1984 (9) TMI 81 - AT - Income Tax

Summary

Issues:
1. Determination of annual letting value of a building let out to Hotel Ajay in Varanasi.
2. Addition of unexplained household expenses and income from other sources.

Analysis:
1. The first issue in the judgment pertains to the determination of the annual letting value of a building rented out to Hotel Ajay in Varanasi. The assessee, one of the six co-owners of the property, declared his share at Rs. 4,000, while the Income Tax Officer (ITO) estimated the entire property's value at Rs. 1,20,000, assigning the assessee's share at Rs. 20,000. The Commissioner of Income Tax (Appeals) accepted the declared income in the appeal. The appellate tribunal noted a previous order in a related case where the annual letting value was equated to the rent received from Hotel Ajay. Consequently, the tribunal directed the ITO to follow the same approach for the current assessment year, aligning with the previous decision.

2. The second issue involves additions made by the ITO for unexplained household expenses and income from other sources. The ITO observed deposits made by the assessee in accounts with Hotel Ajay and Indian Bank, which the assessee attributed to rental income and his minor son's income. The ITO, however, deemed the explanation inadequate and proposed additions based on unexplained deposits and low withdrawals. The assessee presented a cash flow chart during proceedings, demonstrating various transactions and justifying the sources of funds. Despite the assessee's submissions, the IAC directed the ITO to include the unexplained amount and estimated household expenses in the assessment. Upon appeal, the CIT (A) found the assessee's explanations satisfactory, considering the family's combined withdrawals and agricultural income as reasonable household expenses. The CIT (A) consequently deleted the additions. The tribunal upheld the CIT (A)'s decision after reviewing the cash flow charts and verifying transactions, emphasizing the reasonableness of household expenses and the accuracy of the chart's contents. As a result, the tribunal dismissed the appeal, affirming the deletion of the additions of Rs. 14,000 and Rs. 34,262.