1990 (12) TMI 149 - AT - Income Tax

2012 (8) TMI 9 - AT

Issues Involved:

1. Addition of Rs. 15,000 to the capital account.
2. Addition of Rs. 30,000 on account of cash credit from Gopi Chand.
3. Addition of Rs. 30,000 on account of cash credit from Satish Chand.
4. Disallowance of Rs. 15,000 out of paper, stationery, and printing expenses.
5. Disallowance of Rs. 4,000 out of postage expenses.
6. Disallowance of 1/3rd of motor car expenses and depreciation.
7. Disallowance of Rs. 8,358 on account of ex gratia payment.
8. Disallowance of Rs. 5,392 on account of medical allowance.
9. Disallowance of Rs. 5,200 on account of outstanding contract wages.
10. Disallowance of Rs. 1,500 out of traveling expenses.
11. Addition of Rs. 16,438 on account of low withdrawals for household and personal expenses.
12. Adoption of Annual Letting Value (ALV) for self-occupied residential house.

Detailed Analysis:

1. Addition of Rs. 15,000 to the Capital Account:
The issue revolves around the introduction of Rs. 15,000 into the capital account by the assessee, claimed to be from the sale of gold ornaments. The ITO treated this amount as concealed income due to lack of evidence regarding the acquisition and sale of the ornaments. The CIT(A) upheld this view, noting insufficient details to verify the claim. The Tribunal found that the assessee failed to provide corroborative evidence and thus agreed with the lower authorities in treating the amount as concealed income.

2. Addition of Rs. 30,000 on Account of Cash Credit from Gopi Chand:
The assessee claimed that Gopi Chand advanced Rs. 30,000 by cheque. The ITO and CIT(A) found discrepancies in Gopi Chand's statements and the bank transactions, leading to the conclusion that the transaction was not genuine. The Tribunal upheld the addition, noting that the assessee failed to prove the creditor's capacity and the genuineness of the transaction, despite Gopi Chand being an income-tax assessee.

3. Addition of Rs. 30,000 on Account of Cash Credit from Satish Chand:
The assessee claimed a loan of Rs. 30,000 from Satish Chand, who allegedly received the amount from four closely related individuals. The ITO and CIT(A) concluded that Satish Chand lacked the capacity to advance the loan. The Tribunal agreed, noting inconsistencies in the statements and the bank transactions, and upheld the addition as income from undisclosed sources.

4. Disallowance of Rs. 15,000 out of Paper, Stationery, and Printing Expenses:
The ITO disallowed Rs. 15,000 out of the claimed expenses due to a significant portion being incurred in the last month without proper records. The CIT(A) confirmed this disallowance. However, the Tribunal found that the assessee provided detailed evidence of the expenses and noted the increased turnover. Therefore, the disallowance was deleted.

5. Disallowance of Rs. 4,000 out of Postage Expenses:
The ITO disallowed Rs. 10,000, later reduced to Rs. 4,000 by the CIT(A), due to the absence of a postage register. The Tribunal found that the details provided by the assessee, including payments for franking machine usage and postage stamps, justified the expenses. Hence, the disallowance was deleted.

6. Disallowance of 1/3rd of Motor Car Expenses and Depreciation:
The ITO and CIT(A) disallowed a portion of the motor car expenses and depreciation due to possible personal use. The Tribunal agreed with the disallowance of expenses but found the IAC's direction to disallow depreciation invalid as it was not part of the draft assessment. The disallowance of depreciation was deleted, and the disallowance of expenses was reduced to 1/4th.

7. Disallowance of Rs. 8,358 on Account of Ex Gratia Payment:
The ITO and CIT(A) disallowed the ex gratia payment due to lack of evidence of its due date. The Tribunal found that the payment was made for business purposes to maintain employee relations and allowed the deduction.

8. Disallowance of Rs. 5,392 on Account of Medical Allowance:
The ITO and CIT(A) disallowed the medical allowance claim due to lack of evidence of liability during the year. The Tribunal upheld the disallowance, noting the absence of the alleged agreement and failure to prove the liability.

9. Disallowance of Rs. 5,200 on Account of Outstanding Contract Wages:
The ITO and CIT(A) disallowed the claim due to lack of a formal agreement. The Tribunal found that the disallowance was unjustified as the amount was payable for translation work done by two individuals. The disallowance was deleted.

10. Disallowance of Rs. 1,500 out of Traveling Expenses:
The ITO and CIT(A) disallowed Rs. 1,500 due to personal nature of expenses. The Tribunal upheld the disallowance, finding it reasonable based on the facts.

11. Addition of Rs. 16,438 on Account of Low Withdrawals for Household and Personal Expenses:
The ITO and CIT(A) found the withdrawals for household expenses to be low considering the assessee's status and family size. The Tribunal agreed, noting the reasonable estimation of household expenses at Rs. 2,500 per month and upheld the addition.

12. Adoption of Annual Letting Value (ALV) for Self-occupied Residential House:
The assessee contested the ALV adopted by the lower authorities. The Tribunal found no merit in the contention as it did not arise from the CIT(A)'s order and confirmed the finding.

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