1992 (9) TMI 145 - AT - Income Tax

Summary

Issues involved:
1. Unexplained investment of Rs. 1,00,000.
2. Determination of whether M/s Saroj International is a benami concern.
3. Recomputation of interest under sections 138(9) and 217 of the Act.

Detailed Analysis:

1. Unexplained Investment of Rs. 1,00,000:
The appeal challenged the CIT(A) order regarding the unexplained investment of Rs. 1,00,000 by the assessee. The Income Tax Officer (ITO) had added this amount to the assessee's income from undisclosed sources as the cash deposits made by the assessee did not align with the explanation provided regarding a gift received. The CIT(A) upheld the addition based on the timing of the deposits and lack of certified evidence. The advocate for the assessee argued that since the receipt of the gift was undisputed and unutilized, the assessee's version should have been accepted. The Tribunal agreed, emphasizing that the time gap between gift receipt and deposits alone was insufficient to conclude the money was invested elsewhere. The Tribunal found that the assessee satisfactorily proved the source of the deposits, leading to the deletion of the addition.

2. M/s Saroj International - Whether a benami concern:
The ITO had previously considered the business of M/s Saroj International as a benami business of another entity and made certain adjustments. The CIT(A) directed that appropriate orders be taken based on the final decision of the Settlement Commission regarding the other entity. However, the Tribunal, based on a previous order related to a different entity, concluded that M/s Saroj International was not a benami business and directed the ITO to treat certain items differently in the assessee's case.

3. Interest under sections 138(9) and 217 of the Act:
Considering the decisions on the first two points, the Tribunal directed the recomputation of interest under sections 138(9) and 217 of the Act. The appeal was allowed based on the Tribunal's findings on all three issues.

This judgment highlights the importance of substantiating explanations for cash deposits, the consideration of benami concerns, and the consequential recomputation of interest based on the Tribunal's decisions.