2002 (3) TMI 213 - AT - Income Tax

Summary

Issues Involved:
1. Sustenance of additions by CIT(A) out of the additions made by the AO.
2. Allowance of relief by CIT(A) out of the additions made by the AO.
3. Justification of benefits of intangible additions given by CIT(A).
4. Direction to initiate penalty proceedings under Section 271(1)(c) of the IT Act.
5. Credit for amounts debited in the capital accounts of the wives of the assessees.

Detailed Analysis:

1. Sustenance of Additions by CIT(A):
In ITA No. 173/Chd/1995, the assessee challenged the sustenance of an addition of Rs. 60,747 out of Rs. 2,69,422 made by the AO. Similarly, in ITA No. 172/Chd/1995, the assessee contested the sustenance of Rs. 74,038 out of Rs. 2,45,094. In ITA No. 356/Chd/1995, the challenge was against the sustenance of Rs. 73,224 out of Rs. 2,82,115. The Tribunal agreed with the assessee's contention that the construction costs were incurred over multiple years (1989-90 to 1992-93) and not just in the assessment year 1992-93. Therefore, the additions made by the AO and sustained by the CIT(A) were deemed inappropriate and were deleted.

2. Allowance of Relief by CIT(A):
In ITA No. 245/Chd/1995, the Revenue contested the CIT(A)'s allowance of Rs. 2,08,675 out of Rs. 2,69,422. In ITA No. 243/Chd/1995, the Revenue challenged the relief of Rs. 1,71,056 out of Rs. 2,45,094. In ITA No. 666/Chd/1995, the Revenue disputed the relief of Rs. 2,08,891 out of Rs. 2,77,000. The Tribunal upheld the CIT(A)'s decisions, noting the detailed bifurcations of construction costs provided by the assessee and the valuation officer's separate estimates for each assessment year.

3. Justification of Benefits of Intangible Additions:
The Revenue argued that the CIT(A) unjustifiably gave the benefit of intangible additions from assessment years 1974-75 to 1992-93 without evidence from the assessee. The Tribunal found that the CIT(A) correctly considered the withdrawals and shares in firms as available funds for the construction investments, thus upholding the CIT(A)'s decisions.

4. Direction to Initiate Penalty Proceedings:
The Revenue's appeals included grounds that the CIT(A) erred in not directing the AO to initiate penalty proceedings under Section 271(1)(c) of the IT Act. The Tribunal did not find merit in these grounds and upheld the CIT(A)'s decisions.

5. Credit for Amounts Debited in Capital Accounts:
The Revenue contested the CIT(A)'s credit for Rs. 50,000 debited in the capital accounts of the wives of the assessees towards construction costs, arguing the house was completed before the withdrawals. The Tribunal upheld the CIT(A)'s decisions, noting the withdrawals were part of the available funds for construction.

Conclusion:
The Tribunal allowed the appeals filed by the assessees in part, deleting the additions made by the AO and sustained by the CIT(A). The appeals filed by the Revenue were dismissed, upholding the reliefs and credits allowed by the CIT(A). The Tribunal emphasized that the construction costs were incurred over multiple years and not just in the assessment year 1992-93, and thus, the additions made under Section 69 of the IT Act were not justified.