1997 (4) TMI 136 - AT - Income Tax

Issues Involved:

1. Addition of Rs. 78,000 to the assessee's income.
2. Validity of the affidavit filed by the assessee's wife.
3. Whether the case should be remanded to the Assessing Officer.
4. Adverse remarks against the Sr. Departmental Representative, Jr. Departmental Representative, and the Assessing Officer.

Issue-wise Detailed Analysis:

1. Addition of Rs. 78,000 to the Assessee's Income:

The assessee, an individual with income from salary and house property, invested Rs. 3,15,000 in a house property during the financial year relevant to the assessment year 1989-90. The source of this investment included a loan of Rs. 78,000 from the assessee's wife. The Assessing Officer (A.O.) did not accept the genuineness of this loan, citing the lack of documentary evidence and the timing of the bank account opening and deposits. Consequently, an addition of Rs. 78,000 was made to the assessee's income. The CIT(Appeals) upheld this addition, stating the findings of the A.O. were reasonable and the creditworthiness of the assessee's wife was not established.

2. Validity of the Affidavit Filed by the Assessee's Wife:

The assessee's wife filed an affidavit confirming the loan and detailing her sources of income. The A.O. and CIT(Appeals) dismissed this affidavit, citing the absence of corroborative evidence and the timing of the bank deposits. The assessee's counsel argued that the affidavit could not be rejected without cross-examination, referencing the Supreme Court decision in Mehta Parikh & Co. v. CIT. The Tribunal noted that the A.O. did not place any material on record to doubt the veracity of the affidavit and that the affidavit was filed close to the assessment deadline.

3. Whether the Case Should Be Remanded to the Assessing Officer:

The Accountant Member proposed that the matter be remanded to the A.O. to cross-examine the deponent and place positive material on record regarding the affidavit's veracity. The Judicial Member disagreed, emphasizing the assessee's non-cooperative attitude and the lack of supporting evidence for the affidavit. The Third Member, considering the facts and the lack of material to doubt the affidavit's veracity, agreed with the Accountant Member that the matter should be remanded to the A.O. with specific directions to cross-examine the deponent and allow the assessee a reasonable opportunity to be heard.

4. Adverse Remarks Against the Sr. Departmental Representative, Jr. Departmental Representative, and the Assessing Officer:

The Judicial Member condemned the conduct of the Departmental Representatives and the A.O. for not producing the assessment records, suggesting penalties and departmental action. The Accountant Member, in a supplementary order, argued that the Judicial Member acted singly without authority and that the Tribunal had no power to impose penalties or initiate disciplinary actions. The Third Member concurred with the Accountant Member, stating that the adverse remarks should be wholly deleted as they did not partake the character of an observation made or finding recorded by the 'Appellate Tribunal'.

Conclusion:

The majority opinion concluded that the addition of Rs. 78,000 should not be confirmed, and the matter should be remanded to the A.O. with specific directions. The adverse remarks against the Departmental Representatives and the A.O. were to be deleted.

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