1981 (2) TMI 116 - AT - Income Tax

Summary

Issues:
- Addition of income from undisclosed source based on property alterations and additions.

Analysis:
The appeal before the Appellate Tribunal ITAT CALCUTTA-E centered on the addition of Rs. 15,700 as income from an undisclosed source by the Income Tax Officer (ITO). The ITO had scrutinized the assessee's withdrawals totaling Rs. 79,881 over three years for property additions and alterations at a specific location. The ITO's valuation of the additions and alterations, along with furniture and fixtures, amounted to Rs. 95,581, leading to the undisclosed income addition. The ITO emphasized the lack of details and records regarding the construction expenses and furnishings, prompting the addition. Upon appeal, the Income Tax Officer (Appeals) affirmed the ITO's decision due to the absence of construction records and expense specifics.

The assessee contended that the valuation report by the registered valuer, based on rates approved by the Rajasthan PWD, was not made available, leading to an improper addition. The assessee argued that the additions were made under personal supervision without engaging an architect. Additionally, the assessee highlighted the withdrawals were for construction and furniture purchase. The assessee challenged the rejection of the approved valuer's report and the disparity between withdrawals and valuation. The Appellate Tribunal noted the absence of the Valuation Officer's report but considered the differences highlighted by the ITO and ITO (A). Acknowledging the lack of deduction for personal supervision and other expenses in the Valuation Officer's report, the Tribunal estimated the total investment at Rs. 83,000, reducing the undisclosed income to Rs. 1,500 for the relevant year.

In conclusion, the Appellate Tribunal partially allowed the appeal, reducing the undisclosed income addition to Rs. 1,500 based on a revised estimation of the total investment in property alterations and additions. The Tribunal considered factors like personal supervision, lack of contractor involvement, and absence of detailed furniture purchase information in reaching its decision.