1997 (7) TMI 196 - AT - Income Tax

Summary

Issues Involved:

1. Addition of Rs. 30,000 as loan from Mithan Lal under Section 68 of the IT Act, 1961.
2. Addition of Rs. 25,000 out of share application/capital invested by Mrs. Sarita.
3. Deletion of Rs. 2,50,000 out of total addition of Rs. 2,80,000 made by the AO on account of income from undisclosed sources.
4. Deletion of Rs. 50,000 out of a total addition of Rs. 75,000 made on account of unexplained cash credit.

Issue-wise Detailed Analysis:

1. Addition of Rs. 30,000 as loan from Mithan Lal under Section 68 of the IT Act, 1961:

The AO observed that Mithan Lal gave a loan of Rs. 30,000 to the assessee, which was sourced from Kanwar Sen, who in turn received it from Hem Raj. The assessee failed to produce Hem Raj and Kanwar Sen for verification, leading to the addition of Rs. 30,000 under Section 68. The CIT(A) confirmed the addition, noting the lack of proof of Kanwar Sen's creditworthiness, who declared an income of Rs. 33,750 for the year. The assessee submitted various documents, including affidavits, bank passbooks, and assessment orders to prove the genuineness of the loan. The Tribunal concluded that the assessee adequately discharged the burden of proving the identity and capacity of Mithan Lal, directing the AO to delete the addition of Rs. 30,000.

2. Addition of Rs. 25,000 out of share application/capital invested by Mrs. Sarita:

The AO required the assessee to prove the sources of Smt. Sarita Jain's investment in shares amounting to Rs. 2,89,000, but found Rs. 75,000 unexplained, leading to an addition. The CIT(A) deleted Rs. 50,000 of this addition but confirmed Rs. 25,000 related to loans from Smt. Saroj Gaba and Smt. Kiran Lata. The Tribunal noted that Smt. Sarita Jain, an existing income-tax assessee, confirmed her investment and provided adequate supporting documents. It concluded that the assessee proved the identity and capacity of Smt. Sarita Jain, directing the AO to delete the addition of Rs. 25,000.

3. Deletion of Rs. 2,50,000 out of total addition of Rs. 2,80,000 made by the AO on account of income from undisclosed sources:

The CIT(A) deleted Rs. 2,50,000 of the total addition of Rs. 2,80,000, which included Rs. 50,000 from Rameshwar Das and Rs. 2,00,000 from Mithan Lal. The Tribunal reviewed the evidence, including confirmations, balance sheets, and bank passbooks, and found that the sources of the loans were adequately explained. The CIT(A)'s reliance on additional evidence was justified, as it was provided at his instance. The Tribunal upheld the deletion of Rs. 2,00,000 and Rs. 50,000, finding no justification to interfere with the CIT(A)'s decision.

4. Deletion of Rs. 50,000 out of a total addition of Rs. 75,000 made on account of unexplained cash credit:

The CIT(A) deleted Rs. 50,000 of the Rs. 75,000 addition related to Smt. Sarita Jain's investment in shares. The Tribunal reviewed the evidence, including statements and balance sheets, and found that the identity and capacity of Smt. Sarita Jain and her sources of investment were adequately proven. The Tribunal concluded that the CIT(A) rightly deleted the addition of Rs. 50,000, supported by the Hon'ble Delhi High Court's judgment in the case of Sophiya Finance (P) Ltd.

Conclusion:

The Tribunal allowed the assessee's appeal, directing the deletion of the additions of Rs. 30,000 and Rs. 25,000, and dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of Rs. 2,50,000 and Rs. 50,000.