2009 (8) TMI 125 - AT - Income Tax

Issues Involved:
1. Unexplained investment in construction and property.
2. Undisclosed commission income.
3. Unexplained household expenses.
4. Undisclosed profit on sale of agricultural land.
5. Unexplained loans.
6. Investment in land with a third party.
7. Repayment of loan to LIC.
8. Expenditure on car repairs.
9. Gain on sale of plots.
10. Investment in construction of house and shops.
11. Marriage expenses.
12. Nepal visit expenses.
13. Silver jewelry.

Detailed Analysis:

1. Unexplained Investment in Construction and Property:
- Assessee's Appeal (Ground No. 2(i)): The assessee's appeal regarding the addition in construction of shops was dismissed as the Special Bench confirmed the addition of construction of house and shops on plot No. 174, Sector 7, Faridabad.
- Revenue's Appeal (Ground Nos. v and vi): The Special Bench upheld the deletion of the addition of Rs. 10,20,000 for the undisclosed investment in plot No. 174, Sector-7, Faridabad, but reversed the deletion of Rs. 5,68,000 for the undisclosed investment in construction of the house on the same plot.

2. Undisclosed Commission Income:
- Ground No. (i) Rs. 23,25,800: The Special Bench dismissed the Revenue's appeal, agreeing with the CIT(A) that the AO's additions were based on presumptions and not supported by any seized material or evidence.
- Ground No. (viii) Rs. 1,91,400: The Special Bench upheld the CIT(A)'s deletion of the addition, stating that the AO did not verify the assessee's explanation from the concerned parties and thus failed to provide sufficient evidence to support the addition.

3. Unexplained Household Expenses:
- Ground No. (xi): The Special Bench upheld the CIT(A)'s decision to reduce the addition from Rs. 32,43,657 to Rs. 6,00,000, recognizing that the AO's estimates were excessive and not based on any material found during the search.

4. Undisclosed Profit on Sale of Agricultural Land:
- Ground No. (iii) Rs. 17,00,549: The Special Bench dismissed the Revenue's appeal, agreeing with the CIT(A) that the additions were based on presumptions and not supported by any seized material or evidence.

5. Unexplained Loans:
- Ground No. (ii) Rs. 2,25,000: The Special Bench upheld the CIT(A)'s deletion of the addition, noting that the AO did not have any evidence to support the claim that the loans were bogus.
- Ground No. (iii) Rs. 68,000: The Special Bench upheld the CIT(A)'s deletion of the addition, agreeing that the AO did not have any material to conclude that the loans were bogus.

6. Investment in Land with a Third Party:
- Ground No. (ix) Rs. 6,35,924: The Special Bench upheld the CIT(A)'s deletion of the addition, noting that the AO did not provide any evidence to support the claim that the assessee had a share in the land purchased with Mohan Singh Bhatia.

7. Repayment of Loan to LIC:
- Assessee's Ground No. 2 Rs. 3,05,000: The Special Bench dismissed the assessee's appeal, agreeing with the CIT(A) that the assessee did not provide any explanation for the cash payments made to LIC.

8. Expenditure on Car Repairs:
- Ground No. 5 Rs. 15,000: The Special Bench upheld the CIT(A)'s decision to sustain the addition, noting that the AO's findings were based on seized documents.

9. Gain on Sale of Plots:
- Ground No. (iv) Rs. 48,182 and Rs. 30,500: The Special Bench upheld the CIT(A)'s deletion of the additions, noting that the sales were disclosed in the regular returns and the AO could not change the head of income in the block assessment.

10. Investment in Construction of House and Shops:
- Ground No. (vi) Rs. 5,68,000: The Special Bench upheld the addition, agreeing with the AO that the assessee had constructed residential house and shops which were not disclosed.

11. Marriage Expenses:
- Ground No. (iii) Rs. 50,000: The Special Bench allowed the assessee's appeal, deleting the addition as the celebrations were kept to a minimum due to unfortunate circumstances.

12. Nepal Visit Expenses:
- Ground No. (iv) Rs. 40,000: The Special Bench allowed the assessee's appeal, deleting the addition as the boarding pass was in the name of the assessee's son, not the assessee.

13. Silver Jewelry:
- Ground No. (iv) Rs. 39,970: The Special Bench upheld the CIT(A)'s deletion of the addition, noting that the assessee had disclosed 2 kgs of silver in her regular returns and the cash flow statement for the purchase of the remaining 3 kgs was not controverted by the AO.

Conclusion:
The Special Bench of ITAT Delhi, after considering the facts and circumstances of each case, upheld the CIT(A)'s decisions in most instances, emphasizing that additions in block assessments must be based on concrete evidence and not on presumptions or estimates. The appeals by both the Revenue and the assessee were partly allowed, with specific additions being upheld or deleted based on the merits of each case.

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