1976 (3) TMI 60 - AT - Income Tax

Issues Involved:
1. Addition of Rs. 2,90,000 as income from undisclosed sources for the assessment years 1967-68 and 1968-69.
2. Addition of Rs. 11,000 for house repairs for the assessment year 1967-68.
3. Addition of Rs. 13,000 for investment in the firm of Maganlal Babulal Shah for the assessment year 1967-68.
4. Penalty proceedings under Section 271(1)(c) of the Act.
5. Additions for the assessment year 1970-71: Rs. 1,000, Rs. 642, and Rs. 20,250.

Detailed Analysis:

1. Addition of Rs. 2,90,000 as Income from Undisclosed Sources:
The Income Tax Officer (ITO) included Rs. 2,90,000 as income from undisclosed sources for the assessment year 1967-68, based on a statement made by the assessee on 24th November 1967, which was later retracted. The Appellate Assistant Commissioner (AAC) confirmed this addition. However, the Tribunal noted that the same amount was already added to the income of Chimanlal N. Joshi for the assessment year 1968-69, which had become final and conclusive. Therefore, it was held that the same amount could not be assessed in the hands of the assessee. Additionally, the Tribunal observed that even if the assessee's initial statement was accepted, the amount would be assessable in the assessment year 1968-69, not 1967-68, as the transaction occurred on 31st May 1967. Consequently, the addition of Rs. 2,90,000 for both assessment years 1967-68 and 1968-69 was deleted.

2. Addition of Rs. 11,000 for House Repairs:
The ITO added Rs. 11,000 as income from undisclosed sources, assuming it was spent on house repairs. The Tribunal found no evidence or admission from the assessee confirming the expenditure. Therefore, the matter required further investigation to establish whether the amount was indeed spent on repairs. The Tribunal set aside the addition and referred the question back to the ITO for further inquiry.

3. Addition of Rs. 13,000 for Investment in the Firm of Maganlal Babulal Shah:
The ITO added Rs. 13,000 as income from undisclosed sources, which was purportedly invested in the firm. The Tribunal found that no proper investigation or cross-verification of entries was made. Consequently, the addition was set aside, and the matter was referred back to the ITO for further investigation and inquiry.

4. Penalty Proceedings under Section 271(1)(c):
The IAC imposed a penalty of Rs. 3,50,000 for concealment of income, based on the additions of Rs. 2,90,000, Rs. 11,000, and Rs. 13,000. Given the Tribunal's findings that these additions could not be sustained, the penalty proceedings did not survive. The penalty was accordingly cancelled.

5. Additions for the Assessment Year 1970-71:
- Rs. 1,000: The assessee did not press this ground, so it was rejected.
- Rs. 642 (Share Income of Assessee's Wife from Hemant Cloth Stores) and Rs. 20,250 (Investments in Chintamani Cloth Stores and Hemant Cloth Stores): The Tribunal found that no proper inquiry or investigation was made. The matter was referred back to the ITO for further investigation and inquiry.

Conclusion:
The Tribunal set aside the assessments for the years 1967-68 and 1970-71, directing the ITO to make fresh assessments after allowing the assessee to present evidence. Consequently, the appeals for the assessment years 1967-68, 1968-69, and 1970-71 were allowed for statistical purposes.

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