1987 (5) TMI 74 - AT - Income Tax

Advance Tax, Assessment Year, Income Tax, Interest Payable By Assessee, Late Filing, Power To Admit Additional Evidence, Regular Assessment, Total Income

Summary

Issues Involved:
1. Addition due to three cash credits held to be unexplained.
2. Charge of interest under sections 139(8) and 217.

Detailed Analysis:

1. Addition due to three cash credits held to be unexplained:

Sardar Singh's Cash Credit:
The assessee claimed that Sardar Singh advanced Rs. 55,000 out of savings from agricultural income. The ITO disbelieved this cash credit, noting inconsistencies in Sardar Singh's statements and the lack of evidence for savings and agricultural income. The CIT(A) confirmed this addition, citing no accounts of agricultural income and no bank deposits of surplus income. However, the Tribunal found that Sardar Singh's affidavit and corroborative certificates from commission agents supported the genuineness of the loan. The Tribunal noted that Sardar Singh's inability to recall exact dates did not discredit his overall testimony. The Tribunal concluded that the evidence on record established the genuineness of the cash credit, and thus, the addition of Rs. 55,000 was deleted.

Gurdeep Singh's Cash Credit:
The ITO disbelieved Gurdeep Singh's loan of Rs. 5,000 due to inconsistencies in repayment statements. Gurdeep Singh denied any repayment, while the assessee's records showed repayments. The CIT(A) upheld the addition on the same grounds. However, the Tribunal found that Gurdeep Singh's employment details, salary, and savings corroborated his capacity to lend the money. The Tribunal also noted that the contradiction in repayment statements was not adequately addressed by the ITO. Thus, the Tribunal held that the cash credit was duly explained and established, and the addition was deleted.

Paramjit Singh's Cash Credit:
The ITO disbelieved Paramjit Singh's loan of Rs. 52,000 due to his non-appearance and contradictions in the account with M/s. Gobind Ram Som Nath. The CIT(A) provided the assessee an opportunity to produce Paramjit Singh, who confirmed the loan from agricultural income. However, discrepancies in the account and lack of cooperation from the commission agents led the CIT(A) to confirm the addition. The Tribunal admitted additional evidence under Rule 29, considering the relevance and the circumstances that prevented earlier submission. The Tribunal set aside the matter to the CIT(A) for fresh consideration after verifying the additional evidence.

2. Charge of Interest under Sections 139(8) and 217:
The assessee contested the charge of interest under sections 139(8) and 217, arguing that an order passed under section 147 is not a regular assessment. The CIT(A) upheld the levy of interest, noting the divergence of opinions among various High Courts and the absence of a Delhi High Court decision. The Tribunal acknowledged the conflict of decisions and the principle laid down by the Supreme Court in CIT v. Vegetable Products Ltd., favoring the interpretation that benefits the assessee in case of ambiguity. The Tribunal also noted that the amendment by the Taxation Laws (Amendment) Act, 1984, which considered an assessment under section 147 as a regular assessment, was prospective from 1-4-85. Thus, the Tribunal concluded that interest under sections 139(8) and 217 could not be charged in this case.

Conclusion:
The appeal was partly allowed, with deletions of the additions for Sardar Singh's and Gurdeep Singh's cash credits and the charge of interest under sections 139(8) and 217. The matter of Paramjit Singh's cash credit was remanded to the CIT(A) for fresh consideration with the admitted additional evidence.