TMI Blog1997 (9) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 11,20,870. In arriving at the income for various years, the AO considered the investments and outgoings including the assessee's personal expenses. Aggrieved with the assessment of the undisclosed income at Rs. 11,20,870 for the block period the assessee has filed this appeal before the Tribunal. 3. On behalf of the assessee, K.K. Ramachandran, chartered accountant submitted before us that the AO was not justified in assessing the undisclosed income of the block period without accepting the assessee's claim regarding the source for the investments. It was stated that in explaining the source for the investments and outgoings the assessee had filed before the AO a cash-flow statement showing the opening cash balance as on 1st April, 1985 at Rs. 3,50,000 Ramachandran stated that the assessee was working in UAE from 1977 till 1985 and that he was earning substantial income, from which he was making remittances regularly to his wife and that there was thus savings of Rs. 3.5 lakhs available with him as on 1st April, 1985, to explain the various investments. According to the learned representative, the AO was not correct in rejecting the claim regarding the availability of the op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1995, which was also not proved with availability of cash at the time of search, and so de-hors the theory of cash balance, it would go to show that the amount was paid back by the assessee to Manju Enterprises. Ramachandran contended that taking the asst. yrs. 1994-95 and 1995-96 together it could be seen that there was ample evidence to show that the assessee had withdrawn Rs. 6,75,000 from Manju Enterprises and also repaid subsequently, as confirmed by the partners and the manager of that concern. It was then contended that the AO was not correct in estimating the personal and household expenses of the assessee. Ramachandran stated that the assessee had estimated the expenses at very reasonable amount after taking into account the agricultural income available for meeting the expenses. He also submitted that in the cash-flow statement for the years 1988-89 onwards the assessee had shown Rs. 4,000 as the agricultural income. He drew our attention to the sworn statement of the assessee and stated that the assessee had clarified that there were agricultural properties in his name and also in the name of his wife with which he could earn agricultural income to meet the household ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hdrawn was introduced in the books of Sree Construction in the name of the assessee, C. Gopalan Nair or Chilambinath Bank. According to the Departmental Representative, there was nothing to show in the sworn statement that money withdrawn from Chilambinath Bank was utilised by the assessee for investment in the Ranni properties or in any other property and so no credence could be given for the sum of Rs. 6,75,000 in explaining the investments during the previous year relevant for the asst. yr. 1994-95. Regarding the house expenses, Sudhakaran Pillai stated that considering the status of the family, the expenses of Rs. 5,000 as estimated by the assessee for the asst. yr. 1985-86 or 1986-87 was not at all adequate, especially when the assessee was keeping the life-style of a non-resident. It was pointed out that the assessee is having three children including a college-going daughter and that he was also maintaining a car and so the estimate of the expenses at Rs. 10,000 per month by the AO was quite reasonable. It was also stated that the estimates for the subsequent years were quite reasonable, not warranting interference at this stage. As regards the income as determined in the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be below the taxable limit. It may be mentioned here that if the income is below the taxable limit, there is no obligation to file the return of income. Thus, for the asst. yr. 1986-87 the assessee had no obligation to file the return of income and so the sum of Rs. 12,000 cannot be treated as undisclosed income for the purpose of s. 158BC. In this context it may be mentioned that Note No. 5 in the return Form 2B shows the intention of the legislature is that in a case where the assessee has not filed the return because the total income is below the taxable limit, such income cannot be treated as undisclosed income for the purpose of Chapter XIVB of the IT Act. Even otherwise it would be highly unfair and inequituous to tax the assessee on an income which is otherwise below the taxable limit, on a higher flat rate simply because there had been a search by the Department on his premises. In this context we may also refer to the decision of the Tribunal Nagpur Bench in the case of Kasturchand Baid vs. Asstt. CIT (1997) 58 TTJ (Nag) 253. Hence we delete the sum of Rs. 12,000 from the undisclosed income to be assessed for the block period. 6. For the asst. yr. 1987-88 the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after adjusting the income already assessed. For this year the household expenses had been estimated at Rs. 18,000. In view of the fact that the assessee's claim of agricultural income is found acceptable, we hold that there is no further amount to be assessed as undisclosed income for this year. Hence the sum of Rs. 3,000 added as undisclosed income for the asst. yr. 1991-92 is deleted. 10. For the asst. yr. 1992-93 the AO has estimated the house expenses at Rs. 24,000. In the circumstances of the case, we are of the view that the expenses can be reasonably estimated at Rs. 20,000. The assessee thus gets a reduction of Rs. 4,000 from the undisclosed income assessed for this year. 11. For the asst. yr. 1993-94 the AO has estimated the household expenses at Rs. 10,000, but for this year there was no amount added as undisclosed income on the basis of investments or outgoings. The total income for this year was assessed at Rs. 67,400 on account of interest, salary and income under the head "Other sources" as offered for assessment by the assessee. But there is evidence to show that for this year the assessee filed the return declaring a total income of Rs. 98,020 on 31st Aug., 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of the money withdrawn earlier in the financial year 1993-94. We find force in the contention that taking the transactions for the two years together the claim of withdrawal of Rs. 6,75,000 and the repayment in the subsequent year can be accepted as properly explained. In the assessment order the AO has also referred to the statement of the manager regarding the withdrawal of money by the partners. The AO has not given any reason why the statement of the manager was disbelieved. In view of the fact that the repayment has not been doubted by the AO, we hold that there is no justification for rejecting the claim that the assessee had utilised Rs. 6,75,000 from the withdrawal from Manju Enterprises for the purpose of investment in the property. In this view of the matter we delete the addition for the asst. yr. 1994-95. 13. For the asst. yrs. 1995-96 and 1996-97, the assessment of the undisclosed income has been on the basis of the income as shown by the assessee in the cash-flow statement. For both the years only the interest from firms and salary from the firms, as admitted by the assessee, have been brought to tax. As such, we find no reason to interfere. 14. In the result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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