2001 (7) TMI 272 - AT - Income Tax

Issues Involved:
1. Unexplained investment in the purchase of 216 cents of land.
2. Unexplained investment in the purchase of 32.75 cents of land.
3. Unexplained investment in the purchase of 24 cents of land at Valancherry.
4. Unexplained investment in the construction of residential quarters.
5. Unexplained investment in the construction of a residential building.
6. Unexplained investment in the construction of flats.
7. Addition towards the cost of furniture.
8. Addition for vehicle repairs.
9. Agricultural income estimation.
10. Personal and household expenses estimation.
11. Denial of basic exemption for each assessment year in the block period.

Summary:

1. Unexplained Investment in 216 Cents of Land:
The Assessing Officer treated Rs.5,61,600 as the undisclosed income for the block period due to unexplained investment in the purchase of 216 cents of land. The assessees did not press this ground during the hearing, and it was dismissed.

2. Unexplained Investment in 32.75 Cents of Land:
The Assessing Officer concluded that Rs.2 lakhs, withdrawn from the NRE account, was the actual consideration for the land, as opposed to Rs.32,000 shown in the cash flow statement. The Tribunal upheld the Assessing Officer's view, finding the consideration of Rs.2 lakhs reasonable based on evidence of under-statement in other transactions.

3. Unexplained Investment in 24 Cents of Land at Valancherry:
The Assessing Officer estimated the total investment at Rs.14,50,000 based on bank withdrawals, but the Tribunal found Rs.7,10,700 reasonable, considering the Registration authorities' valuation and the lack of evidence for higher investment.

4. Unexplained Investment in the Construction of Residential Quarters:
The Assessing Officer estimated the investment at Rs.8,97,297, but the Tribunal directed to adopt Rs.7,50,000 as the reasonable cost, considering the evidence and the report from a registered valuer.

5. Unexplained Investment in the Construction of a Residential Building:
The Assessing Officer estimated the cost at Rs.12 lakhs based on the Inspector's report, but the Tribunal found Rs.10,50,000 reasonable, considering the registered valuer's report and adjustments for defects.

6. Unexplained Investment in the Construction of Flats:
The Assessing Officer estimated the cost at Rs.6 lakhs, but the Tribunal reduced it to Rs.5 lakhs, considering the stage of construction and the materials purchased.

7. Addition Towards the Cost of Furniture:
The Assessing Officer added Rs.50,000 for furniture, which the Tribunal upheld due to lack of evidence that the furniture was received as presents.

8. Addition for Vehicle Repairs:
The Assessing Officer added Rs.45,000 for vehicle repairs not shown in the cash flow statement. The Tribunal upheld the addition due to lack of explanation from the assessees.

9. Agricultural Income Estimation:
The Assessing Officer allowed Rs.3,30,000 against the claimed Rs.6,20,000. The Tribunal revised the estimation, allowing credit for agricultural income ranging from Rs.20,000 to Rs.50,000 per year, based on the evidence of yield and the properties held.

10. Personal and Household Expenses Estimation:
The Assessing Officer increased the estimate for 1993-94 and 1994-95 to Rs.70,000 each, but the Tribunal found the assessees' estimate of Rs.50,000 reasonable, considering the family size and standard of living.

11. Denial of Basic Exemption for Each Assessment Year in the Block Period:
The Tribunal agreed with the Assessing Officer that section 113 does not allow basic exemption for each year. However, it directed to exclude incomes below the taxable limit from the total undisclosed income.

Separate Judgment:
The Judicial Member dissented, arguing that the additions were based on estimations without concrete evidence, violating principles of natural justice. The Third Member agreed with the Judicial Member, leading to the appeals being allowed.

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