1997 (7) TMI 197 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment.
2. Legitimacy of additions aggregating to Rs. 2,97,16,770.

Summary:

1. Validity of the Assessment:
The assessee challenged the validity of the assessment made by the AO u/s 158BC(c) of the IT Act for the block period from asst. yrs. 1986-87 to 1996-97. The assessee contended that the AO made additions based on mere presumption by invoking s. 132(4A), which is only for proceedings under ss. 132(5) and 132(11) and not for block assessment under Chapter XIV-B. The Tribunal agreed with the assessee, stating that the presumption under s. 132(4A) is not applicable for framing assessment under Chapter XIV-B and that the provisions of ss. 68, 69, 69A, 69B, and 69C must be adhered to.

2. Legitimacy of Additions:

Addition of Rs. 1,50,000 and Rs. 11,700:
The AO made these additions based on seized documents. The Tribunal confirmed the additions, finding a direct link between the assessee and the transactions recorded.

Addition of Rs. 2,50,10,548:
The AO inferred that the figures in the trial balances were coded. The Tribunal disagreed, stating that the AO's inference was incorrect and based on suspicion. The Tribunal upheld an addition of Rs. 1,88,018 only, out of the total addition of Rs. 2,50,10,548.

Addition of Rs. 75,000:
The addition was made for unaccounted expenses. The Tribunal retained Rs. 25,000 as the assessee's share of the expenses, as indicated in the seized paper.

Addition of Rs. 67,000:
The Tribunal confirmed this addition as no satisfactory explanation was provided by the assessee.

Addition of Rs. 95,000:
The addition was based on an estimate for electricity charges and other expenses. The Tribunal confirmed the addition, finding the explanation given by the assessee unacceptable.

Addition of Rs. 250:
The Tribunal confirmed this addition due to lack of explanation.

Addition of Rs. 20,680:
The Tribunal deleted this addition, finding no justification as the property belonged to an independent assessee.

Addition of Rs. 1,09,471:
The Tribunal upheld Rs. 95,165 as justified but deleted Rs. 14,306 related to interest, as the AO had accepted the genuineness of the loan and interest at 17%.

Addition of Rs. 1,60,000:
The Tribunal found the addition to be a mistake and deleted it, accepting the explanation provided by the assessee.

Addition of Rs. 50,000:
The Tribunal confirmed this addition as the payment was not recorded in the books of accounts.

Addition of Rs. 1,23,899:
The Tribunal deleted this addition, finding that the expenditure related to a company where the assessee was a director and was duly recorded in the company's books.

Addition of Rs. 12,200:
The Tribunal deleted this addition as it was interconnected with the previous deleted addition.

Addition of Rs. 25,704:
The Tribunal confirmed this addition due to lack of explanation from the assessee.

Addition of Rs. 50,000:
The Tribunal deleted this addition, finding no justification as the property was not registered in the name of the assessee's relative.

Addition of Rs. 37,55,316:
The Tribunal deleted this addition, finding no evidence that the properties belonged to the assessee or that he received rental income from them.

Conclusion:
The appeal was partly allowed, with several additions being deleted or reduced based on the explanations and evidence provided by the assessee.