1981 (2) TMI 98 - AT - Income Tax

Summary

Issues:
1. Determination of initial capital at the commencement of the assessment year.
2. Assessment of unexplained capital as income from other sources.

Analysis:
1. The appeal involved a dispute regarding the initial capital of the assessee at the commencement of the assessment year. The assessee claimed a capital of Rs. 66,100 derived from assessed incomes of previous years, while the assessing authorities estimated it differently. The Income Tax Officer (ITO) estimated the initial capital at Rs. 2,000, whereas the Appellate Authority Commissioner (AAC) estimated it at Rs. 5,000. The Tribunal considered the agricultural income, family size, and expenses of the assessee in determining the initial capital. The Tribunal concluded that Rs. 56,000 could be traced to income from earlier years, reducing the unexplained capital to Rs. 10,000.

2. The second issue revolved around the treatment of unexplained capital as income from other sources. The Revenue authorities had added Rs. 27,585 as unexplained capital, which the AAC reduced to Rs. 16,000. However, the Tribunal further reduced this amount to Rs. 10,000 after considering the agricultural income, family expenses, and overall circumstances. The Tribunal held that the unexplained capital of Rs. 10,000 could be justifiably treated as income from other sources. The appeal was partly allowed based on this analysis.