1983 (2) TMI 89 - AT - Income Tax

Summary

Issues:
1. Whether the Tribunal was correct in deleting the addition of Rs. 10,000 when the assessee had surrendered the amount to be taxed as income?
2. Whether the Tribunal was right in deleting the addition of Rs. 10,000 from the assessee's income for the assessment year 1979-80 on the ground that the deposit did not fall within the 'previous year'?
3. Whether the Tribunal was justified in considering a new ground for deleting the addition of Rs. 10,000?

Analysis:

Issue 1:
The assessee had surrendered Rs. 10,000 to be taxed as income due to the death of the depositor and the reluctance of the depositor's son to appear before the ITO. However, the ITO did not accept the offer and independently added the amount as unexplained investment. The Tribunal found that the surrender offer was not accepted and was a finding of fact. Therefore, the question of whether the Tribunal was right in deleting the addition does not arise.

Issue 2:
The cash credit of Rs. 10,000 did not fall within the 'previous year' relevant to the assessment year 1979-80. The Tribunal accepted the additional contention that the credit did not pertain to the relevant year based on the business setup timeline and previous court decisions. As the credit did not fall within the 'previous year,' it could not be taxed under section 68. Thus, the question of deleting the addition based on the 'previous year' timeline was justified.

Issue 3:
The Tribunal entertained a new ground raised by the assessee regarding the assessability of Rs. 10,000 as income for the relevant year. The Tribunal observed that additional legal grounds can be entertained if detailed investigation is not required. The new plea was found to be within the subject matter of appeal, and the Tribunal deemed question 3 to be academic. The Tribunal's decision to consider the new ground was in line with established legal principles.

In conclusion, the Tribunal rejected the revenue's request to refer the questions to the High Court, and the reference application was dismissed. The Tribunal's decision to delete the addition of Rs. 10,000 from the assessee's income for the assessment year 1979-80 was based on valid legal reasoning and factual findings.