1998 (5) TMI 34 - AT - Income Tax

Summary

Issues Involved:
1. Timeliness of the assessment for the assessment year 1983-84.
2. Additions made by the Assessing Officer on account of suppressed commission for the assessment years 1984-85, 1985-86, and 1986-87.
3. Addition of Rs. 11,400 in the assessment year 1984-85 related to the short-term capital gain declared by Smt. Raj Kumari.

Detailed Analysis:

1. Timeliness of the Assessment for the Assessment Year 1983-84:
The core issue was whether the assessment for the year 1983-84 was barred by time. The assessee filed the return under section 139(4) on 10-7-1983 and a revised return on 25-3-1986. The legal plea was that the assessment should have been completed by 31-3-1986, but it was completed on 23-3-1987. The assessee relied on various High Court decisions, including the Supreme Court decision in Kumar Jagdish Chandra Sinha v. CIT, which reversed the Calcutta High Court's decision and upheld that the assessment should have been completed by 31-3-1986. The Tribunal, respecting the Supreme Court's decision, annulled the assessment order as it was barred by time and dismissed both the assessee's and the revenue's appeals as infructuous.

2. Additions Made by the Assessing Officer on Account of Suppressed Commission:
The Assessing Officer made additions of Rs. 50,000 for 1984-85, Rs. 25,000 for 1985-86, and Rs. 60,000 for 1986-87 on account of alleged suppressed commission. The assessee argued that the lower rate of commission was charged due to business exigencies and that the Department had accepted this practice in the past. The CIT(A) deleted these additions, stating that the assessee had provided sufficient details and that the Assessing Officer had not conclusively proved any suppression of commission income. However, the Judicial Member disagreed, emphasizing that the assessee failed to provide specific reasons for not charging the usual 2% commission and upheld the additions. The Accountant Member dissented, arguing that the additions were based on surmises and not supported by tangible evidence, and that the CIT(A) was correct in deleting the additions. The Third Member agreed with the Accountant Member, concluding that the Assessing Officer's additions were not justified and were rightly deleted by the CIT(A).

3. Addition of Rs. 11,400 in the Assessment Year 1984-85:
The Assessing Officer treated Rs. 11,400 declared by Smt. Raj Kumari as short-term capital gain as the assessee's income, alleging it was a benami transaction. The CIT(A) deleted this addition, noting that Smt. Raj Kumari was separately assessed, and the same amount could not be taxed again in the assessee's hands. The Tribunal upheld the CIT(A)'s decision, stating that the Assessing Officer had not conclusively proved that the transaction was benami and that mere taking of funds from the firm by Smt. Raj Kumari was insufficient to treat the amount as the firm's income.

Conclusion:
The Tribunal annulled the assessment for the year 1983-84 due to being time-barred, upheld the CIT(A)'s deletion of additions for suppressed commission for the years 1984-85, 1985-86, and 1986-87, and confirmed the deletion of the Rs. 11,400 addition for the assessment year 1984-85. The detailed findings emphasized the necessity of concrete evidence over presumptions and the importance of adhering to judicial precedents.