1980 (2) TMI 124 - AT - Income Tax

Summary

Issues:
1. Discrepancy in entertainment tax payments for cinema houses.
2. Estimation of income from money-lending business.
3. Estimation of income from house property.

Analysis:

1. Discrepancy in entertainment tax payments for cinema houses:
The Income Tax Officer (ITO) noticed a variance in the entertainment tax payments made by the assessee for Radha Talkies and Krishna Talkies as per certificates from the District Excise Officer and the assessee's own records. The ITO applied section 145(1) and estimated the income at Rs. 37,200 due to discrepancies. The Appellate Tribunal found that the assessee had maintained consistent records in the past, and the discrepancies were due to totaling mistakes by the ITO. The Tribunal concluded that the accounts were capable of verification, and hence, deleted the addition made by the ITO.

2. Estimation of income from money-lending business:
The ITO estimated income from the money-lending business based on the interest calculated on withdrawals made by the assessee. The assessee had not maintained proper accounts, leading to a dispute over the estimated income. The Tribunal noted that in the absence of proper accounts, the estimate made by the ITO was justified, especially considering the intermingling of funds from entertainment tax collections and money-lending activities. The Tribunal upheld the ITO's estimation in this regard.

3. Estimation of income from house property:
Regarding the income from house property, the ITO estimated a higher rental value without providing a valid reason. The Tribunal observed that the tenant had continued to occupy the property, and there was no justification for an increase in the rental value. The Tribunal compared the returned figures with the next year's accepted income from the property and concluded that the higher estimate was unwarranted. As a result, the Tribunal deleted the addition made by the ITO in relation to the income from the house property.

In conclusion, the Appellate Tribunal partially allowed the appeal, deleting the additions made by the ITO concerning the entertainment tax payments for cinema houses and the income from the house property. However, the Tribunal upheld the estimation of income from the money-lending business due to the lack of proper accounts maintained by the assessee.