1991 (8) TMI 133 - AT - Income Tax

Appellate Assistant Commissioner, Assessment Notice, Business Premises, Promissory Estoppel, Reassessment Notice

Summary

Issues Involved:
1. Validity of reassessment proceedings under Section 147(b).
2. Addition of Rs. 1,10,000 as unexplained capital.
3. Addition of Rs. 40,000 as unexplained gifts to the assessee's daughters.
4. Addition of Rs. 9,000 on account of household expenses.

Issue-wise Detailed Analysis:

1. Validity of Reassessment Proceedings under Section 147(b):

The original return filed by the assessee on 30th August 1988 was accepted under Section 143(1) of the Act. During the assessment of M/s Dhir Jewellers, it was discovered that the assessee had introduced Rs. 1 lac as capital. Upon inquiry, it was revealed that Rs. 50,000 was received from Shri K.K. Dhir and Rs. 60,000 from Capt. Rakesh Dhir. Shri K.K. Dhir stated that the money belonged to the assessee. Consequently, the Assessing Officer invoked Section 147(b) and issued a notice under Section 148. The reassessment proceedings were challenged but upheld by the first appellate authority. The Tribunal concluded that the factual position justified the action under Section 147(b), thereby validating the reassessment proceedings.

2. Addition of Rs. 1,10,000 as Unexplained Capital:

In the reassessment proceedings, the Assessing Officer added Rs. 50,000 credited from Shri K.K. Dhir and Rs. 60,000 from Capt. Rakesh Dhir to the assessee's total income. The assessee argued that the transactions were through banking channels, confirmed by the respective banks, and supported by confirmatory letters from the creditors. The Tribunal found that the statement of Shri K.K. Dhir was evasive and not credible enough to sustain the addition. Similarly, the addition from Capt. Rakesh Dhir was deemed unjustified as the transaction was through a banking channel and confirmed by the bank. The Tribunal concluded that the assessee had discharged the onus of proving the genuineness of the transactions and deleted the addition of Rs. 1,10,000.

3. Addition of Rs. 40,000 as Unexplained Gifts to the Assessee's Daughters:

The Assessing Officer added Rs. 20,000 each received by Miss Mukta Dhir and Miss Shilpi Dhir as gifts to the assessee's total income. The assessee provided documentary evidence, including bank confirmations and confirmatory letters from Capt. Rakesh Dhir and Shri K.K. Dhir. The Tribunal found that the gifts were through banking channels and confirmed by the respective banks. The Tribunal criticized the Assessing Officer for making fishing inquiries despite clear documentary evidence and deleted the addition of Rs. 40,000.

4. Addition of Rs. 9,000 on Account of Household Expenses:

The Assessing Officer added Rs. 9,000 to the assessee's total income for household expenses. The Tribunal found no evidence on record to justify this addition and deemed it to be based on conjectures and surmises. Consequently, this addition was also deleted.

Conclusion:

The Tribunal allowed the appeal, deleting the additions of Rs. 1,10,000 as unexplained capital, Rs. 40,000 as unexplained gifts, and Rs. 9,000 on account of household expenses. The reassessment proceedings under Section 147(b) were upheld as valid.