2000 (12) TMI 218 - AT - Income Tax

Summary

Issues:
1. Addition of Rs. 1,05,400 as unexplained stock.
2. Addition of Rs. 15,015 as income from business on own account.

Analysis:

Issue 1: Addition of Rs. 1,05,400 as unexplained stock
The appeal by the assessee, a registered firm, was against the addition of Rs. 1,05,400 as unexplained stock and Rs. 15,015 as income from business on own account for the assessment year 1991-92. The excess stock was discovered during a survey under section 133A of the IT Act, and the managing partner agreed to treat it as income for the relevant year. The CIT(A) upheld the addition, emphasizing that the appellant failed to disclose this amount in the return and provided unsubstantiated explanations. The appellate tribunal considered the evidence, including the managing partner's statement, and concluded that the authorities were justified in adding the value of the excess stock to the firm's income, citing precedents where admissions by the assessee were accepted as sole evidence for assessment. The tribunal upheld the addition of Rs. 1,05,400, rejecting the contention that the managing partner's admission was invalid due to language barriers.

Issue 2: Addition of Rs. 15,015 as income from business on own account
Regarding the addition of Rs. 15,015 as income from business on own account, the tribunal noted that the managing partner clearly stated that the firm was engaged only in commission agency business. The Department failed to provide evidence contradicting this statement. As no proof of the firm conducting business on its own account was presented, the tribunal concluded that the addition of Rs. 15,000 was unwarranted. Consequently, the tribunal deleted the addition of Rs. 15,000, allowing the appeal in part.

In summary, the appellate tribunal upheld the addition of Rs. 1,05,400 as unexplained stock based on the managing partner's admission and deleted the addition of Rs. 15,000 as income from business on own account due to lack of evidence supporting such a claim.