1982 (9) TMI 125 - AT - Income Tax

Summary

Issues:
1. Addition of income from undisclosed sources.
2. Charging of interest under sections 139 and 217.

Analysis:

Issue 1: Addition of income from undisclosed sources
The primary issue in this case was the addition of Rs. 8957 as income from undisclosed sources by the Income Tax Officer (ITO). The ITO based this addition on the assessment that the household expenses shown by the assessee were inadequate and unsupported by evidence. The ITO estimated the household expenses at Rs. 15,000 due to the lifestyle of the assessee, which included being the President of Liquor Contractors and owning a Fiat car and telephone. The assessee contested this estimation, arguing that the telephone belonged to an association and was not personal property. The assessee's counsel contended that the ITO's estimation was unjustified and requested the addition to be deleted. However, the Appellate Tribunal found that while the ITO's estimation was on the higher side, the assessee's expenses were indeed lower considering various factors. Consequently, the Tribunal revised the estimated household expenses to Rs. 12,000, providing some relief to the assessee.

Issue 2: Charging of interest under sections 139 and 217
The second issue revolved around the charging of interest under sections 139 and 217. The assessee appealed against the charging of interest, arguing that the Appellate Commissioner (AAC) should have allowed the appeal as it was consequential to the quantum appeal. However, the Tribunal noted that the grounds of appeal did not deny the liability to be assessed under the Income Tax Act. Referring to legal precedents, the Tribunal highlighted that a mere objection to the imposition of interest does not imply a denial of liability to be assessed. The Tribunal cited decisions from various High Courts emphasizing that a denial of liability must encompass the entire process of assessment, not just specific provisions. Ultimately, the Tribunal upheld the AAC's decision, stating that the appeal objecting to the imposition of interest was incompetent due to the absence of a complete denial of liability to be assessed.

In conclusion, the Tribunal partly allowed the assessee's appeal by revising the estimated household expenses but dismissed the appeal regarding the charging of interest under sections 139 and 217.