1997 (6) TMI 69 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs.18,000 as income u/s 68 and disallowance of Rs.1,828 as interest.
2. Addition of Rs.11,555 based on loose sheets recovered during search operations u/s 132.
3. Addition of Rs.17,824 on account of difference in closing stock.
4. Addition on account of low withdrawals.
5. Deletion of cash credits of Rs.69,000, interest of Rs.6,891, and investment of Rs.4,00,000 in the purchase of a house.
6. Deletion of additions u/s 40A(3), low drawing, and materials gathered from loose papers.

Summary:

1. Addition of Rs.18,000 as income u/s 68 and disallowance of Rs.1,828 as interest:
The assessee obtained a loan from Smt. Girija Devi amounting to Rs.18,000. The A.O. added this amount to the assessee's income u/s 68 due to lack of confirmatory letter and disallowed Rs.1,828 as interest. The Appellate Commissioner confirmed the addition. However, the Tribunal held that the assessee discharged the onus u/s 68 by explaining the source of funds through account payee cheques and directed deletion of both the sum of Rs.18,000 and Rs.1,828 interest. A separate judgment by the Accountant Member upheld the addition, leading to a reference to a Third Member. The Third Member concluded that the additional evidence should be admitted and the addition of Rs.18,000 and disallowance of Rs.1,828 should be deleted.

2. Addition of Rs.11,555 based on loose sheets recovered during search operations u/s 132:
The A.O. added Rs.11,555 based on loose sheets recovered during search operations, which the assessee claimed belonged to his son. The Tribunal directed deletion of the addition and instructed the A.O. to refer the matter to the A.O. assessing the assessee's son for proper enquiries.

3. Addition of Rs.17,824 on account of difference in closing stock:
The A.O. added Rs.17,824 due to a discrepancy in the closing stock of silver. The Tribunal found the addition unwarranted as the difference in stock had already been taxed in the previous assessment year (1982-83), and directed deletion of the addition to avoid double taxation.

4. Addition on account of low withdrawals:
The A.O. added Rs.6,000 for low household withdrawals. The Tribunal found that other family members also made significant withdrawals, making the addition unnecessary, and directed its deletion.

5. Deletion of cash credits of Rs.69,000, interest of Rs.6,891, and investment of Rs.4,00,000 in the purchase of a house:
The Tribunal upheld the Appellate Commissioner's decision to set aside the assessment and remand the matter for fresh investigation regarding cash credits of Rs.69,000 and interest of Rs.6,891. It also agreed with the remand for re-examination of the purchase of a house property worth Rs.4,00,000.

6. Deletion of additions u/s 40A(3), low drawing, and materials gathered from loose papers:
The Tribunal upheld the deletion of Rs.6,047 added u/s 40A(3) and Rs.14,000 for low household expenses. It also agreed with the deletion of Rs.1,02,329 based on loose papers found in the assessee's son's bedroom, directing any necessary addition to be made in the son's assessment.

Conclusion:
The appeals were disposed of with directions for deletions and remands as indicated. The Third Member's opinion resolved the difference regarding the Rs.18,000 cash credit and Rs.1,828 interest, favoring the deletion of these additions.