2006 (1) TMI 123

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....Appellate Tribunal was right in holding that the Assessing Officer was not correct in invoking sections 69 and 69A of the Income-tax Act, 1961, in the hands of the persons in whose names the monies stood invested on the ground that some members of the public have claimed monies as belonging to them and that too in the absence of any corroborative evidence? 2. Whether, on the facts and in the circumstances of the case the Income-tax Appellate Tribunal was right in holding that income, if any, on the unexplained investments should be considered in the hands of the firm especially when it had been found that the firm itself was not genuine and in the absence of any evidence to show that the deposits belonged to such a firm? 3. Whether, o....

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....nder: (a) The assessee was connected with the concern, by name, Vazhaga Vaiyagam Enterprises having its premises at Nos. 2 and 3A, East Perumanoor Road, Salem. One K. Palanisamy was the person running the concern. There was a search by police officials in the premises of concern on August 19, 1991, and a sum of Rs. 1,18,21,935 was seized. It was followed by a survey under section 133A of the Act and action under section 132 of the Act. (b) On notice, the said Palanisamy filed return. He also appeared on summons and gave statements. Then, complaints were lodged against the partners and promoters of the concern. Books of account maintained were also incomplete and no evidence was produced to show that funds were collected from the publi....

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....p;                      G.S. under section 69  5,00,000                                                         --------                                  Total      &nbs....

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.... investment. The expenditure that has to be allowed is with regard to administrative and incidental expenses incurred in connection with earning of the income and such other normal expenses of the firm. Wherever the amounts found in the names of various individual persons, relatives, close friends etc. which could not be linked with the accounts of the firm, it would be necessary for such individuals to explain. In the interest of natural justice and fair play it would be necessary to examine the firm on the one hand along with the various individuals with the account books of the firm to appreciate that the moneys belong to the various persons. 'What is claimed by the public as money belonging to them, which has been frozen by the police a....