1986 (10) TMI 56 - AT - Income Tax

Summary

Issues: Whether the AAC was justified in confirming the addition of Rs. 4,500 as unexplained investment.

Analysis:
The appeal before the Appellate Tribunal ITAT ALLAHABAD involved the question of whether the AAC was correct in upholding the addition of Rs. 4,500 as unexplained investment for the assessment year 1981-82. The assessee, an individual, had invested this amount in the books of M/s Prakash Company, claiming it to be gifts received from relatives on occasions like festivals. The ITO added the amount as unexplained investment as the gift receipts were deemed unverifiable. On appeal, the AAC upheld the ITO's decision, noting the lack of evidence regarding the gifts. The assessee then appealed to the ITAT, arguing that the list of gift-givers was provided to the ITO and AAC, and that the gifts were customary in Hindu families. The departmental representative disputed the submission, claiming the list was not filed before the ITO. The ITAT observed that the list was indeed submitted before the AAC and held that the small investment amount of Rs. 4,500 should not be considered unexplained, given the customary nature of such gifts in Hindu families and the status of the assessee. The ITAT concluded that the authorities had not considered all facts and deleted the addition, contingent on the list being filed before the ITO.

The ITAT's decision was based on the assessment of the submissions made by both parties. The ITAT noted that the assessee had explicitly mentioned receiving gifts in a letter to the ITO, but the ITO failed to request the list of gift-givers. The departmental representative did not refute the claim that the list was not submitted before the AAC. However, it was confirmed that the list was indeed presented before the AAC, and the ITAT accepted the submission that the gifts were customary for Hindu ladies and constituted their stridhan. The ITAT emphasized that the assessee's good status and the customary nature of the gifts supported the conclusion that the investment of Rs. 4,500 should not be considered unexplained. Therefore, the ITAT agreed with the assessee's representative and held that the addition should be deleted, subject to the list being provided to the ITO. As a result, the appeal was allowed for statistical purposes, indicating the deletion of the addition of Rs. 4,500 as unexplained investment.