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Issues involved: Interpretation of past intangible additions in assessing unexplained investments and set off for low household expenses.
Summary: The High Court of Punjab and Haryana addressed five Income-tax References concerning an assessee, focusing on whether past intangible additions made in the case of a firm could be considered in assessing unexplained investments and set off against agreed low household expenses. The Income-tax Officer had made various additions for different reasons, with the assessee agreeing to the low household expenses addition but disputing others. The Appellate Assistant Commissioner deleted most additions except a nominal amount for the first year, allowing set off based on firm's additions. The Income-tax Appellate Tribunal, following precedent, concluded that the assessee could utilize past intangible additions to explain income sources and set off against agreed expenses. The Tribunal referred the matter to the High Court for opinion. The Department argued that once the assessee agreed to household expenses addition, it could not be deleted. However, the crux of the issue was whether past intangible additions from the firm could be used to offset agreed expenses. Citing relevant case law, the High Court upheld the Tribunal's decision, stating that the assessee was entitled to set off past additions against agreed expenses for the assessment years in question. The judgment favored the assessee, with each party bearing their own costs.
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