2004 (7) TMI 298 - AT - Income Tax

Summary

Issues:
1. Appeal against block assessment order for the period from 1987-88 to 1996-97.
2. Peak credit addition of Rs. 4,73,738.
3. Addition of Rs. 54,000 as unexplained expenditure.
4. Addition of Rs. 63,780 as unexplained investment in machinery.

Analysis:

1. The appeal was filed against the block assessment order for the period from 1987-88 to 1996-97. The main issue raised in the appeal was regarding the peak credit addition of Rs. 4,73,738. The AO had added Rs. 6,97,038 as unexplained cash credit, but the CIT(A) directed to accept the peak credit at Rs. 4,73,738 considering the disclosure made by the assessee. The Tribunal agreed with the CIT(A) and upheld the addition of Rs. 4,73,738 as undisclosed income based on the evidence provided by the assessee.

2. The next issue involved the addition of Rs. 54,000 as unexplained expenditure. The AO had made this addition due to the failure of the assessee to establish the nature of a donation of Rs. 11,001 and evidence of another donation of Rs. 43,000. However, the CIT(A) directed to delete the addition after considering the nature of the expenditure and verifying the entries in the books of account. The Tribunal agreed with the CIT(A) and upheld the deletion of the addition of Rs. 54,000.

3. The third issue was related to the addition of Rs. 63,780 as unexplained investment in the purchase of machinery. The AO had treated the amount debited for machinery as unexplained investment, but the assessee claimed that the machinery belonged to another company. The CIT(A) allowed relief by stating that the AO did not provide evidence to prove the machinery was purchased by the assessee. However, the Tribunal disagreed with the CIT(A) and upheld the AO's finding, stating that the burden of proof was on the assessee to establish ownership of the machinery, which was not supported by evidence.

4. The CO raised by the assessee was not pressed, leading to its dismissal. In conclusion, the appeal was partly allowed, and the CO was dismissed based on the Tribunal's findings on the various issues raised in the appeal.