1991 (11) TMI 123 - AT - Income Tax

Summary

Issues Involved:
1. Addition based on "Sahi Bahi" or Signatures Book (Annexure C-28).
2. Addition based on another "Sahi Bahi" or Signatures Book (Annexure C-26).
3. Additions related to alleged investments and profits from undisclosed potato sales (Annexure C-1/46).
4. Notional income addition based on supposed sale proceeds.
5. Charging of interest u/s 217(1A) of the IT Act.

Summary:

Issue 1: Addition based on "Sahi Bahi" or Signatures Book (Annexure C-28)
The Assessing Officer added Rs. 4,60,290 to the assessee's income based on entries in a seized document (C-28), presumed to belong to the assessee firm. The assessee argued that these transactions were conducted by partner Shri Kishanchand in his individual capacity, supported by his affidavit. The Tribunal held that the presumption u/s 132(4A) was rebutted by the evidence provided by the assessee, and the addition of Rs. 4,60,290 was deleted.

Issue 2: Addition based on another "Sahi Bahi" or Signatures Book (Annexure C-26)
The Assessing Officer added Rs. 68,597 under section 69 of the IT Act for transactions not verifiable from regular books. The CIT(A) sustained an addition of Rs. 24,000. The Tribunal found that the transactions were recorded in the "Sahi Bahi," which was a regular book of account maintained by the assessee. Since the assessee satisfactorily explained the entries and the transactions were part of the regular business, the addition of Rs. 24,000 was deleted.

Issue 3: Additions related to alleged investments and profits from undisclosed potato sales (Annexure C-1/46)
The Assessing Officer made additions totaling Rs. 13,31,507 based on documents (C-1/46) presumed to belong to the assessee. The CIT(A) substituted this with an addition of Rs. 6,87,240. The assessee contended that these documents were found at the premises of a sister concern, M/s Shobhraj Cold Storage. The Tribunal found no evidence to prove that the documents were recovered from the assessee's premises and held that the presumption u/s 132(4A) could not be applied. The addition of Rs. 6,87,240 was deleted.

Issue 4: Notional income addition based on supposed sale proceeds
The CIT(A) sustained an addition of Rs. 1,00,000 as notional income based on the sale proceeds of potatoes. Since the Tribunal deleted the addition of Rs. 6,87,240, the basis for the notional income addition was nullified, and the addition of Rs. 1,00,000 was deleted.

Issue 5: Charging of interest u/s 217(1A) of the IT Act
The assessee objected to the charging of interest u/s 217(1A). The Tribunal agreed with the assessee, citing the decision of the Hon'ble Rajasthan High Court in CIT v. Multi Metals Ltd. [1991] 188 ITR 151, and directed that no interest should be charged u/s 217(1A). Additionally, since all additions were deleted, there was no basis for charging interest.

Conclusion:
The appeal filed by the assessee was allowed, and all additions made by the Assessing Officer were deleted.