1998 (7) TMI 119 - AT - Income Tax

Summary

Issues Involved:
1. Justification of assessment on a protective basis versus substantive basis.
2. Levy of penalty for concealment of income.
3. Addition towards alleged low household withdrawals.
4. Addition on account of alleged unexplained investment in the construction of a building.
5. Addition of alleged unexplained investment in FDRs.
6. Addition of income claimed to belong to S.K. Gupta & Sons HUF.
7. Addition of alleged unexplained investment.
8. Addition of income claimed to belong to the assessee's wife.
9. Addition of loans in the names of various persons.
10. Addition of alleged unexplained credit in the bank account of the assessee's mother.
11. Addition based on various seized papers.
12. Interest charged under sections 139(8) and 217 of the Income Tax Act.

Detailed Analysis:

1. Justification of assessment on a protective basis versus substantive basis:
The primary issue was whether the CIT(A) was justified in upholding the assessment on a protective basis in the hands of the assessee-HUF. The Tribunal noted that the returns filed by the assessee in the status of HUF under the Amnesty Scheme for the assessment years 1985-86 to 1987-88 were accepted and completed by the AO without any proceedings under sections 263 or 148. The Tribunal found that the CIT(A) had deleted the addition of Rs. 12,220 made by the AO in the hands of the individual for the assessment year 1988-89. Furthermore, the Tribunal quashed the assessment orders in the case of the firm S.K. Gupta & Co. for the assessment years 1986-87 to 1988-89. Consequently, the Tribunal set aside the order of the CIT(A) and restored the matter to the file of the AO with the direction to redo the assessment of the amount disclosed by the assessee in the status of HUF after considering the consequential effect of the Tribunal's order in the case of the firm.

2. Levy of penalty for concealment of income:
The Tribunal quashed the finding of the CIT(A) regarding the levy of penalty for concealment of income, stating that such a finding in the quantum matter was uncalled for.

3. Addition towards alleged low household withdrawals:
The Tribunal found that the assessee's family consisted of five members and had shown withdrawals of Rs. 9,000 besides Rs. 6,000 by the wife. The AO considered these withdrawals insufficient and made an addition of Rs. 21,000, which the CIT(A) reduced to Rs. 6,000. The Tribunal, considering the size of the family and other factors, quashed the addition of Rs. 6,000 for low household withdrawals.

4. Addition on account of alleged unexplained investment in the construction of a building:
The Tribunal noted that the CIT(A) deleted the addition of Rs. 35,813 on the grounds that similar additions were made in the case of the firm S.K. Gupta & Co. Since the Tribunal had quashed the assessment orders in the firm's case, the Tribunal dismissed the ground as infructuous.

5. Addition of alleged unexplained investment in FDRs:
Similarly, the Tribunal noted that the CIT(A) deleted the addition of Rs. 1,25,000 on the grounds that similar additions were made in the case of the firm S.K. Gupta & Co. The Tribunal dismissed the ground as infructuous.

6. Addition of income claimed to belong to S.K. Gupta & Sons HUF:
The Tribunal noted that the CIT(A) deleted the addition of Rs. 12,200 on the grounds that similar additions were made in the case of the firm S.K. Gupta & Co. The Tribunal dismissed the ground as infructuous.

7. Addition of alleged unexplained investment:
The Tribunal noted that the CIT(A) deleted the addition of Rs. 64,536 on the grounds that similar additions were made in the case of the firm S.K. Gupta & Co. The Tribunal dismissed the ground as infructuous.

8. Addition of income claimed to belong to the assessee's wife:
The Tribunal found that the Department had accepted that the house property belonged to the assessee's wife, Smt. Pushpa Gupta, and assessed the income in her hands for the assessment year 1992-93. The Tribunal held that the Department could not deviate from this established position and deleted the addition of Rs. 19,943.

9. Addition of loans in the names of various persons:
The Tribunal noted that the CIT(A) upheld the addition of Rs. 55,000 without recording his own reasons and merely agreeing with the AO. The Tribunal set aside the order of the CIT(A) and restored the matter to the file of the AO for fresh adjudication.

10. Addition of alleged unexplained credit in the bank account of the assessee's mother:
The Tribunal noted that the ground was not pressed by the assessee during the hearing and accordingly rejected it as not pressed.

11. Addition based on various seized papers:
The Tribunal upheld the CIT(A)'s decision to restore the matter to the file of the AO for fresh adjudication, noting that the AO had not examined the entire material on record and made the addition without any evidence or sound basis.

12. Interest charged under sections 139(8) and 217 of the Income Tax Act:
The Tribunal directed the AO to recalculate the interest, if any, while giving effect to the Tribunal's order, noting that the levy of interest under sections 139(8) and 217 was consequential in nature.

Conclusion:
The Tribunal allowed ITA Nos. 4872 and 4873/Del/1994 for statistical purposes and partly allowed ITA No. 354/Del/1992.