1994 (9) TMI 125 - AT - Income Tax

Summary

Issues:
- Dispute over the source of funds amounting to Rs. 4 lakhs seized by Customs Department.
- Verification of various loans claimed by the assessee from different individuals.
- Examination of the source of funds related to own timber used in construction.
- Dispute regarding the claimed sale proceeds of pepper.

Analysis:

Dispute over Source of Funds:
The appeal pertains to the asst. yr. 1988-89 where the assessee, an individual, had Rs. 4 lakhs seized by Customs Department at Cochin airport. The assessee initially claimed the funds were from the sale of a house in Bombay but later stated it was raised from various sources for a house purchase. The Assessing Officer and Commissioner(A) accepted only part of the sources, leading to the current appeal.

Verification of Loans:
1. Loan from Shukoor: The assessee claimed a loan of Rs. 15,000 from a pepper merchant, Shukoor. Despite lack of documentary evidence, the ITAT held in favor of the assessee as the creditor confirmed the advance, and the source was deemed credible.
2. Loan from Rajan Ommen: The ITAT deleted an addition of Rs. 28,500 as income from undisclosed sources as the creditor was identified and confirmed the loan, relieving the assessee.
3. Loan from Ommen George: The ITAT confirmed the addition of Rs. 37,000 as income from undisclosed sources due to insufficient proof of the loan's source.
4. Loan from Rajan George: The ITAT deleted an addition of Rs. 32,000 as the delay in utilization was explained by the assessee's investment plans, leading to the removal of the addition.

Verification of Own Timber Use:
The ITAT allowed a partial deduction of Rs. 20,000 for the use of own timber in construction based on the proximity of the lands to the construction site, despite lack of concrete evidence.

Dispute over Pepper Sales:
Regarding the claimed sale proceeds of pepper, the ITAT upheld the CIT(A)'s decision to grant a further relief of Rs. 30,000, bringing the total relief to Rs. 60,000, as there was no additional evidence to warrant a different decision.