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- Determination of additional income under Voluntary Disclosure Scheme - Evaluation of credits in the books of account as income from undisclosed sources Analysis: Issue 1: Determination of additional income under Voluntary Disclosure Scheme The appellant, a firm engaged in the tyre business, filed a return for the assessment year 1974-75 declaring an income of Rs. 92,415. Subsequently, under the Voluntary Disclosure Scheme, an additional income of Rs. 60,000 was disclosed, resulting in a revised income of Rs. 1,52,415. The Income Tax Officer (ITO) discovered credits of Rs. 95,000 in the dairy farm's folio, which he deemed as income from undisclosed sources. The appellant contended before the Appellate Assistant Commissioner (AAC) that the credits were repayment of earlier amounts drawn and compensation received, justifying the genuineness of the credits. However, the AAC upheld the ITO's decision, leading to the present appeal. Issue 2: Evaluation of credits in the books of account as income from undisclosed sources The appellate tribunal analyzed the circumstances surrounding the credits of Rs. 50,000 and Rs. 45,000 in the dairy farm's accounts. The partners had filed voluntary disclosure petitions, disclosing substantial amounts, including the dairy income. The tribunal noted that the total disclosed income covered the impugned credits, indicating their genuineness. The tribunal emphasized the need for objective evaluation based on facts and evidence, cautioning against relying on suspicions or conjectures. Referring to judicial precedents, the tribunal highlighted the importance of giving the benefit of doubt to the appellant in such cases. Citing various court decisions, the tribunal concluded that the appellant had satisfactorily explained the credits, thereby ordering in favor of the appellant and allowing the appeal. In conclusion, the appellate tribunal ruled in favor of the appellant, holding that the impugned credits of Rs. 50,000 and Rs. 45,000 should not be treated as income from undisclosed sources. The tribunal emphasized the importance of objective evaluation based on facts and evidence, giving the benefit of doubt to the appellant in such circumstances. The tribunal's decision was guided by legal principles and precedents emphasizing the need for a fair and thorough assessment of the appellant's explanations regarding the credits in question.
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