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Issues Involved:
1. Sustaining an addition of Rs. 2,95,500 by the CIT(A) against the AO's addition of Rs. 4,96,500 for unaccounted investment. 2. Spreading the alleged unaccounted investment over various assessment years from 1985-86 to 1992-93. 3. Consideration of a sum of Rs. 50,000 as advance received from two tenants for the construction of the commercial building. Issue-wise Detailed Analysis: 1. Sustaining an Addition of Rs. 2,95,500 by the CIT(A) Against the AO's Addition of Rs. 4,96,500 for Unaccounted Investment: The assessee, an HUF represented by its Karta, was aggrieved by the addition of Rs. 4,96,500 made by the AO, which was reduced to Rs. 2,95,500 by the CIT(A). The AO believed the assessee invested unaccounted funds in constructing a farmhouse and a commercial complex over and above the declared costs. The Department Valuation Officer valued the buildings at Rs. 14,72,000, while the assessee claimed the investment was Rs. 10,95,000, leading to a difference of Rs. 2,16,000. The AO added Rs. 4,96,500 as unexplained investment, considering the HUF's agricultural income insufficient for household expenses. The CIT(A) deleted Rs. 2,01,000 but confirmed the addition of Rs. 2,95,500. 2. Spreading the Alleged Unaccounted Investment Over Various Assessment Years from 1985-86 to 1992-93: The assessee argued that the construction of the farmhouse and commercial complex was spread over several years. The construction of the farmhouse commenced in 1984 and remained unfinished till 1992, while the commercial shops started in 1989 and were incomplete by 1992. The assessee filed a cash flow statement from 1981 to 1995, showing the source of invested funds, including agricultural and dairy income and borrowed funds. The AO accepted Rs. 65,000 spent during 1991-92 from borrowed funds but did not consider the entire cash flow statement. The Tribunal noted that the AO did not provide a valid reason for estimating Rs. 75,000 towards probable expenses by 1990 against the claimed Rs. 4,90,000. The Tribunal also observed that the alleged unaccounted investment could not be assessed in one year, referencing the decision in Upasana Hospital and Nursing Home vs. CIT. 3. Consideration of a Sum of Rs. 50,000 as Advance Received from Two Tenants for the Construction of the Commercial Building: For the assessment year 1993-94, the AO added Rs. 2,50,000 as unaccounted income towards construction expenses. The assessee claimed to have received Rs. 50,000 as advance from two tenants during 1992-93 and Rs. 1,25,000 from other tenants after 31st March, 1993. The AO did not consider the two lease agreements relevant to 1992-93 but acknowledged the rent received from these tenants. The Tribunal found that the cash flow statement showed adequate funds to meet the construction expenses and noted that the AO had admitted the existence of seven lessees but failed to consider all relevant lease agreements. The Tribunal concluded that the addition made by the AO and partially sustained by the CIT(A) could not survive. Conclusion: The Tribunal deleted the addition of Rs. 2,95,000 sustained by the CIT(A) for the assessment year 1992-93 and found that the assessee had adequately explained the sources of funds for the construction expenses. The appeals of the assessee were allowed, and the additions made by the AO and partially sustained by the CIT(A) were not upheld.
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