2022 (3) TMI 435 - AT - Income Tax

Appeal partly allowed on assessment order for AY 2007-08: cash deposits limited, gift income deleted, LIC premium deduction granted.

Khoday Goverdhan, Hyderabad. Versus Income-tax Officer, Ward – 7 (2), Hydereabad.

Khoday Goverdhan, Hyderabad. Versus Income-tax Officer, Ward – 7 (2), Hydereabad. - TMI Issues:1. Assessment order passed by the Income Tax Officer under Section 143(3) for the assessment year 2007-08.2. Validity of adding cash deposits made in the bank as income of the assessee.3. Addition of gift received from brothers as income.4. Disallowance of deduction claimed for LIC premium paid.Analysis:Issue 1: Assessment Order under Section 143(3)The appeal was against the CIT(A)'s order confirming the assessment order passed by the Income Tax Officer for the assessment year 2007-08 under the Income Tax Act, 1961. The appellant argued that the assessment order was contrary to law as it was beyond the prescribed time limit. The Income Tax Officer had issued a notice after the expiration of the one-year period, which the appellant contended was barred by limitation. The appellant also challenged the extension period applied by the Income Tax Officer, claiming it had no legal sanctity. However, the tribunal found that the assessment was completed within the statutory time limit and dismissed this ground.Issue 2: Cash Deposits in BankThe Assessing Officer added cash deposits made in the bank as income of the assessee. The appellant contended that the deposits were from retail sales, past savings, and opening capital balances. The tribunal observed that the assessee's income under Section 44AF had been accepted, and turnovers were in line with the Act. Considering the submissions, the tribunal restricted the addition to 10% of the deposited amount, allowing the ground partly.Issue 3: Addition of Gift ReceivedThe Assessing Officer added the gift received from the appellant's brothers as income, questioning the genuineness of the gift. The tribunal noted discrepancies in the financial statements but found that the appellant had wrongly recorded the gift amount before executing the gift deed. Citing legal precedent, the tribunal ruled in favor of the appellant, deleting the addition made by the Assessing Officer.Issue 4: Disallowance of LIC Premium DeductionThe Assessing Officer disallowed the deduction claimed for LIC premium paid due to lack of proof. The tribunal, upon the appellant producing the receipts, directed the AO to allow the claim for LIC premium paid under Section 80C. Consequently, this ground was allowed.In conclusion, the tribunal partly allowed the appeal, addressing each issue raised by the appellant and providing detailed reasoning for its decisions.