1985 (10) TMI 285 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 66,000 as income from undisclosed sources under Section 68 of the IT Act.
2. Addition of Rs. 10,000 as income from undisclosed sources under Section 68 of the IT Act.
3. Disallowance of Rs. 13,400 out of transportation account.
4. Disallowance of Rs. 9,410 out of traveling expenses.
5. Disallowance of Rs. 2,400 out of establishment expenses.
6. Disallowance of Rs. 1,250 under the head general charges.

Detailed Analysis:

1. Addition of Rs. 66,000 as Income from Undisclosed Sources under Section 68 of the IT Act:
The CIT(A) confirmed the addition of Rs. 66,000 as the firm's income from undisclosed sources under Section 68 of the IT Act. The cash was deposited in the name of Shri Ramesh Krishna Mehrotra, but the ITO found no details of the depositor's address. The firm initially claimed the deposit was made by Shri Kamal Krishna Mehrotra on behalf of his brother, Ramesh Krishna Mehrotra. However, Kamal Krishna Mehrotra denied depositing the amount during his examination under Section 131. The CIT(A) and the Tribunal upheld the ITO's decision, stating that the firm failed to provide sufficient evidence, such as a confirmatory letter or affidavit from Ramesh Krishna Mehrotra. The Tribunal concluded that the authorities were justified in treating the amount as income from undisclosed sources.

2. Addition of Rs. 10,000 as Income from Undisclosed Sources under Section 68 of the IT Act:
The ITO added Rs. 10,000 as income from undisclosed sources, citing incomplete confirmatory letters and lack of evidence regarding the depositor, Shri Anand Kishore Agarwal. The CIT(A) affirmed this, noting that the assessee failed to provide sufficient opportunity to produce the confirmatory letter or affidavit. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee did not discharge the initial onus of proving the genuineness, creditworthiness, and identity of the depositor.

3. Disallowance of Rs. 13,400 out of Transportation Account:
The ITO disallowed Rs. 13,400 claimed as transportation charges due to inadequate evidence, such as unsigned vouchers and lack of vehicle details. The CIT(A) upheld this disallowance, citing inconsistencies in the signatures and lack of corroborative evidence. However, the Tribunal disagreed, stating that the ITO should have summoned Shri Subhash, the alleged transporter, to verify the payments. The Tribunal found the disallowance improper and deleted it, noting that the authorities did not doubt the trips made by the trucks.

4. Disallowance of Rs. 9,410 out of Traveling Expenses:
The ITO disallowed Rs. 9,410 claimed as traveling expenses for Shri U.S. Halwasiya and Shri Pritam Goel, citing lack of evidence such as hotel bills and taxi receipts. The CIT(A) upheld this disallowance, noting that the firm did not own a car and failed to provide confirmatory letters from car owners. The Tribunal agreed, stating that the assessee withheld material evidence and failed to prove that the expenses were incurred for business purposes.

5. Disallowance of Rs. 2,400 out of Establishment Expenses:
The ITO disallowed Rs. 2,400 claimed as salary for a driver, noting that the firm did not own a car. The CIT(A) affirmed this, stating that the driver, Nanhey, had already been paid for transportation charges and was not produced as a witness. The Tribunal upheld the disallowance, emphasizing that the assessee failed to prove the services rendered by the driver and withheld material evidence.

6. Disallowance of Rs. 1,250 under the Head General Charges:
The CIT(A) restricted the disallowance under general charges to Rs. 750, which the Tribunal found fair and reasonable. The Tribunal confirmed the CIT(A)'s finding, noting that no interference was called for.

Conclusion:
The appeal was partly allowed, with the Tribunal deleting the disallowance of Rs. 13,400 out of the transportation account but upholding the other disallowances and additions made by the CIT(A).