2002 (6) TMI 155 - AT - Income Tax

Issues Involved:
1. Addition of Rs. 20,000 on account of security deposit.
2. Addition of Rs. 1,89,904 for the period 1st April, 1997 to 9th Oct., 1997.
3. Treatment of TDS of Rs. 1,95,410.
4. Interest under s. 158BBFA(1).
5. Admission of additional evidence and deletion of Rs. 12,27,700 on account of payments to Government officials.
6. Deletion of additions for the asst. yrs. 1994-95 and 1996-97.
7. Deletion of additions on account of transport charges payable.
8. Deletion of addition of Rs. 46,500 and restoration of issues for Rs. 14,040 and Rs. 12,608.
9. Validity of notice under s. 158BC.

Issue-wise Detailed Analysis:

1. Addition of Rs. 20,000 on Account of Security Deposit:
The AO added Rs. 20,000 as it was not recorded in the cash book. The assessee argued that the cash was available from previous years' income. The CIT(A) confirmed the addition due to lack of evidence. However, the Appellate Tribunal found that the additions of Rs. 37,184 and Rs. 4,060 for previous years were available for the security deposit. Relying on the Supreme Court decision in Anantharam Veerasinghaiah & Co. vs. CIT, the Tribunal deleted the addition of Rs. 20,000.

2. Addition of Rs. 1,89,904 for the Period 1st April, 1997 to 9th Oct., 1997:
The AO applied s. 145 due to unavailability of books and added Rs. 1,89,904. The CIT(A) confirmed this addition. The Tribunal, however, found that the income for this period should not be treated as undisclosed since the receipts were deposited in the bank and TDS was deducted. The Tribunal directed the AO not to consider this as undisclosed income for block assessment.

3. Treatment of TDS of Rs. 1,95,410:
This issue was correlated with the addition of Rs. 1,89,904. Since the Tribunal resolved the main issue, no separate findings were required for the TDS matter.

4. Interest under s. 158BBFA(1):
The assessee argued that the delay in filing the return was due to the Department's delay in providing photocopies of seized documents. The Tribunal found merit in this argument and directed the AO not to charge interest under s. 158BFA.

5. Admission of Additional Evidence and Deletion of Rs. 12,27,700 on Account of Payments to Government Officials:
The AO added Rs. 12,27,700 based on seized documents. The CIT(A) admitted additional evidence (affidavit) and deleted the addition, attributing the expenses to Chabal Kalan Co-operative Society. The Tribunal upheld this decision, noting that the AO failed to establish a nexus between the notings and the assessee.

6. Deletion of Additions for the Asst. Yrs. 1994-95 and 1996-97:
The AO added Rs. 4,64,817 and Rs. 50,751 for undisclosed receipts. The CIT(A) reduced the additions by applying an 8% profit rate on these receipts. The Tribunal upheld this approach, noting that the entire receipts could not be treated as income without considering expenses.

7. Deletion of Additions on Account of Transport Charges Payable:
The AO added 10% of transport charges payable as undisclosed income. The CIT(A) deleted these additions, finding them based on conjectures. The Tribunal agreed, noting that the AO accepted 90% of the liabilities as genuine and had no basis for treating the remaining 10% as bogus.

8. Deletion of Addition of Rs. 46,500 and Restoration of Issues for Rs. 14,040 and Rs. 12,608:
The AO added these amounts for expenses not recorded in the books. The CIT(A) deleted Rs. 46,500, considering it an allowable business expense, and restored the other issues for fresh decision. The Tribunal upheld these decisions, noting that the expenses were allowable as business expenses.

9. Validity of Notice under s. 158BC:
The Tribunal did not address this additional ground as the appeal was disposed of on merits.

Conclusion:
The assessee's appeal was partly allowed, and the Department's appeal was dismissed. The Tribunal provided detailed reasoning for each issue, ensuring that the decisions were based on substantial evidence and legal precedents.

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