1980 (8) TMI 118 - AT - Income Tax

Summary

Issues:
1. Addition of unexplained loans amounting to Rs. 1,00,000.
2. Estimate of income from brick-kilns at Gokul and Mainpuri.

Analysis:

Issue 1: Addition of Unexplained Loans
The appeal pertains to the assessment year 1972-73, where the assessee, a Hindu Undivided Family (HUF), derived income from various sources. The primary objection in this appeal was the addition of Rs. 1,00,000 for unexplained loans found in the assessee's records. The loans were noted in loose papers seized during a search conducted under section 132(1) of the Income Tax Act. The assessee argued that the loans were genuine and duly recorded in the seized papers, invoking the provisions of section 132(4A) to support their claim. However, after examining the evidence, including statements from individuals related to the loans, the assessing officer added the amount of Rs. 1,00,000 as unexplained income. The CIT (A) upheld the addition, stating that the parties involved did not admit to providing the loans. On further appeal, the ITAT Delhi-E held in favor of the assessee, noting that the seized papers were not meant for production before the department and that individuals related to the loans had admitted their handwriting on the papers. The ITAT ordered the deletion of the addition of Rs. 1,00,000, emphasizing the genuineness of the loans based on the evidence presented.

Issue 2: Estimate of Income from Brick-Kilns
The second objection in the appeal concerned the estimate of income from two brick-kilns at Gokul and Mainpuri, with total sales amounting to Rs. 3,79,568. The assessing officer applied a rate of 38% to estimate the income, which was deemed excessive. Referring to previous tribunal orders related to the assessee family for other assessment years, the ITAT directed that the income from the brick-kilns for the year 1972-73 should be computed by applying a reduced rate of 20%. Consequently, the appeal was partly allowed, and the income estimate from the brick-kilns was adjusted accordingly.

In conclusion, the ITAT Delhi-E ruled in favor of the assessee, deleting the addition of unexplained loans and adjusting the income estimate from the brick-kilns, resulting in a partial allowance of the appeal for the assessment year 1972-73.