2013 (11) TMI 1737 - AT - Income Tax

Summary

Issues Involved:
1. Validity of assessment and additions made by AO.
2. Disallowance of interest.
3. Unexplained investment.
4. Benefit of disclosure/additions made in the firm of M/s. Tirupati Construction Co.

Summary:

1. Validity of Assessment and Additions:
- The assessee challenged the validity of the assessment and additions made by the AO for all the assessment years, claiming the orders were "wholly illegal, unlawful and against the principles of natural justice." These grounds were deemed general in nature and required no adjudication.

2. Disallowance of Interest:
- Assessment Year 2003-2004: The disallowance of interest of Rs. 26,511/- was upheld as the assessee could not establish that the borrowed funds were used for business purposes.
- Assessment Year 2004-2005: The disallowance of interest of Rs. 1,01,812/- was upheld for similar reasons as in the previous year.
- Assessment Year 2005-2006: The disallowance of interest of Rs. 4,26,688/- was upheld, following the reasoning from earlier years.
- Assessment Year 2006-2007: No specific disallowance of interest was mentioned for this year.

3. Unexplained Investment:
- Assessment Year 2003-2004: The addition of Rs. 73,340/- was deleted as the sale of gold ornaments by the assessee's wife covered this amount.
- Assessment Year 2004-2005: The addition of Rs. 5,78,818/- was partly allowed with a relief of Rs. 1,72,280/- based on the assessee's 12% share in the firm M/s. Tirupati Construction Co.
- Assessment Year 2005-2006: The addition of Rs. 5,48,088/- was partly allowed with a relief of Rs. 80,490/- based on the assessee's 12% share in the firm.
- Assessment Year 2006-2007: The addition of Rs. 1,63,845/- was partly allowed with a relief of Rs. 69,260/- based on the assessee's share in the firm.

4. Benefit of Disclosure/Additions in M/s. Tirupati Construction Co.:
- The assessee claimed telescopic benefit of the additions made in the firm M/s. Tirupati Construction Co. for unexplained investments in the construction of a bungalow. The Tribunal allowed the benefit to the extent of the assessee's share in the firm's profit and loss account for the relevant assessment years.

Conclusion:
- The appeals were partly allowed, with specific reliefs granted for unexplained investments based on the assessee's share in the firm M/s. Tirupati Construction Co. The disallowance of interest was upheld across the relevant assessment years.