2004 (5) TMI 281 - AT - Income Tax

Summary

Issues:
1. Addition of Rs. 25,000 on account of GP estimation.
2. Addition of Rs. 6,73,000 under s. 68/69 of the Act.
3. Liability to pay interest under s. 234A, 234B, and 234C of the Act.

Analysis:

Issue 1: Addition of Rs. 25,000 on account of GP estimation
The assessee appealed against the addition of Rs. 25,000, which was not pressed by the authorized representative, leading to its rejection as not pressed.

Issue 2: Addition of Rs. 6,73,000 under s. 68/69 of the Act
The AO made an addition of Rs. 6,73,000 under s. 68 of the Act based on cash credits in the books of account. The CIT(A) confirmed this addition, questioning the explanation provided by the assessee related to cash withdrawals from the 'Tijori account.' The AO rejected the explanation citing various reasons, including the absence of a Tijori account maintained by the assessee. However, the Tribunal found the AO's rejection of the explanation on irrelevant considerations. The Tribunal noted that the AO failed to establish that the cash withdrawn was not available in the Tijori account. The Tribunal also disagreed with the CIT(A)'s observations, stating that the inferences drawn were based on illogical presumptions. The Tribunal, applying the test of 'human probabilities,' concluded that the addition of Rs. 6,73,000 was unwarranted, deleting the same and allowing ground No. 2 of the appeal.

Issue 3: Liability to pay interest under s. 234A, 234B, and 234C of the Act
The ground related to the levy of interest under s. 234A, 234B, and 234C of the Act. The Tribunal directed the AO to recompute the interest in accordance with the law, providing consequential relief to the assessee.

In conclusion, the appeal was partly allowed, with the addition of Rs. 6,73,000 under s. 68/69 of the Act being deleted, and directions given for the re-computation of interest under s. 234A, 234B, and 234C of the Act.