2004 (4) TMI 261 - AT - Income Tax

Summary

Issues Involved:

1. Addition of Rs. 6 lakhs related to IVPs and KVPs.
2. Addition of Rs. 5 lakhs related to cash found and seized.
3. Addition of Rs. 1 lakh related to silver articles.
4. Addition of Rs. 4,50,000 related to furniture, renovation, and interior decoration.
5. Addition of Rs. 1,12,866 related to alleged cash found claimed to be out of sundry savings.

Issue-wise Analysis:

1. Addition of Rs. 6 lakhs related to IVPs and KVPs:

The Revenue challenged the CIT(A)'s deletion of the Rs. 6 lakhs addition made by the AO. During the search, IVPs and KVPs worth Rs. 11,51,000 were found, and the assessee initially could not explain the source, offering the entire amount for taxation. Later, the assessee claimed Rs. 6 lakhs were withdrawn from M/s Sunvin Industries (P) Ltd. The AO rejected this explanation due to lack of evidence. However, the CIT(A) found a clear nexus between the company's undisclosed income and the assessee's investment. The Revenue argued against this, but the Tribunal upheld the CIT(A)'s decision, noting the contemporaneous nature of events and rejecting the application of s. 2(22)(e) of the IT Act, 1961, as the amount was not from accumulated profits.

2. Addition of Rs. 5 lakhs related to cash found and seized:

The Revenue contested the CIT(A)'s deletion of the Rs. 5 lakhs addition. During the search, Rs. 15,13,900 was found, and the assessee initially attributed it to family and business funds. Later, Rs. 5 lakhs was claimed to belong to M/s Sunvin Industries (P) Ltd. The AO did not accept this, but the CIT(A) found sufficient cash balance in the company's books. The Tribunal agreed with the CIT(A), noting the cash balance and the employee's statement, thus deleting the addition.

3. Addition of Rs. 1 lakh related to silver articles:

The Revenue argued against the CIT(A)'s deletion of the Rs. 1 lakh addition for silver articles. The Tribunal agreed with the CIT(A) that considering the financial status of the assessee's family, the silver utensils found were within reasonable limits of past accumulation. The Tribunal noted that the value recorded was approximate and not the exact cost of acquisition, thus upholding the CIT(A)'s decision.

4. Addition of Rs. 4,50,000 related to furniture, renovation, and interior decoration:

The assessee challenged the CIT(A)'s confirmation of the Rs. 4,50,000 addition. The assessee claimed this amount was disclosed by his father under VDIS, 1997. The Tribunal found that the assessee did not categorically state that the renovation cost was Rs. 15,50,000, with Rs. 4,50,000 from his father. The Tribunal accepted the assessee's contention and deleted the Rs. 4,50,000 addition, giving credit for the amount disclosed by the father under VDIS, 1997.

5. Addition of Rs. 1,12,866 related to alleged cash found claimed to be out of sundry savings:

The assessee challenged the CIT(A)'s confirmation of the Rs. 1,12,866 addition. The Tribunal found that the general explanation of sundry savings could not be accepted for every addition. Therefore, the Tribunal upheld the CIT(A)'s decision to confirm the addition of Rs. 1,12,866.

Conclusion:

The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal, confirming the deletion of Rs. 6 lakhs, Rs. 5 lakhs, and Rs. 1 lakh additions, while deleting the Rs. 4,50,000 addition and upholding the Rs. 1,12,866 addition.