1991 (2) TMI 194 - AT - Income Tax

Summary

Issues Involved:
1. Addition of incomes earned by different entities in the name of the assessee.
2. Clubbing of income in the case of Srimadhopur Textiles.
3. Ownership and income attribution of Shanti Textiles and Mansa Textiles.
4. Depreciation claims on power looms.
5. Trading additions and interest charges.

Summary:

1. Addition of Incomes:
The main dispute relates to the addition of incomes earned by Smt. Shanti Devi, Smt. Mansa Devi, and M/s Srimadhopur Textiles in the name of Sri Manoharlal, who admits to be the proprietor of M/s Manohar Textiles. The ITO found discrepancies in the account books, concluding that the incomes of these entities should be clubbed with the assessee's income due to defective books and manipulated transactions. The ITO invoked provisions of s. 145(2) and made various additions, including Rs. 18,430 for discrepancies and Rs. 3,101 for capital expenditure.

2. Clubbing in Srimadhopur Textiles:
The ITO concluded that Srimadhopur Textiles, claimed to be a partnership between the assessee and Smt. Kamla Devi, was actually a proprietory concern of the assessee. The CIT(A) directed the ITO to reconsider the genuineness of the partnership and recompute the income, restoring the matter for further examination.

3. Ownership and Income Attribution of Shanti Textiles and Mansa Textiles:
The ITO determined that Shanti Textiles and Mansa Textiles were benami concerns of the assessee, managed entirely by him, and thus their incomes were liable to be clubbed with the assessee's income. The CIT(A) upheld this conclusion but deleted certain additions. The Tribunal, however, found that the Department had not conclusively proved the benami nature of these concerns and directed that the incomes from these concerns should not be included in the assessee's income.

4. Depreciation Claims on Power Looms:
The assessee's claim for depreciation on the cost of power looms was not considered by the CIT(A). The Tribunal directed the ITO to re-examine this claim afresh.

5. Trading Additions and Interest Charges:
The CIT(A) reduced the trading addition from Rs. 15,727 to Rs. 7,000, which the Tribunal further restricted to Rs. 4,000. Interest charges under ss. 215/217 and 139(8) were directed to be deleted as they were not levied in the original assessment order.

Final Judgment:
- ITA Nos. 736 and 783/Jp/84: Partly allowed.
- ITA Nos. 1152 & 1153/Jp/85: Dismissed, upholding the AAC's decision that the incomes from Shanti Textiles and Mansa Textiles belonged to Smt. Shanti Devi and Smt. Mansa Devi respectively and should not be clubbed with the assessee's income.