2002 (11) TMI 269 - AT - Income Tax

Issues Involved:
1. Addition of Rs. 1,70,000 on account of unexplained cash.
2. Addition of Rs. 44,69,703 on account of unexplained investment in FDRs and accrued interest.
3. Addition on account of investment in a moped.
4. Addition on account of marriage expenses.

Issue-wise Detailed Analysis:

1. Addition of Rs. 1,70,000 on account of unexplained cash:

The assessee, an employee of the State Excise Department, was subject to a search and seizure operation under s. 132(1) of the IT Act, resulting in the discovery of Rs. 1,84,680 at his residence and Rs. 9,250 in a locker. Initially, the assessee and his wife could not explain the sources of the cash. However, later, the wife claimed that Rs. 1,70,000 belonged to Shri Jai Narain Jaiswal. The AO disbelieved this claim, noting inconsistencies and lack of evidence from Shri Jai Narain Jaiswal. The Tribunal, however, found that the sources of cash were sufficiently explained through various statements and evidences, including the cash book entry from M/s Ekta Agencies, confirming the withdrawal of Rs. 1,72,500 by Shri Jai Narain Jaiswal. Thus, the addition of Rs. 1,70,000 as undisclosed income was deleted.

2. Addition of Rs. 44,69,703 on account of unexplained investment in FDRs and accrued interest:

During the search, 15 FDRs totaling Rs. 15,02,879 were found, and an additional 13 FDRs totaling Rs. 11,05,421 were disclosed by the assessee. The AO initially added these amounts as undisclosed income. The Tribunal had earlier set aside the assessment for re-examination. On re-examination, the AO maintained that Rs. 13,86,339 of the FDR investments were unexplained. The Tribunal reviewed each FDR and found that many were either declared under VDIS, already taxed, or were renewals of previously taxed FDRs. Consequently, the Tribunal deleted the additions related to these FDRs, except for Rs. 20,000 for one FDR where the source was not explained. The Tribunal also set aside the additions related to two FDRs for further examination by the AO.

3. Addition on account of investment in a moped:

The AO made an addition for the purchase of a moped in the name of Navneet, the assessee's son, based on seized documents. The Tribunal confirmed the substantive addition in the hands of the assessee, as the source of the investment was not disclosed.

4. Addition on account of marriage expenses:

The AO estimated the marriage expenses of the assessee's daughter at Rs. 1,00,000, based on seized documents showing Rs. 88,300 in expenses. The Tribunal found no justification for the AO's estimate and acknowledged that it is customary in Hindu families for expenses to be shared among family members. Thus, the Tribunal confirmed an addition of Rs. 25,000, considering it reasonable, and deleted the balance.

Conclusion:

The Tribunal's judgment resulted in partial relief for the assessee, with significant deletions of additions related to unexplained cash and FDR investments, while confirming minor additions for the moped investment and marriage expenses.

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