1978 (2) TMI 137 - AT - Income Tax

Summary

Issues:
- Appeal against the deletion of income from undisclosed sources amounting to Rs. 14,000 for the assessment year 1974-75.

Analysis:
1. The Department appealed against the deletion of Rs. 14,000 from the income of the assessee, claiming it was from undisclosed sources. The assessee had explained that the amount was saved from his earnings over the years. The Income Tax Officer (ITO) did not accept this explanation, citing the lavish lifestyle of the assessee and his family as a reason to treat the amount as undisclosed income.

2. The assessee appealed before the Appellate Authority Commissioner (AAC), presenting a detailed account of his earnings and expenses over the years. The AAC found discrepancies in the assessee's accounting practices, noting the lack of proper records and tangible evidence to support the claimed savings. However, the AAC concluded that the addition of Rs. 14,000 as income from undisclosed sources was unjustified and deleted the amount from the assessment.

3. The Department challenged the AAC's decision, arguing that the estimate of income at Rs. 14,000 from undisclosed sources should have been upheld. The counsel for the assessee provided a statement detailing the assessee's financial history, including initial capital, assessed income in previous years, and household expenses. The statement supported the assessee's claim that the saved amount of Rs. 14,000 was derived from legitimate business income.

4. The counsel further emphasized that the assessee had a consistent income pattern over the years, with earnings below the taxable limit for certain periods. The counsel also highlighted the employment of the assessee's wife as a nurse, contributing to the household income. The Tribunal found the assessee's explanations satisfactory, ruling that the addition of Rs. 14,000 as income from undisclosed sources was not justified. Consequently, the Tribunal upheld the AAC's decision to delete the amount from the assessment.

5. In conclusion, the Tribunal dismissed the Department's appeal, affirming the AAC's decision to delete the Rs. 14,000 from the assessee's income for the assessment year 1974-75.