2013 (9) TMI 76 - AT - Income Tax

Undisclosed income - Withdrawals of cash from the book of boarding hostel - Held that - It is a well-settled that the undisclosed income under Chapter XIV-B of the Act has to be computed on the basis of search materials. It is also well settled that any income which has already been either recorded in the books of account or otherwise disclosed to the Department prior to the date of search cannot be treated as undisclosed income of an assessee. In the instant case, the learned Commissioner of Income-tax (Appeals) has given a clear finding that the abovesaid withdrawals have been declared in the balance-sheets filed along with the returns of income, which were filed prior to the date of search - Decided against Revenue. Enhancement of relief - Receipt of marriage gifts - Held that - assessee has furnished the details of donors and also confirmation letters obtained from some of the donors. However, the assessee did not obtain the con firmation letters from all the donors. Hence, on a conspectus of the matter, we are of the view that it would meet the ends of justice if the gift amount is determined at Rs. 3,50,000 - The Assessing Officer is directed to restrict the addition on this issue to Rs. 1,27,500 - Decided in favour of Revenue. There cannot be any dispute that the income already disclosed to the Department shall not form part of undisclosed income. Technically, the action of the learned Commissioner of Income-tax (Appeals) may be wrong, however, it is noticed that the Assessing Officer has also made the impugned addition without making proper verification, simply because certain details are missing in the narration recorded in the books of account. Under these circumstances, the claim of the assessee could be allowed, provided somebody had examined the said claim - Matter remitted back - Decided in favour of Revenue. LIC survival benefits - Held that - assessee has filed copies of letter received from LIC and also a copy of relevant cheque leaf. According to the learned authorised representative, the assessee has filed the said documents before the Assessing Officer. Since the Assessing Officer has taken a stand that the assessee has failed to substantiate the claim of receipt of LIC amount of Rs. 20,000, therefore the claim of the assessee needs to be examined afresh in the light of documents filed - Decided in favour of Revenue.

Issues Involved:
1. Deletion of Rs. 5,31,755 relating to cash received from the boarding hostel.
2. Addition of Rs. 89,192 relating to chitty receipts.
3. Enhancement of relief relating to marriage gifts by Rs. 1 lakh.
4. Addition of Rs. 1,97,713 pertaining to interest accrued on bank deposits.
5. Addition of Rs. 14,82,089 pertaining to peak deposits found in savings bank accounts.
6. Addition pertaining to subscriptions made in chittys of Gokulam Chit Fund.
7. Levying of surcharge under section 113 of the Act.
8. Addition of Rs. 20,000 pertaining to LIC survival benefits.

Detailed Analysis:

1. Deletion of Rs. 5,31,755 Relating to Cash Received from Boarding Hostel:
The Revenue disputed the deletion of Rs. 5,31,755, which the Assessing Officer considered as undisclosed income. The assessee showed these withdrawals in the books of the boarding hostel, which were reflected in the balance sheets filed with the income returns prior to the search. The Commissioner of Income-tax (Appeals) verified these documents and found no reason to treat the sums as undisclosed income. The Tribunal upheld this decision, emphasizing that income already recorded in the books or disclosed to the Department prior to the search cannot be treated as undisclosed income.

2. Addition of Rs. 89,192 Relating to Chitty Receipts:
The Assessing Officer treated Rs. 89,192 as undisclosed income due to lack of evidence. However, the Commissioner of Income-tax (Appeals) found that the assessee had declared these receipts in her capital account filed with the return of income for the assessment year 1999-2000. Since these transactions were disclosed prior to the search, the Tribunal upheld the deletion of this addition.

3. Enhancement of Relief Relating to Marriage Gifts by Rs. 1 Lakh:
The Assessing Officer accepted only Rs. 1 lakh out of Rs. 4,77,500 claimed as marriage gifts, treating the remaining Rs. 3,77,500 as undisclosed income. The Commissioner of Income-tax (Appeals) enhanced the acceptable gift amount to Rs. 2 lakhs, sustaining an addition of Rs. 2,77,500. The Tribunal, after reviewing the evidence, determined the gift amount at Rs. 3,50,000, reducing the addition to Rs. 1,27,500.

4. Addition of Rs. 1,97,713 Pertaining to Interest Accrued on Bank Deposits:
The Assessing Officer treated Rs. 1,97,713 as undisclosed income since the returns for the period ending March 31, 2002, and from April 1, 2002, to May 28, 2002, were filed after the search. The Commissioner of Income-tax (Appeals) deleted this addition, citing precedents that income already disclosed in prior returns cannot be treated as undisclosed. The Tribunal upheld this deletion.

5. Addition of Rs. 14,82,089 Pertaining to Peak Deposits Found in Savings Bank Accounts:
The Assessing Officer treated peak credits in certain bank accounts as undisclosed income. The Commissioner of Income-tax (Appeals) found that these accounts were disclosed in the cash flow statements and belonged to the Sabarigiri Trust. The Tribunal agreed, stating there was no need to consider peak credits for assessment when transactions were already disclosed.

6. Addition Pertaining to Subscriptions Made in Chittys of Gokulam Chit Fund:
The Assessing Officer added Rs. 14,23,024 for chitty subscriptions, doubting their correlation with the trust's accounts. The Commissioner of Income-tax (Appeals) directed verification of the assessee's claim that these chitties belonged to the trust. The Tribunal upheld this directive, emphasizing the need for proper verification.

7. Levying of Surcharge Under Section 113 of the Act:
The Commissioner of Income-tax (Appeals) deleted the surcharge, considering it prospective. However, the Tribunal referred to the Supreme Court ruling in CIT v. Suresh N. Gupta, which held that the surcharge is leviable. Thus, the Tribunal set aside the deletion.

8. Addition of Rs. 20,000 Pertaining to LIC Survival Benefits:
The Assessing Officer treated Rs. 20,000 as undisclosed income due to lack of supporting documents. The Commissioner of Income-tax (Appeals) confirmed this. The Tribunal, considering new evidence, directed the Assessing Officer to re-examine the claim.

Conclusion:
The appeal of the Revenue and the cross-objection of the assessee are partly allowed for statistical purposes. The Tribunal issued directives for re-examination and upheld certain deletions and additions based on the evidence and legal precedents.

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