1989 (5) TMI 146 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 6,90,231 u/s 69C.
2. Addition of Rs. 68,170 for interest on borrowings.
3. Addition of Rs. 23,730 income from sale of empty gunny bags.
4. Addition of Rs. 6,831 as 10% profit on work done in the name of Manimaran.
5. Cross Objection by the Department regarding deletion of Rs. 1 lakh.

Summary:

1. Addition of Rs. 6,90,231 u/s 69C:
The assessee was assessed for the year 1985-86 in the status of "Individual" and had undertaken contracts from the Tamil Nadu Housing Board and built a cinema theatre. A search revealed unaccounted expenditure of Rs. 6,90,231 evidenced by 15 vouchers. The I.T.O. added this amount u/s 69C, as the source of the expenditure was unexplained. The assessee claimed that Rs. 3.25 lakhs were borrowed from his father-in-law, but this was not accepted by the I.T.O. The C.I.T.(A) apportioned Rs. 1 lakh to Housing Board contracts and upheld the inclusion of the balance Rs. 5,90,231. Upon further remand, it was determined that only Rs. 12,726 related to the theatre construction, and the remaining Rs. 6,77,505 was attributable to Housing Board contracts. The Tribunal concluded that the assessee is entitled to a further relief of Rs. 5,77,505, allowing the appeal in part.

2. Addition of Rs. 68,170 for interest on borrowings:
The I.T.O. made an addition of Rs. 68,170 for interest on borrowings diverted for the construction of the theatre. This issue was not specifically contested in the appeal summary.

3. Addition of Rs. 23,730 income from sale of empty gunny bags:
The I.T.O. added Rs. 23,730 as income from the sale of empty gunny bags. This issue was not specifically contested in the appeal summary.

4. Addition of Rs. 6,831 as 10% profit on work done in the name of Manimaran:
The I.T.O. added Rs. 6,831 as 10% profit on work done in the name of Manimaran. This issue was not specifically contested in the appeal summary.

5. Cross Objection by the Department regarding deletion of Rs. 1 lakh:
The Department contested the deletion of Rs. 1 lakh by the C.I.T.(A), arguing that the relief was not warranted and the apportionment was not justified. The Tribunal, after considering the Remand Reports and the material on record, dismissed the Cross Objection, concluding that Rs. 12,726 related to theatre construction and the balance Rs. 6,77,505 related to Housing Board contracts. The Tribunal found no basis to reduce the figure further and upheld the relief granted to the assessee.