1983 (3) TMI 122 - AT - Income Tax

Summary

Issues:
1. Addition of income from undisclosed sources due to discrepancy in accounts.
2. Disallowance of claimed expenses and initiation of penalty proceedings.
3. Addition of undisclosed income from trading entries in the balance sheet.
4. Disallowance of certain expenses by the assessing authorities.
5. Disallowance of claimed expenses by the assessing authorities.
6. Imposition of penalty under section 271(1)(c) of the Act.

Analysis:

1. The assessing officer added Rs. 10,000 as income from undisclosed sources due to a discrepancy in the crossing account. The assessee claimed it was a totalling mistake and explained that unclaimed business expenses reduced the difference to Rs. 646. The Income Tax Appellate Tribunal (ITAT) found the addition uncalled for and deleted it.

2. The assessing officer disallowed Rs. 1,500 of claimed expenses for lack of vouchers, completing the assessment at Rs. 36,890 total income. Penalty proceedings under section 271(1)(c) were initiated. The ITAT found the disallowance unjustified and deleted the Rs. 1,500 disallowance.

3. The assessing officer added Rs. 3,568 as undisclosed income from trading entries in the balance sheet. The ITAT held that the addition was made without notice to the assessee and was nominal, thus deleting the addition.

4. The ITAT examined various disallowed expenses, including octroi, charity, and bad debts. It allowed the bad debt claim of Rs. 874 but upheld disallowances of other claims due to lack of evidence. The ITAT found the disallowance of Rs. 1,500 unjustified and deleted it.

5. The penalty under section 271(1)(c) of Rs. 10,000 was imposed due to the totalling mistake. The ITAT noted that the mistake was unintentional, as per the assessee's explanation, and cancelled the penalty. The assessing officer's contention of intentional concealment was dismissed.

6. The ITAT considered the preponderance of probabilities and found the totalling mistake to be unintentional and bona fide. It concluded that the penalty order was unjustified and cancelled it. The ITAT allowed one appeal in part and the other in full, overturning the penalties and disallowances imposed by the assessing authorities.