1997 (9) TMI 156 - AT - Income Tax

Summary

Issues Involved:
1. Treatment of returns under the Amnesty Scheme.
2. Addition of Rs. 15,695 as payment to Delhi Development Authority (DDA).
3. Addition of Rs. 20,000 as N.D. Bond belonging to the assessee's daughter.
4. Addition of Rs. 60,000 as Fixed Deposit Receipts (FDRs) in the names of the assessee's daughters.
5. Addition of Rs. 1,05,000 as unexplained credits.
6. Addition of Rs. 11,140 as income belonging to Smt. Chetandevi.
7. Addition of Rs. 58,590 and Rs. 22,075 as income belonging to Vijay Kumar and Raj Kumar.
8. Addition of Rs. 1,73,000 as loan given by V.K. Saklecha & Sons, HUF, to Smt. Chetandevi.
9. Charging of interest under Section 139(8) of the Income Tax Act.

Detailed Analysis:

1. Treatment of Returns under the Amnesty Scheme:
The assessee contended that the returns should be treated under the Amnesty Scheme. However, it was found that the scheme would not apply if no tax was payable as per the assessee's admission. Additionally, if the income declared was not true and complete, the benefit of the scheme would not be available. The CIT(A) had discussed this in detail, and the Tribunal found no reason to disturb these findings, thus subscribing to the CIT(A)'s view.

2. Addition of Rs. 15,695 as Payment to DDA:
The AO noted a payment of Rs. 15,695 to DDA for a flat allotment and questioned the source. The assessee claimed the payment was made from cash in hand but failed to provide a cash flow statement. The Tribunal found that the balance sheet did not clarify if the amount included the payment to DDA. Given the discrepancies in the dates of cash credits, the matter was restored to the AO for proper investigation with directions to examine the issue in light of the cash flow statements after affording the assessee an opportunity of being heard.

3. Addition of Rs. 20,000 as N.D. Bond:
The AO observed that the investment in N.D. Bonds was made in the name of the assessee's minor daughter, Kum. Meena, who had no income source. The AO added the amount to the assessee's income. The Tribunal found that the AO did not make sincere efforts to ascertain the source of the investment and did not allow the assessee to defend his case properly. The issue was restored to the AO for re-examination after affording the assessee an opportunity of being heard.

4. Addition of Rs. 60,000 as FDRs:
The AO added Rs. 60,000 as unexplained investment in FDRs in the names of the assessee's minor daughters. The Tribunal noted that the AO did not ascertain the source of the investment and did not allow the assessee to defend his case properly. The issue was restored to the AO for fresh adjudication after affording the assessee an opportunity of being heard.

5. Addition of Rs. 1,05,000 as Unexplained Credits:
The AO observed that the assessee included loans from three persons in the statement of affairs as on 31st March 1978, but the loans were obtained in April 1978. The AO added Rs. 1,05,000 as unexplained investment. The Tribunal found that the assessee was not given an opportunity to cross-examine the creditors and that the AO relied on statements from other assessment proceedings. The issue was restored to the AO with directions to allow the assessee to cross-examine the creditors and to re-examine the issue afresh.

6. Addition of Rs. 11,140 as Income Belonging to Smt. Chetandevi:
The AO treated investments in the name of Smt. Chetandevi as the assessee's income. The Tribunal found that the AO and CIT(A) did not make detailed discussions before making the addition and did not allow the assessee to furnish an explanation. The issue was restored to the AO for fresh examination in light of the statement of investments and the balance sheet of Smt. Chetandevi.

7. Addition of Rs. 58,590 and Rs. 22,075 as Income Belonging to Vijay Kumar and Raj Kumar:
The AO treated investments in the names of Vijay Kumar and Raj Kumar as the assessee's income without detailed discussions or affording the assessee an opportunity of being heard. The Tribunal found that the assessee was not allowed to defend his case properly and restored the matter to the AO for fresh adjudication after affording the assessee an opportunity of being heard.

8. Addition of Rs. 1,73,000 as Loan Given by V.K. Saklecha & Sons, HUF, to Smt. Chetandevi:
The CIT(A) observed that once the loan to Smt. Chetandevi was treated as unexplained in the hands of the HUF, the source of borrowings in her hands became explained. The Tribunal agreed with the assessee's argument that the addition could not be made in the hands of both the HUF and the assessee. The addition of Rs. 1,73,000 was deleted.

9. Charging of Interest under Section 139(8):
The assessee argued that interest under Section 139(8) could only be levied in a regular assessment, not in an assessment framed after issuance of notice under Section 148. The Tribunal agreed, citing the jurisdictional High Court's judgment, and deleted the interest.

Conclusion:
The appeal was partly allowed, with several issues restored to the AO for fresh examination and adjudication after affording the assessee an opportunity of being heard. The addition of Rs. 1,73,000 was deleted, and the interest charged under Section 139(8) was also deleted.