenses was not accepted, the provisions of section 69C, which deal with unexplained expenditure, were deemed applicable. The court affirmed the Tribunal's decision to uphold the addition of Rs. 5,000, considering the facts on record and the rejection of the assessee's explanation.

In conclusion, the court answered the questions in the affirmative and in favor of the department, indicating that the addition of Rs. 5,000 for unaccounted expenditure during the Kashmir trip was justified. The court made no order as to costs in this matter.