1997 (1) TMI 128 - AT - Income Tax

Additional Evidence, Appellate Authority, Assessing Officer, Assessment Year, Cash Credits, Foreign Exchange, Income From Undisclosed Sources, Taxable Gift

Summary

Issues Involved:

1. Additions under Section 68 of the Income-tax Act.
2. Admission of additional evidence under Rule 46A.
3. Treatment of foreign remittances as income.
4. Disallowance of Rs. 67,000 for low drawings (specific to one appellant).

Issue-wise Detailed Analysis:

1. Additions under Section 68 of the Income-tax Act:

The key issue in these appeals was the addition of certain amounts under Section 68 of the Income-tax Act. The appellants had claimed immunity under the Remittance of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities & Exemptions) Act, 1991 (the Scheme), asserting that the amounts received were not income. The Assessing Officer (AO) noted that the appellants did not provide the prescribed declaration forms to support their claims under the Scheme. Despite multiple adjournments and opportunities, the appellants failed to furnish the required declarations. Consequently, the AO treated the amounts as unexplained cash credits under Section 68.

2. Admission of additional evidence under Rule 46A:

The appellants sought to introduce additional evidence during the appellate proceedings, including a "Gift Deed" from Shri Jayant Nanda and certificates from Middle East Bank. The CIT(A) rejected this request, noting that the appellants had ample opportunity to submit such evidence during the assessment proceedings but chose not to. The CIT(A) emphasized that the appellants did not demonstrate sufficient cause for their failure to produce the evidence earlier. The Tribunal upheld this decision, stating that the appellants' conduct lacked bona fides and that they failed to comply with the requirements of Rule 46A.

3. Treatment of foreign remittances as income:

The Tribunal examined whether the foreign remittances could be treated as the appellants' income. The appellants argued that the amounts were gifts from Shri Jayant Nanda and not taxable income. However, the Tribunal found that the appellants did not discharge their burden of proof under Section 68. The identity of the remitter, his capacity, and the genuineness of the transaction were not established. The Tribunal concluded that the amounts were rightly treated as the appellants' income from undisclosed sources, as the appellants failed to provide credible evidence to support their claims.

4. Disallowance of Rs. 67,000 for low drawings:

In the case of one appellant, an additional ground of appeal concerned the disallowance of Rs. 67,000 due to low drawings. The AO had noted that the withdrawals shown were inadequate and erratic, given the appellant's economic situation and social status. The CIT(A) upheld the AO's decision but allowed partial relief, reducing the addition to Rs. 67,000. The Tribunal found no reason to interfere with the findings of the lower authorities and upheld the disallowance.

Conclusion:

The Tribunal dismissed all four appeals, affirming the decisions of the lower authorities. The appellants failed to provide the necessary declarations to claim immunity under the Scheme, did not establish the genuineness of the foreign remittances, and could not justify the admission of additional evidence. The disallowance for low drawings was also upheld.