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Issues:
1. Addition of income from undisclosed sources - unexplained investment in house construction. 2. Taxability of capital gains from the sale of a house. 3. Addition of amount to business income. Analysis: Issue 1: The first issue pertains to the addition of Rs. 24,475 as income from undisclosed sources, representing unexplained investment in the construction of a house. The Appellate Tribunal noted that the construction of the house spanned multiple assessment years, with the completion in April 1973. The Tribunal held that the Income Tax Officer (ITO) erred in treating the entire unexplained investment as made in the financial year 1973-74. The Tribunal emphasized the provisions of Section 69 of the Income Tax Act, which allow for the taxation of unexplained investments for a particular year. Consequently, the Tribunal directed the ITO to determine the extent of investment in April 1973 and tax only the unexplained portion, if any, under Section 69 for the assessment year 1974-75. Issue 2: The second issue concerns the taxability of capital gains amounting to Rs. 24,575 arising from the sale of a house. The assessee claimed exemption under Section 54 of the Income Tax Act, citing the construction of another house within the stipulated period. The contention arose from the requirement that the house sold should have been used for the assessee's residence for two years preceding the sale. The Tribunal, relying on legal precedent, held that continuous stay for two years was not essential under Section 54. As the house was used by the assessee for residence in the two preceding years, the Tribunal concluded that the capital gain from the sale of the old house was not taxable, and thus, deleted the addition of Rs. 24,525. Issue 3: The final issue involved the addition of Rs. 500 to the business income of the appellant. The counsel for the assessee did not pursue this point during the appeal, leading to the rejection of this ground. In conclusion, the Appellate Tribunal partly allowed the appeal. It deleted the addition of Rs. 24,525 as capital gain and the amount of unexplained investment of Rs. 24,475. The matter was remanded back to the ITO for further assessment in line with the Tribunal's directions and in compliance with the relevant legal provisions.
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