1978 (7) TMI 135 - AT - Income Tax

Summary

Issues:
- Addition of Rs. 7,000 as unexplained income of the assessee for the purchase of a truck.
- Dispute regarding the source of the investment and nature of the amount withdrawn by the assessee's mother.
- Assessment of the disputed amount in the hands of the assessee and rejection of his explanation.

Analysis:

1. The appeal was filed against the order of the AAC, which upheld the addition of Rs. 7,000 as unexplained income of the assessee related to the purchase of a truck. The assessee claimed to have taken a loan of Rs. 7,000 from his mother to invest in the truck.

2. The ITO disbelieved the assessee's claim as there was no apparent source of income for the mother at that time. Consequently, the amount was assessed as unexplained income for the relevant year.

3. The assessee provided evidence to the AAC showing that his mother had withdrawn Rs. 7,000 from her bank account. However, the withdrawal date did not align with the truck purchase date, leading to the rejection of the explanation by the AAC.

4. In the further appeal, the assessee's counsel argued that the loan was confirmed by the creditor, the mother, who had a legitimate source of income. The counsel contended that the assessee, being a government employee, could not have earned additional income apart from his salary.

5. The Departmental Representative argued that the failure to satisfactorily prove the source of investment allows the ITO to infer that the amount is concealed income. It was suggested that the mother should not have kept the amount idle for an extended period without investment.

6. The Tribunal analyzed the facts and found no dispute regarding the withdrawal and transfer of Rs. 7,000 from the mother to the son for the truck purchase. The Tribunal questioned the probability of a government servant keeping cash idle for 18 months without investment. Since there was no evidence of the amount being invested elsewhere, and the mother was not examined, the Tribunal concluded that the lower authorities included the amount in the income without substantial evidence against the assessee.

7. Consequently, the Tribunal allowed the appeal and deleted the addition of Rs. 7,000 as unexplained income of the assessee, as the explanation provided was considered reasonable and the evidence presented was found to be insufficient to support the inclusion of the amount in the assessee's income.