1997 (6) TMI 73 - AT - Income Tax

Summary

Issues Involved:

1. Confirmation of a sum of Rs.87,000 as income from undisclosed sources u/s 68 of the Act.
2. Retention of a sum of Rs.15,000 as against Rs.20,800 made by the Assessing Officer (A.O.) on account of low withdrawal for household expenses.
3. Levy of interest u/s 217 of the Act.

Summary:

Issue 1: Confirmation of a sum of Rs.87,000 as income from undisclosed sources u/s 68 of the Act:

The assessee had credited Rs.87,000 in his personal accounts, claiming these were gifts from various persons. The Assessing Officer (A.O.) examined three donors on oath, who confirmed the gifts. However, the A.O. disbelieved the explanation, concluding that the amount represented the assessee's own concealed income. The first appellate authority agreed with the A.O. and upheld the addition. The assessee's counsel argued that the A.O. did not bring any material evidence to disprove the gifts and relied on various Tribunal decisions supporting the assessee's case. The Tribunal found no evidence from the A.O. to suggest that the gifts were not genuine and directed the deletion of the addition. However, the Accountant Member disagreed, emphasizing the improbability of the gifts based on the donors' financial status and other circumstances, confirming the addition of Rs.87,000 as concealed income. The matter was referred to a Third Member, who, after considering human probabilities and the Supreme Court's decision in Sumati Dayal v. CIT, agreed with the Accountant Member that the gifts were unlikely and upheld the addition.

Issue 2: Retention of a sum of Rs.15,000 as against Rs.20,800 made by the A.O. on account of low withdrawal for household expenses:

The A/C gave relief of Rs.5,800 to the assessee, sustaining an addition of Rs.15,000. The Tribunal found the A/C's decision to be fair and reasonable, thus retaining the addition of Rs.15,000.

Issue 3: Levy of interest u/s 217 of the Act:

The Tribunal noted that the Appellate Commissioner (A/C) did not decide on this issue. Instead of remanding the matter back, the Tribunal directed the A.O. to provide a reasonable opportunity of being heard to the assessee before charging interest u/s 217, thus disposing of the third ground.

Conclusion:

The appeal was partly allowed. The Tribunal directed deletion of the Rs.87,000 addition, but the Accountant Member's dissent led to a Third Member's intervention, who upheld the addition. The retention of Rs.15,000 for low household withdrawals was confirmed, and the matter of interest u/s 217 was directed for reassessment by the A.O.