2013 (9) TMI 76 - AT - Income Tax

Tribunal Decides on Revenue's Appeal and Assessee's Cross-Objection

Assistant Commissioner of Income-tax Versus Smt. Sula Jayakumar

Assistant Commissioner of Income-tax Versus Smt. Sula Jayakumar - [2012] 20 ITR 37 Issues Involved:1. Deletion of Rs. 5,31,755 relating to cash received from the boarding hostel.2. Addition of Rs. 89,192 relating to chitty receipts.3. Enhancement of relief relating to marriage gifts by Rs. 1 lakh.4. Addition of Rs. 1,97,713 pertaining to interest accrued on bank deposits.5. Addition of Rs. 14,82,089 pertaining to peak deposits found in savings bank accounts.6. Addition pertaining to subscriptions made in chittys of Gokulam Chit Fund.7. Levying of surcharge under section 113 of the Act.8. Addition of Rs. 20,000 pertaining to LIC survival benefits.Detailed Analysis:1. Deletion of Rs. 5,31,755 Relating to Cash Received from Boarding Hostel:The Revenue disputed the deletion of Rs. 5,31,755, which the Assessing Officer considered as undisclosed income. The assessee showed these withdrawals in the books of the boarding hostel, which were reflected in the balance sheets filed with the income returns prior to the search. The Commissioner of Income-tax (Appeals) verified these documents and found no reason to treat the sums as undisclosed income. The Tribunal upheld this decision, emphasizing that income already recorded in the books or disclosed to the Department prior to the search cannot be treated as undisclosed income.2. Addition of Rs. 89,192 Relating to Chitty Receipts:The Assessing Officer treated Rs. 89,192 as undisclosed income due to lack of evidence. However, the Commissioner of Income-tax (Appeals) found that the assessee had declared these receipts in her capital account filed with the return of income for the assessment year 1999-2000. Since these transactions were disclosed prior to the search, the Tribunal upheld the deletion of this addition.3. Enhancement of Relief Relating to Marriage Gifts by Rs. 1 Lakh:The Assessing Officer accepted only Rs. 1 lakh out of Rs. 4,77,500 claimed as marriage gifts, treating the remaining Rs. 3,77,500 as undisclosed income. The Commissioner of Income-tax (Appeals) enhanced the acceptable gift amount to Rs. 2 lakhs, sustaining an addition of Rs. 2,77,500. The Tribunal, after reviewing the evidence, determined the gift amount at Rs. 3,50,000, reducing the addition to Rs. 1,27,500.4. Addition of Rs. 1,97,713 Pertaining to Interest Accrued on Bank Deposits:The Assessing Officer treated Rs. 1,97,713 as undisclosed income since the returns for the period ending March 31, 2002, and from April 1, 2002, to May 28, 2002, were filed after the search. The Commissioner of Income-tax (Appeals) deleted this addition, citing precedents that income already disclosed in prior returns cannot be treated as undisclosed. The Tribunal upheld this deletion.5. Addition of Rs. 14,82,089 Pertaining to Peak Deposits Found in Savings Bank Accounts:The Assessing Officer treated peak credits in certain bank accounts as undisclosed income. The Commissioner of Income-tax (Appeals) found that these accounts were disclosed in the cash flow statements and belonged to the Sabarigiri Trust. The Tribunal agreed, stating there was no need to consider peak credits for assessment when transactions were already disclosed.6. Addition Pertaining to Subscriptions Made in Chittys of Gokulam Chit Fund:The Assessing Officer added Rs. 14,23,024 for chitty subscriptions, doubting their correlation with the trust's accounts. The Commissioner of Income-tax (Appeals) directed verification of the assessee's claim that these chitties belonged to the trust. The Tribunal upheld this directive, emphasizing the need for proper verification.7. Levying of Surcharge Under Section 113 of the Act:The Commissioner of Income-tax (Appeals) deleted the surcharge, considering it prospective. However, the Tribunal referred to the Supreme Court ruling in CIT v. Suresh N. Gupta, which held that the surcharge is leviable. Thus, the Tribunal set aside the deletion.8. Addition of Rs. 20,000 Pertaining to LIC Survival Benefits:The Assessing Officer treated Rs. 20,000 as undisclosed income due to lack of supporting documents. The Commissioner of Income-tax (Appeals) confirmed this. The Tribunal, considering new evidence, directed the Assessing Officer to re-examine the claim.Conclusion:The appeal of the Revenue and the cross-objection of the assessee are partly allowed for statistical purposes. The Tribunal issued directives for re-examination and upheld certain deletions and additions based on the evidence and legal precedents.