1999 (12) TMI 142 - AT - Income Tax

Tribunal partially allows appeal, removes certain additions but sustains others based on lack of evidence

The Tribunal allowed the appeal in part, deleting additions such as amounts received by the appellant's children as customary gifts, unexplained ... Search And Seizure, Block Assessment Issues Involved:1. Addition of amounts received by the appellant's children as customary receipts or presents.2. Addition on account of unexplained investments in the purchase of agricultural lands.3. Addition on account of alleged on-money payment made to M/s S.N. Products.4. Addition of Rs. 6,15,900 declared for the block period.5. Addition on account of suppression of sales.6. Addition of Rs. 4,35,000 representing the difference between declared and disclosed income.7. Addition of gifts aggregating to Rs. 2 lakhs received from an NRI.Summary of Judgment:Issue 1: Addition of amounts received by the appellant's children as customary receipts or presentsThe AO added Rs. 91,205 received by the appellant's children as gifts, treating them as bogus. The Tribunal found that the gifts were customary and petty, ranging from Rs. 1,500 to Rs. 3,000 annually, and noted that the children had agricultural income accepted by the AO. The addition was deleted.Issue 2: Addition on account of unexplained investments in the purchase of agricultural landsThe AO added Rs. 20,46,052 based on the difference between document price and market value/stamp duty value. The Tribunal held that such additions were not tenable, referencing various High Court and Supreme Court judgments. Additionally, Rs. 7,88,000 of the additions were not proposed in the draft assessment order, making them legally untenable. The total addition was deleted.Issue 3: Addition on account of alleged on-money payment made to M/s S.N. ProductsThe AO added Rs. 4,17,830 for FY 1993-94 and Rs. 4,36,630 for FY 1995-96 based on the statement of Smt. S.N. Godbole, which was later retracted. The Tribunal found that the assessee's statement and corroborated evidence indicated that on-money was paid and should be considered part of the purchase price, allowing deduction u/s 37. The addition was deleted.Issue 4: Addition of Rs. 6,15,900 declared for the block periodThe AO added Rs. 6,15,900 as declared income. The Tribunal noted that Rs. 2,38,597 was already accounted for as suppression of sales, making it a double addition. The Tribunal deleted Rs. 2,38,597 and confirmed Rs. 3,77,703.Issue 5: Addition on account of suppression of salesThe Tribunal considered the addition of Rs. 2,38,597 as already covered in the declared amount of Rs. 6,15,900. The addition was deleted as it would amount to double addition.Issue 6: Addition of Rs. 4,35,000 representing the difference between declared and disclosed incomeThe AO added Rs. 4,35,000 due to a shortfall in declared business income. The Tribunal accepted the retraction to Rs. 13,15,000 but sustained an addition of Rs. 2.50 lakhs, as there was no material to suggest that the undisclosed income pertained to agricultural income.Issue 7: Addition of gifts aggregating to Rs. 2 lakhs received from an NRIThe AO added Rs. 2 lakhs received as gifts from Mrs. Chhaya N. Shah, an NRI, treating them as undisclosed income. The Tribunal found the gifts genuine, supported by bank passbook entries and confirmation from the donor. The addition was deleted.Conclusion:The appeal was allowed in part, with several additions deleted and some sustained based on the evidence and legal principles discussed.