1997 (2) TMI 165 - AT - Income Tax

Summary

Issues Involved:
1. Condonation of delay in filing the appeal by the Department.
2. Deletion of addition of Rs. 50,000 by CIT(A) regarding the genuineness of the loan.
3. Addition of Rs. 21,000 as income from undisclosed sources.
4. Addition of Rs. 15,000 on account of low withdrawals for household expenses.

Summary:

1. Condonation of Delay:
The appeal by the Department was barred by limitation for 18 days. The delay was attributed to the transfer of jurisdiction and changes in staff. The Tribunal found the delay to be reasonably explained and condoned it, admitting the appeal for hearing.

2. Deletion of Addition of Rs. 50,000:
The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 50,000, arguing that the assessee failed to prove the genuineness of the loan. The AO had summoned the creditor, Sunil Kumar, u/s 131, who could not satisfactorily explain the source of the deposit. The CIT(A) deleted the addition, stating that the assessee had discharged the burden of proving the identity, genuineness, and capacity of the creditor. The Tribunal upheld the CIT(A)'s decision, noting that the creditor's identity and source of income were established, and no action was taken against the creditor by the Department.

3. Addition of Rs. 21,000 as Income from Undisclosed Sources:
The assessee claimed a gift of Rs. 21,000 from Mohan Lal Aggarwal, supported by a confirmatory letter, affidavit, and bank details. The AO rejected the gift as genuine due to insufficient creditworthiness of the donor. The CIT(A) confirmed the addition, but the Tribunal reversed this decision. The Tribunal found that the assessee had provided sufficient evidence to prove the genuineness of the gift, including the donor's identity, bank transactions, and gift-tax assessment. The Tribunal held that the burden shifted to the Department to disprove the evidence, which it failed to do.

4. Addition of Rs. 15,000 on Account of Low Withdrawals for Household Expenses:
The AO added Rs. 15,000 to the assessee's income, considering the household expenses shown at Rs. 6,000 to be insufficient. The CIT(A) confirmed this addition. The Tribunal acknowledged the low household expenses but directed the ITO to give relief by considering the additions sustained in the trading results of the partnership firm where the assessee had a 50% share. The Tribunal allowed the benefit of telescoping of the addition against the trading results.

Conclusion:
The Department's appeal was dismissed, and the assessee's appeal was partly allowed. The cross-objection by the assessee was dismissed as withdrawn.