1991 (2) TMI 192 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order and opportunity to the assessee.
2. Addition of Rs. 7,02,000 and Rs. 1,57,300 under Section 69A.
3. Addition of Rs. 50,000 under Section 69C for foreign trips.
4. Addition of Rs. 11,800 for unexplained deposits.
5. Addition of Rs. 5,500 for low household withdrawals.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order and Opportunity to the Assessee:
The assessee argued that the assessment order should be set aside due to lack of reasonable and proper opportunity to present his case and because the order was passed hurriedly. This ground was to be addressed while dealing with the merits of the appeal.

2. Addition of Rs. 7,02,000 and Rs. 1,57,300 under Section 69A:
The Customs authorities conducted a search on 1st Jan., 1985, and seized 36 gold biscuits and 2100 US Dollars from the assessee's possession. The ITO added Rs. 7,02,000 for the value of the gold biscuits and Rs. 1,57,300 for the US Dollars under Section 69A, treating them as income from undisclosed sources. The assessee contended that the seized items did not belong to him and that the statement made to Customs authorities was under duress. The CIT(A) upheld the ITO's view, but the Tribunal noted that the search was conducted by Customs, not IT authorities, and the possession of the items was assumed without proper inquiry. The Tribunal set aside the matter to the ITO for fresh examination, considering the outcome of the pending appeal against the Customs adjudication order.

3. Addition of Rs. 50,000 under Section 69C for Foreign Trips:
The ITO added Rs. 50,000 for unrecorded expenditure on four foreign trips made by the assessee. The CIT(A) deleted this addition, stating there was no evidence of actual visits. However, the Tribunal found that the assessee's foreign trips were undisputed and set aside the matter to the ITO for a fresh decision.

4. Addition of Rs. 11,800 for Unexplained Deposits:
The ITO added Rs. 11,800 for unexplained deposits in the assessee's capital account with M/s Badri Narayan Sitaram. The CIT(A) confirmed this addition. However, the Tribunal found that the amount was given by cheque from the assessee's savings bank account, and since the ITO had not examined this, the addition was deleted.

5. Addition of Rs. 5,500 for Low Household Withdrawals:
The ITO added Rs. 5,500 for low household withdrawals, noting that the assessee had a family of six members but only withdrew Rs. 6,500 on 25th Feb., 1985. The CIT(A) deleted this addition, stating there was no logic or basis for it. The Tribunal upheld the deletion, finding no material to justify the ITO's addition.

Conclusion:
The Tribunal allowed the appeals filed by the assessee and the Department in part, setting aside certain matters to the ITO for fresh examination and upholding some deletions made by the CIT(A).