1992 (2) TMI 155 - AT - Income Tax

Summary

Issues Involved:
1. Validity of reopening of assessments.
2. Addition of consultancy fees.
3. Addition of cash credits.
4. Disallowance of car and household expenses.
5. Charging of interest under Section 215 and Section 217.
6. Treatment of gifts as income.

Detailed Analysis:

1. Validity of Reopening of Assessments:
- The assessments for the assessees were reopened under Section 143(2)(b). The validity of this reopening was initially challenged but later not pressed after the Department filed necessary papers. Hence, this issue no longer survives for consideration.

2. Addition of Consultancy Fees:
- For the assessment year 1985-86, the Income Tax Officer (ITO) added Rs. 23,263 to the declared consultancy fees of Dr. A.S. Meenawat, estimating daily consultancy earnings based on the number of patients and fees per patient. The Dy. Commissioner (A) reduced this addition to Rs. 5,863, considering the number of working days.
- The Tribunal found no warrant or justification for rejecting the assessee's books of account or estimating consultancy receipts. The declared receipts were deemed reasonable, and the addition of Rs. 5,863 was deleted.

3. Addition of Cash Credits:
- The ITO made various additions for unexplained cash credits in the accounts of Dr. A.S. Meenawat and Dr. Jyoti Meenawat.
- Dr. A.S. Meenawat:
- Rs. 2,500 in the name of Shri P.R. Jain was held genuine as his identity and confirmation were established.
- Additions totaling Rs. 19,500 from six creditors were deleted by the Dy. Commissioner (A) after verifying confirmations and examining creditors.
- Rs. 10,000 credited in the name of the assessee's daughter, Kum. Ajita, was held genuine as it was supported by evidence of gifts and bank transactions.
- Rs. 1,500 credited as a gift from Mrs. (Dr.) Asha Rani Mathur was accepted based on a declaration of gift and cheque transaction.
- Dr. Jyoti Meenawat:
- Rs. 2,000 from Shri Pradeep Dixit was deleted as the capacity of his mother to provide the loan was not assailed.
- Rs. 2,000 from Shri Ramesh Chand was deleted as the cash credit was held genuine, and no separate addition was made for alleged undisclosed repayment.

4. Disallowance of Car and Household Expenses:
- Car Expenses:
- Rs. 1,000 disallowed by the ITO for Dr. A.S. Meenawat was reduced to Rs. 500 by the Dy. Commissioner (A). The Tribunal maintained this disallowance considering the personal use of the car.
- For Dr. Jyoti Meenawat, Rs. 1,000 disallowed by the ITO was reduced to Rs. 500 by the Tribunal on similar grounds.
- Household Expenses:
- The ITO added Rs. 6,350 for Dr. Jyoti Meenawat's household expenses, reduced to Rs. 3,350 by the Dy. Commissioner (A). The Tribunal deleted this addition, finding no warrant or justification for it in the absence of specific evidence.

5. Charging of Interest under Section 215 and Section 217:
- The Dy. Commissioner (A) directed the Assessing Officer to recompute interest under Section 215 considering the reliefs granted. The Tribunal found this ground purely consequential.
- For interest under Section 217, the ITO was directed to see if any interest would be chargeable based on the income finally assessed as a result of the appeals.

6. Treatment of Gifts as Income:
- Dr. Jyoti Meenawat:
- The ITO added Rs. 20,000 as income under Section 28, treating gifts received from four persons as income. The Dy. Commissioner (A) reduced this to Rs. 2,000, considering Rs. 500 from each gift as taxable.
- The Tribunal deleted the entire addition, holding that the gifts were genuine, made out of love and affection, and not related to any specific treatment. The cash or money could not be treated as a perquisite or income under Section 28.
- Departmental Appeals:
- The Department's appeals against the deletion of additions for cash credits and gifts were dismissed, as the Tribunal upheld the findings of the Dy. Commissioner (A) and found no basis for the additions.

Conclusion:
- The appeals filed by the assessees (ITA Nos. 587 to 589) were partly allowed, and the appeals filed by the Department (ITA Nos. 503, 505, and 506/JP/89) were dismissed. The Tribunal provided detailed justifications for deleting various additions and disallowances, emphasizing the need for concrete evidence and reasonable estimations in tax assessments.