1976 (2) TMI 63 - AT - Income Tax

Issues Involved:
1. Excess cash found during the raid.
2. Unaccounted sale vouchers and transactions.
3. Purchase of property in the name of Nawal Kishore Mishra.
4. Loans and money lending transactions in the name of Nawal Kishore Mishra.
5. Penalty under Section 271(1)(c) of the IT Act, 1961.
6. Rebate on Life Insurance Premium and donation.
7. Accrued interest on loans.

Detailed Analysis:

1. Excess Cash Found During the Raid:
The IT Department discovered cash amounting to Rs. 27,549 during a raid on the assessee's premises. The ITO disbelieved the assessee's explanation that this cash represented the sale proceeds of his late wife's jewelry, considering it unlikely that a money lender would keep such a large amount idle for nearly 28 years. The ITO allowed Rs. 4,500 as accounted for and treated the remaining Rs. 23,000 as income from undisclosed sources. However, the AAC deleted this addition, considering the assessee's high ideals and political history. The Tribunal, considering the improbability of keeping such a large amount idle for 15 years, restored the addition of Rs. 23,000 to the total income.

2. Unaccounted Sale Vouchers and Transactions:
44 sale vouchers relating to silver ornaments worth Rs. 49,724 were found, which the ITO attributed to clandestine transactions by the assessee. The AAC confirmed the income estimates for the assessment years 1963-64 and 1965-66 but deleted the addition for 1966-67. The Tribunal held that these transactions belonged to Nawal Kishore Mishra, not the assessee, and accordingly deleted the additions.

3. Purchase of Property in the Name of Nawal Kishore Mishra:
A property purchased in Nawal Kishore's name for Rs. 25,000 was treated by the ITO as a benami transaction by the assessee. The AAC confirmed the addition of Rs. 11,000, considering Rs. 15,000 as a loan from the assessee. The Tribunal found that the property belonged to Nawal Kishore and the Rs. 15,000 was indeed a loan. Thus, the addition of Rs. 11,000 and the rental income of Rs. 3,000 were deleted.

4. Loans and Money Lending Transactions in the Name of Nawal Kishore Mishra:
The ITO included various loans and money lending transactions in the assessee's income, assuming they were benami transactions. The AAC initially agreed but later took a different view for the assessment year 1964-65 onwards, deleting the additions. The Tribunal upheld that these transactions belonged to Nawal Kishore, not the assessee, and deleted the related additions.

5. Penalty under Section 271(1)(c) of the IT Act, 1961:
A penalty of Rs. 3,000 was imposed on the assessee for concealing particulars of income related to the house property and clandestine sarafa business. The Tribunal, having held that the property and business did not belong to the assessee, cancelled the penalty.

6. Rebate on Life Insurance Premium and Donation:
The assessee's claims for rebates on Life Insurance Premium (Rs. 2,016) and a donation to the Police Training School (Rs. 4,000) were not considered by the lower authorities. The Tribunal directed the ITO to consider these claims upon the production of necessary receipts.

7. Accrued Interest on Loans:
The ITO included accrued interest on loans advanced in the name of Nawal Kishore in the assessee's income. The AAC deleted these additions, and the Tribunal upheld this decision, confirming that the loans were advanced by Nawal Kishore, not the assessee.

Conclusion:
The Tribunal's judgment comprehensively addressed each issue, ultimately concluding that the transactions and properties in question belonged to Nawal Kishore Mishra and not the assessee. Consequently, the additions made by the ITO were largely deleted, except for the Rs. 23,000 in excess cash found during the raid. The penalties and accrued interest related to these transactions were also cancelled. The Tribunal directed the ITO to reconsider the assessee's claims for rebates on Life Insurance Premium and donations upon the production of necessary receipts.

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