1991 (12) TMI 95 - AT - Income Tax

Summary

Issues Involved:
1. Levy of interest under Section 217 of the Income-tax Act, 1961.
2. Deletion of Rs. 48,000 out of the total addition of Rs. 60,000 as unexplained cash.
3. Deletion of Rs. 800 representing the value of US $ 89 found.
4. Deletion of Rs. 11,66,441 as concealed income from share business.
5. Deletion of Rs. 16,476 representing interest on borrowed capital disallowed by the ITO.

Detailed Analysis:

1. Levy of Interest under Section 217 of the Income-tax Act, 1961:
The assessee objected to the levy of interest amounting to Rs. 2,20,896 under Section 217, arguing that it was unjustified and illegal. The CIT (Appeals) considered the relief as consequential to other reliefs and did not examine the issue in detail. The Tribunal found that the matter needs re-examination and fresh disposal by the CIT (Appeals) as the assessee had completely denied liability. The Tribunal set aside this portion of the CIT (Appeals) order and restored the ground for fresh disposal in accordance with law after giving a reasonable opportunity to the assessee and the ITO.

2. Deletion of Rs. 48,000 out of the Total Addition of Rs. 60,000 as Unexplained Cash:
The ITO added Rs. 60,000 as unexplained income after rejecting the assessee's explanations regarding the source of cash found during a search. The CIT (Appeals) deleted Rs. 48,000 of this addition, accepting the assessee's explanations about withdrawals from M/s. Luxmi Traders and savings of family members. The Tribunal upheld the CIT (Appeals) decision, agreeing that the books of M/s. Luxmi Traders supported the assessee's claims and that the departmental authorities had allowed entries in the seized books after satisfying themselves about the genuineness of the claims.

3. Deletion of Rs. 800 Representing the Value of US $ 89 Found:
The ITO added Rs. 800 rejecting the explanation that the amount was savings from foreign exchange sanctioned to the assessee's son. The CIT (Appeals) accepted the explanation supported by an affidavit and passport details. The Tribunal found no merit in the Revenue's objection, noting that the CIT (Appeals) had given the ITO an opportunity to examine the evidence and had acted in conformity with law, thus upholding the deletion.

4. Deletion of Rs. 11,66,441 as Concealed Income from Share Business:
The ITO added Rs. 11,66,441 based on speculative transactions recorded in seized papers, which the assessee denied. The CIT (Appeals) found no conclusive evidence linking these transactions to the assessee and noted the absence of material to prove the transactions resulted in profit. The Tribunal agreed with the CIT (Appeals), emphasizing the lack of evidence and the necessity of positive proof over suspicion, thus confirming the deletion.

5. Deletion of Rs. 16,476 Representing Interest on Borrowed Capital Disallowed by the ITO:
The ITO disallowed Rs. 16,476 as interest on borrowed capital, alleging it was used for personal expenditure. The CIT (Appeals) found no nexus between the borrowing and personal expenses. The Tribunal, following its earlier decision in the assessee's case for the previous year, confirmed the deletion, noting no material was presented to rebut the CIT (Appeals) findings.

Conclusion:
The Tribunal partly allowed the assessee's appeal for statistical purposes and dismissed the departmental appeal, confirming the CIT (Appeals) decisions on the deletion of various additions and the need for re-examination of the interest levy under Section 217.