2004 (8) TMI 338 - AT - Income Tax

Summary

Issues Involved:
1. Legality of action under Section 132 of the IT Act and notice under Section 158BC.
2. Addition of Rs. 2,53,847 for purchase of Australian dollars.
3. Addition of Rs. 3,50,000 as unexplained income for the assessment year 1990-91.
4. Addition of Rs. 2,00,000 due to cash found belonging to the firm.
5. Addition of Rs. 8,00,000 for cash deposited in the savings bank account.
6. Addition of Rs. 9,00,000 from the opening balance of capital.
7. Addition of Rs. 2,26,740 due to lack of evidence for filing regular returns.
8. Interest levied under Section 158BFA(1) of the IT Act.
9. Deletion of addition of Rs. 44.90 lakhs by the CIT(A).
10. Deletion of addition of Rs. 32.5 lakhs as sale consideration of property.

Detailed Analysis:

1. Legality of Action under Section 132 and Notice under Section 158BC:
This issue was not pressed by the assessee and thus dismissed as 'not pressed'.

2. Addition of Rs. 2,53,847 for Purchase of Australian Dollars:
The AO found unexplained remittances for education expenses in Australia. The CIT(A) confirmed the addition. The Tribunal, however, found that the assessee provided sufficient documentation and explanation for the source of funds, including loans and withdrawals from bank accounts. The Tribunal concluded that the Revenue failed to make a case against the assessee, and the addition was directed to be deleted.

3. Addition of Rs. 3,50,000 as Unexplained Income for AY 1990-91:
The AO treated certain fixed deposits as unexplained income. The CIT(A) confirmed this. The Tribunal noted that the FDRs were not found in the assessee's name and no corroborative evidence was provided by the AO. The Tribunal found the explanation regarding the source of funds for the FDR of Rs. 50,000 satisfactory and directed the deletion of the addition.

4. Addition of Rs. 2,00,000 Due to Cash Found Belonging to the Firm:
The AO treated the cash found at the assessee's residence as undisclosed income. The Tribunal found that the cash belonged to the partnership firm, as evidenced by the firm's cash book. The Tribunal accepted the explanation and directed the deletion of the addition.

5. Addition of Rs. 8,00,000 for Cash Deposited in Savings Bank Account:
The AO treated cash deposits in the assessee's bank account as unexplained income. The Tribunal found that the deposits were made from earlier withdrawals and no contrary evidence was found by the Revenue. The Tribunal directed the deletion of the addition.

6. Addition of Rs. 9,00,000 from the Opening Balance of Capital:
The AO treated the opening balance in the capital account as unexplained income. The Tribunal found that the investments were made before the block period and were disclosed in regular returns. The Tribunal directed the deletion of the addition.

7. Addition of Rs. 2,26,740 Due to Lack of Evidence for Filing Regular Returns:
The Tribunal remanded the issue back to the AO for verification of the Departmental records to determine if the returns were filed and taxes paid. If the Revenue finds no returns were filed, the income may be treated as undisclosed.

8. Interest Levied under Section 158BFA(1) of the IT Act:
The AO did not pass a specific order for charging interest under Section 158BFA. The Tribunal found that without a specific order, no demand for interest could be issued. The interest demand was directed to be deleted.

9. Deletion of Addition of Rs. 44.90 Lakhs by the CIT(A):
The AO added Rs. 44.90 lakhs based on seized documents indicating advances and interest received. The CIT(A) deleted the addition, finding no tangible assets or corroborative evidence. The Tribunal agreed, noting that loose papers and jottings could not be the basis for treating undisclosed income. The deletion was upheld.

10. Deletion of Addition of Rs. 32.5 Lakhs as Sale Consideration of Property:
The AO added Rs. 32.5 lakhs based on seized documents suggesting a higher sale consideration for a property. The CIT(A) found that only a portion of the property was sold and the disclosed amount was accurate. The Tribunal upheld the deletion, finding no evidence of undisclosed consideration.

Conclusion:
The Tribunal partly allowed the assessee's appeal, directing the deletion of several additions and remanding one issue for further verification. The Revenue's appeal was dismissed in its entirety.