1979 (7) TMI 114 - AT - Income Tax

Summary

Issues:
1. Addition of Rs. 11,000 as income from undisclosed sources.
2. Discrepancy in the assessee's explanation regarding the source of investment.
3. Rejection of evidence provided by the assessee regarding the loans and gifts received.

Analysis:

1. The primary issue in this case was the addition of Rs. 11,000 as income from undisclosed sources by the Income Tax Officer (ITO). The appellant, a medical practitioner, claimed that the sum represented two amounts received from individuals, Shri Arjun Singh and Shri D.P. Dwivedi. The ITO did not accept the appellant's version and treated the entire amount as undisclosed income.

2. The appellant provided details of the source of the investment, stating that it was a loan from Shri Arjun Singh, a gift from Shri D.P. Dwivedi, and past savings. The ITO questioned the credibility of these explanations, particularly regarding the loans and gifts received. The ITO raised concerns about the lack of bank or post office accounts, pronotes, and the paying capacity of the individuals providing the funds.

3. The Appellate Assistant Commissioner (AAC) upheld the addition of Rs. 11,000 but deleted the addition related to the past savings. The appellant then appealed the decision, arguing that the burden of proof had been discharged by producing Shri Arjun Singh and Shri D.P. Dwivedi, who confirmed the transactions. The Tribunal found that the AAC erred in not believing the evidence provided by the individuals, noting their substantial land ownership as evidence of their paying capacity. The Tribunal concluded that the burden of proof had been met, and the addition of Rs. 11,000 was deleted.

In conclusion, the Tribunal ruled in favor of the appellant, deleting the addition of Rs. 11,000 as income from undisclosed sources. The judgment emphasized the importance of considering the credibility of evidence provided by witnesses and the burden of proof in such cases.