1989 (2) TMI 147 - AT - Income Tax

Tribunal decision: Disallowances for unexplained investment, maintenance charges upheld; professional expenses partially allowed; loss not affecting assessee

The Tribunal upheld the Income Tax Officer's decision to add Rs. 1,61,616 for unexplained investment in silver bars, disallow Rs. 2,760 for maintenance ... Assessment Year, Business Expenditure, Deductions In Respect, Disclosure Petition, Income From House Property, Set Off, Voluntary Disclosure Scheme, Wholly And Exclusively Issues Involved:1. Addition of Rs. 1,61,616 due to unexplained investment in silver bars.2. Disallowance of Rs. 2,760 for maintenance charges of property.3. Expenses allowable in computing professional income.4. Treatment of loss shown by DMKS Trust as benami of the assessee.Issue-wise Detailed Analysis:1. Addition of Rs. 1,61,616 due to unexplained investment in silver bars:The primary issue in this appeal is the addition of Rs. 1,61,616 made by the Income Tax Officer (ITO) due to unexplained investment in two silver bars found in the assessee's bank locker during a search on 20-1-1982. The assessee claimed that one bar belonged to a Hindu Undivided Family (HUF) and the other to his wife, substantiating this with disclosure petitions under the Voluntary Disclosure Scheme 1976. However, the authorities noted discrepancies in the weights of the declared and found bars. The assessee's explanations, including approximations and use of smaller bars for making utensils, were deemed inconsistent and contradictory. The Tribunal upheld the authorities' decision, emphasizing that the assessee failed to provide cogent evidence to rebut the presumption under section 132(4A) of the Income Tax Act, 1961, that the assets found in his possession belonged to him.2. Disallowance of Rs. 2,760 for maintenance charges of property:The assessee claimed a deduction of Rs. 2,760 for maintenance charges of a flat in a multistoreyed building. The Tribunal rejected this claim, stating that under section 24 of the Income Tax Act, only specified deductions are permissible from income from house property, and maintenance charges are not included. Instead, a fixed deduction for repairs is allowed, irrespective of actual expenditure.3. Expenses allowable in computing professional income:The assessee, engaged in the profession of acting as a liaison man, claimed expenses exceeding his gross receipts. The ITO allowed only part of the claimed expenses, and the CIT (Appeals) upheld this decision, doubting the exclusive professional use of the entire staff. The Tribunal noted that no arguments were presented to challenge this finding and upheld the disallowance, emphasizing the lack of evidence that the entire expenditure was incurred wholly and exclusively for business purposes.4. Treatment of loss shown by DMKS Trust as benami of the assessee:The assessee, a trustee of DMKS Trust, contested the inclusion of the Trust's income in his hands. The ITO adopted the Trust's income as nil, pending its assessment. The CIT (Appeals) supported this, noting the assessee's objection to including the Trust's income in his assessment. The Tribunal found no grounds for the assessee's grievance, as no income or loss of the Trust was included in his assessment. The issue was deemed academic, needing no decision in the current circumstances.Conclusion:The Tribunal dismissed the assessee's appeal, upholding the addition for unexplained investment in silver bars, disallowance of maintenance charges, partial allowance of professional expenses, and the treatment of the Trust's loss.