1983 (8) TMI 128 - AT - Income Tax

Summary

Issues:
- Addition of Rs. 17,000 as income from undisclosed sources
- Disallowance of interest paid at Rs. 3,338

Analysis:

Issue 1: Addition of Rs. 17,000 as income from undisclosed sources

The case involved a sum of Rs. 17,000 deposited in the name of a creditor. The Income Tax Officer (ITO) treated this as the assessee's income from undisclosed sources after concluding that the creditor was not in a position to have advanced the amount. The Appellate Assistant Commissioner (AAC) initially deleted the addition and directed the payment of interest on the deposit. However, on further appeal, the ITAT restored the matter to the AAC. The main contention was the capacity of the creditor to advance the money and the genuineness of the transaction. The AAC, following the ITO's reasoning, confirmed the addition based on the Calcutta High Court's decision criteria regarding the identity of the creditor, capacity, and genuineness of the transaction.

Issue 2: Disallowance of interest paid at Rs. 3,338

The appellant contested the disallowance of interest paid at Rs. 3,338. The appellant's counsel argued that the lower authorities failed to consider crucial facts, such as the timing of filing returns before the statement was recorded by the ITO. The appellant also provided details of payments made to the creditor in subsequent years to support the transaction's genuineness. The Tribunal found that the creditor had admitted to advancing the loan and receiving interest. Considering the assessments made for the creditor in previous years, the Tribunal concluded that the addition of Rs. 17,000 as income from undisclosed sources was incorrect. The Tribunal emphasized that the key criteria of the Calcutta High Court decision were met, leading to the deletion of the addition.

In conclusion, the Tribunal allowed the appeal of the assessee, deleting the addition of Rs. 17,000 as income from undisclosed sources. The decision was based on the creditor's admission, previous assessments, and the genuineness of the transaction, as per the criteria set by the Calcutta High Court.