1990 (9) TMI 118 - AT - Income Tax

Issues Involved:
1. Computation of income from "commission" business for the assessment year 1980-81.
2. Addition of Rs. 5,000 in respect of the business of purchase and sale of rejected diamonds.
3. Deletion of self-occupied property income of Rs. 2,000 on the ground that it belongs to the HUF.
4. Allowance of payment of Rs. 43,744 disallowed under section 40A(3) of the Income Tax Act.
5. Estimate of income from "Diamond Majuri Commission" at Rs. 31,000 for the assessment year 1981-82.
6. Addition of Rs. 5,000 on an estimated basis to the profit in the purchase and sale of diamond chura for the assessment year 1981-82.

Detailed Analysis:

1. Computation of Income from "Commission" Business for the Assessment Year 1980-81:
The assessee's appeal for the assessment year 1980-81 involved the computation of income from the "commission" business. A search conducted on 26th April 1982 led to the seizure of diamonds valued at Rs. 3,93,200. The assessee filed a return declaring an income of Rs. 15,810, including Rs. 10,708 from "Diamond Commission." The ITO estimated the income at Rs. 29,000, citing the assessee's statement during the raid that he earned Rs. 25,000 from the commission business. The AAC revised this estimate to Rs. 20,000, considering the statement and the low profit disclosed. The Tribunal upheld the AAC's estimate, rejecting the assessee's appeal.

2. Addition of Rs. 5,000 in Respect of the Business of Purchase and Sale of Rejected Diamonds:
The assessee did not press this ground during the hearing, and it was accordingly rejected.

3. Deletion of Self-Occupied Property Income of Rs. 2,000 on the Ground that it Belongs to the HUF:
The ITO estimated an income of Rs. 2,000 from self-occupied property at River Driver Society. The AAC deleted this addition, noting that the property belonged to the HUF, which derived income from agriculture. The payment for the property was made through cheques from the Ahmedabad Dist. Co-op. Bank, representing receipts from agricultural produce sales. The Tribunal confirmed the AAC's order, rejecting the Revenue's appeal.

4. Allowance of Payment of Rs. 43,744 Disallowed under Section 40A(3) of the Income Tax Act:
The ITO disallowed cash purchases exceeding Rs. 2,500 under section 40A(3), citing the lack of purchase bills and the identity of sellers. The AAC deleted the addition for the assessment year 1980-81, accepting the assessee's explanation that purchases were made from petty laborers who insisted on cash payments. However, for the assessment year 1981-82, the CIT(A) upheld the disallowance, noting the absence of proof and the failure to establish the identity of payees. The Tribunal reversed the AAC's order for 1980-81 and upheld the CIT(A)'s order for 1981-82, rejecting the assessee's arguments.

5. Estimate of Income from "Diamond Majuri Commission" at Rs. 31,000 for the Assessment Year 1981-82:
The ITO estimated the income from diamond commission at Rs. 31,000, based on the assessee's statement during a raid and the low profit shown. The CIT(A) confirmed this estimate. The Tribunal found no reason to interfere with the CIT(A)'s order, rejecting the assessee's appeal.

6. Addition of Rs. 5,000 on an Estimated Basis to the Profit in the Purchase and Sale of Diamond Chura for the Assessment Year 1981-82:
The assessee did not press this ground during the hearing, and it was accordingly rejected.

Conclusion:
The Tribunal dismissed the assessee's appeals (ITA No. 2542/Ahd/1984 and ITA No. 2330/Ahd/1984) and partly allowed the Revenue's appeal (ITA No. 2572/Ahd/1984).

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