1994 (11) TMI 165 - AT - Income Tax

Summary

Issues:
1. Reopening of assessments for asst. yrs. 1987-88 and 1988-89.
2. Allowance of relief on account of unexplained investment.
3. Disputed transactions outside the books of account.
4. Reconciliation of purchases and sales transactions.
5. Assessing Officer's additions and CIT(A)'s decision.
6. Controversy over unexplained purchases and profits.
7. CIT(A)'s findings and decision on the Revenue's appeal for asst. yr. 1988-89.
8. Deletion of additions by CIT(A) and final decision on all appeals.

Reopening of Assessments:
The judgment involves four appeals related to asst. yrs. 1987-88 and 1988-89, with two appeals filed by the assessee challenging the reopening of assessments. The Revenue's appeal for asst. yr. 1987-88 focused on the allowance of relief of Rs. 2,34,887 on account of unexplained investment, leading to detailed investigations into transactions with various parties from Rajasthan. The Assessing Officer reopened the proceedings under s. 143(2)(b) after obtaining necessary approval, based on discrepancies in purchases and sales outside the books of account.

Disputed Transactions and Additions:
The Assessing Officer made additions totaling Rs. 2,34,887 on account of unexplained purchases and Rs. 45,960 on unexplained profits, which were contested by the assessee. The CIT(A) examined the matter extensively, concluding that certain purchases were duly reflected in account books and that the controversy was limited to unexplained purchases of Rs. 1,67,475. The CIT(A) considered circumstantial evidence, the timing of transactions, and the credibility of the assessee's explanations to determine the legitimacy of the transactions.

CIT(A)'s Decision and Revenue's Appeal for 1988-89:
The CIT(A) upheld the deletion of the addition of Rs. 2,34,887 for asst. yr. 1987-88, citing reconciled accounts and lack of substantial evidence to support the Revenue's claims. In the appeal for asst. yr. 1988-89, the CIT(A) deleted the entire addition of Rs. 50,170, based on a detailed analysis of transactions with specific parties from Rajasthan and the assessee's offered profits. The CIT(A) found discrepancies in reflected purchases and actual transactions, leading to the deletion of the additional amount added by the Assessing Officer.

Final Decision and Dismissal of Appeals:
After considering submissions from both parties and reviewing the CIT(A)'s orders, the tribunal upheld the CIT(A)'s decisions to delete the contested additions in both years. The tribunal dismissed all four appeals-two by the assessee and two by the Revenue-concluding the legal proceedings related to the disputed assessments for the respective years.