1991 (1) TMI 216 - AT - Income Tax

Summary

Issues Involved:
1. Addition for excess stock found during survey.
2. Addition of Rs. 68,597 (Rs. 40,000 of Shri Naina Ram Bhatt, Rs. 26,000 of Shri Harjiram Bhatt, and Rs. 1,047 excess cash found).
3. Alleged unexplained investment in pawning business.
4. Disallowance of Rs. 5,000 out of various expenses.
5. Charge of interest under s. 215.

Detailed Analysis:

1. Addition for Excess Stock Found During Survey:
The primary issue revolved around the addition of Rs. 94,530 due to alleged unaccounted stock found during the survey on 17th Sept., 1982. The stock was calculated based on the assumption that each bag of grain contained 100 kgs. The assessee contended that the actual weight per bag ("Bharti") varied by commodity, with wheat bags weighing about 90 kgs and Raida bags about 85 kgs. The Commissioner(A) accepted the assessee's contention and recalculated the stock differences, reducing the addition to Rs. 5,876. The Tribunal confirmed this recalculated addition, noting that the survey team had not conducted actual weighment and had relied on an incorrect assumption of 100 kgs per bag.

2. Addition of Rs. 68,597:
- Rs. 40,000 of Shri Naina Ram Bhatt: The assessee claimed that this amount was kept for safe custody. Despite some contradictions in statements, the Tribunal found the evidence supporting the assessee's claim credible, including affidavits, receipts, and bank account details. The addition was deleted.
- Rs. 26,000 of Shri Harjiram Bhatt: Similarly, this amount was claimed to be kept for safe custody. The Tribunal found the supporting evidence credible and consistent with the assessee's business practices. The addition was deleted.
- Rs. 1,047 Excess Cash: The Tribunal upheld the addition due to the absence of a satisfactory explanation from the assessee. The excess cash was Rs. 1,047, not Rs. 2,597 as mentioned in the grounds of appeal.

3. Alleged Unexplained Investment in Pawning Business:
The ITO had added Rs. 50,000, estimating income from an alleged pawning business based on gold ornaments found during the survey. The Commissioner(A) reduced this to Rs. 17,000. The Tribunal found the affidavits and statements from individuals who had entrusted the gold to the assessee for safe custody credible. There was no evidence of pawning business activity. The addition was deleted.

4. Disallowance of Rs. 5,000 Out of Various Expenses:
The ITO disallowed Rs. 5,000 out of claimed expenses due to lack of complete vouchers and personal use elements in motorcycle and telephone expenses. The Commissioner(A) upheld this disallowance as reasonable. The Tribunal found no justification for interference and upheld the disallowance.

5. Charge of Interest Under s. 215:
The ITO charged Rs. 18,797 as interest under s. 215. The Commissioner(A) confirmed this, noting that the advance tax paid was less than 75% of the assessed tax. The Tribunal directed the ITO to recalculate the interest in light of the final assessed income when giving effect to the appellate order.

Conclusion:
The assessee's appeal was partly allowed, with significant deletions of additions related to excess stock and alleged unexplained investments, while the Department's appeal was dismissed. The Tribunal's decisions were based on detailed examinations of evidence and adherence to legal standards.