2000 (8) TMI 234 - AT - Income Tax

Tribunal Decision: Reduction of Unexplained Investment & Loan Repayment Addition

Income-Tax Officer. Versus Manilal S. Dave.

The Tribunal upheld the CIT(A)'s decision regarding the disputed unexplained investment in gold ornaments, reducing the addition from Rs. 1,22,500 to Rs. ... Income From Undisclosed Sources Issues Involved:1. Relief given by CIT(A) regarding alleged unexplained investment in gold ornaments.2. Addition made by AO for repayment of loan instalment from undisclosed sources.Issue 1: Relief on Unexplained Investment in Gold OrnamentsThe dispute revolved around the relief granted by the CIT(A) concerning the addition made by the AO for unexplained investment in gold ornaments. The AO had added Rs. 1,22,500 as undisclosed income based on the acquisition of 505 gms. of gold ornaments. However, the CIT(A) provided relief of Rs. 97,500, confirming an addition of Rs. 25,000. The Tribunal agreed with the CIT(A) after considering the evidence, noting that the explanation for the remaining amount was satisfactory. The breakdown of the gold ornaments found included items belonging to the assessee's wife, gifts received by the family, and ornaments purchased during the year. Affidavits supported the explanation, citing inheritance and gifting as reasons. Reference was made to CBDT Instruction No. 1916, setting limits for gold ornaments not subject to seizure based on gender and marital status. The Tribunal found merit in this argument, especially regarding ornaments belonging to the wife, falling below the prescribed limit and thus not subject to addition.Issue 2: Repayment of Loan Instalment from Undisclosed SourcesThe second ground of appeal concerned an addition of Rs. 32,000 for a loan repayment made from undisclosed sources. The assessee had constructed a property in the wife's name, funded partially by a loan and other sources. The AO doubted the repayment source as it was not recorded in the assessee's books. However, examination revealed that the loans were repaid by the wife from amounts advanced by five parties, confirmed through transactions. The CIT(A) noted a similar addition in the wife's assessment, leading to the deletion of the addition in the assessee's case. The Tribunal upheld this decision, emphasizing that the repayments were adequately explained and supported by evidence, dismissing the AO's suspicions based on lack of entries in the assessee's books.In conclusion, the Tribunal dismissed the appeal, confirming the CIT(A)'s order on both grounds, as the explanations provided for the disputed amounts were found to be satisfactory and supported by evidence.