1994 (12) TMI 135 - AT - Income Tax

Summary

Issues Involved:

1. Addition of Rs. 25,000 on account of gifts.
2. Addition of Rs. 11,600 on account of low household expenses.
3. Addition of Rs. 12,500.
4. Addition of Rs. 5,000.
5. Additions of Rs. 60,000 and Rs. 50,000.
6. Interest u/s 234B & 234C.

Summary:

1. Addition of Rs. 25,000 on account of gifts:

The assessee declared an income of Rs. 18,200 for AY 1989-90 and claimed to have received five gifts of Rs. 5,000 each from Shri Pawan Kumar Jain in London. The Assessing Officer (AO) required confirmations and details about Shri Jain, which the assessee failed to provide adequately. The AO added Rs. 25,000 to the assessee's total income, considering the gift as sham. The CIT(A) upheld this addition, relying on the Punjab & Haryana High Court decision in Lalchand Kalra vs. CIT. The Tribunal agreed with the AO and CIT(A), noting that the circumstances and conduct of the parties did not support the genuineness of the transaction.

2. Addition of Rs. 11,600 on account of low household expenses:

The AO noted insufficient withdrawals by the assessee and his wife for household expenses and added Rs. 16,100, estimating expenses at Rs. 2,000 per month. The CIT(A) confirmed this addition. The assessee argued that his mother contributed Rs. 10,000 from her agricultural income, but the Tribunal found no evidence of such contribution during the relevant period. The Tribunal confirmed the addition, considering it fair and reasonable.

3. Addition of Rs. 12,500:

The AO added Rs. 12,500 in the hands of the assessee, representing profits from the sale of stock-in-hand of M/s Pashupati Readymade Emporium, a business allegedly run by the assessee's wife in Nepal. The Tribunal found that the business was indeed carried on by the assessee's wife, and the income was wrongly clubbed in the assessee's hands. The addition was deleted.

4. Addition of Rs. 5,000:

The AO added Rs. 5,000 in the hands of the assessee, representing business income of the HUF, which had not disclosed any business income in the past. The CIT(A) observed that the HUF had carried on casual transactions in the past. The Tribunal upheld the CIT(A)'s decision, noting the absence of stock with the HUF at the end of the year.

5. Additions of Rs. 60,000 and Rs. 50,000:

The AO added Rs. 60,000 and Rs. 50,000 as income from undisclosed sources, based on cash deposits in the assessee's and his wife's bank accounts. The CIT(A) confirmed these additions, noting inconsistencies in the assessee's explanations. The Tribunal upheld the addition of Rs. 60,000 but deleted the addition of Rs. 50,000, considering the sale proceeds of the stock-in-hand from the business in Nepal as a plausible source for the deposit in the wife's account.

6. Interest u/s 234B & 234C:

The Tribunal directed that the interest u/s 234B and 234C be recalculated while giving effect to its order.

Conclusion:

The appeal was partly allowed, with some additions confirmed and others deleted based on the evidence and circumstances presented.