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Facts
The assessee, M/s Shiva Enterprises, was subjected to a survey in 2003, revealing no books of accounts. The AO framed assessments for AYs 1999-2000 to 2002-03, making additions for undisclosed income, vehicle purchase, and capital gains, which were partly allowed by the CIT(A). The assessee filed further appeals against these sustained additions.
Held
The Tribunal found that the assessee had sufficient excess funds from AY 1999-2000 and 2001-02 to cover the additions for AY 2000-01 (Rs.2,40,624/-) and for AY 2002-03 (Rs.16,72,680/- for undisclosed income and Rs.9,26,322/- for vehicle purchase), thus deleting these additions. The capital gains addition for AY 2002-03 was restricted to the assessee's own computation of Rs.2,72,568/-, but the deduction u/s 54 was denied due to lack of substantiation.
Key Issues
Whether additions for undisclosed income and vehicle purchase were justified considering available funds from prior years; and the correct quantum of capital gains addition and eligibility for Section 54 deduction.
Sections Cited
143(3), 148, 54
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Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeals by assessee for Assessment Years (AY) 2000-01 and 2002-03 are directed against the common order of learned Commissioner of Income Tax (Appeals), Shimla [CIT(A)] dated 14-02-2020 in the matter of an assessment framed by Ld.
Assessing Officer [AO] u/s 143(3) r.w.s. 148 of the Act on 29-12-2004. The registry has noted delay of 71 days in the appeals which stand condoned. Having heard rival submissions, the appeal is disposed-off as under. The Ld. AR has pleaded for telescoping benefit which has been opposed by Ld. Sr. DR.
It emerges that the assessee was subjected to survey on 18-07- 2003. The assessee is stated to be engaged in various business activities under his proprietorship concern namely M/s Shiva Enterprises. It transpired that the assessee was not maintaining any books of accounts. The Ld. AO framed assessments from AYs 1999- 2000 to 2002-03 and determined income for each of these years. The assessee preferred further appeals wherein the appeal of the assessee was ultimately partly allowed by Ld. CIT(A) vide order dated 14-02-2020. Pursuant to the order of Ld. CIT(A), giving effect order has been passed by Ld. AO for 2000-01 & 2002-03 on 16-03-2020 which is placed on record. In AY 2000-01, Ld. AO has sustained addition of Rs.2,40,624/-. The capital gains addition has been restricted to the extent of Rs.28,544/-. In AY 2002-03, Ld. AO has made addition of Rs.9,26,322/- on account of purchase of vehicle, sustained addition of Rs.16,72,680/- for undisclosed income and capital gains addition has been restricted to Rs.3,72,566/-. Aggrieved, the assessee is in further appeals before us.
It could be seen that Ld. CIT(A), at para 8.1.4 of the impugned order, after considering remand findings, has worked out the funds availability with the assessee as under: - Description 1999-2000 2000-01 2001-02 2002-03 Workout from above 1175239 2486118 661380 4037347 bank accounts Less : receipts of Hill 471502 198094 238220 317267 Crest Balance 703737 2288024 423160 3720080 Available funds as 2047400 2047400 2047400 2047400 accepted Balance -1343663 240624 -1624240 1672680 It is quite clear that the assessee has excess funds for Rs.13,43,663/- for AY 1999-2000. Therefore, the benefit of the same would certainly be available to the assessee. Therefore, the addition of Rs.2,40,624/- for AY 2000-01 stand deleted. Similarly the remaining surplus fund of AY 1999-2000 (Rs.13,43,663/- - Rs.2,40,624/- = Rs.11,03,039/-) and surplus fund for AY 2001-02 (Rs.16,24,240/-) would far exceed shortage of funds in AY 2002-03 for Rs.16,72,680/- as well as investment in purchase of vehicle for Rs.9,26,322/-. Therefore, the twin additions of Rs.16,72,680/- & Rs.9,26,322/- as sustained by Ld. AO in AY 2002-03 stand deleted.
So far as the addition of capital gain for Rs.3,72,568/- in AY 2002-03 is concerned, the assessee himself has worked out the same at Rs.2,72,568/- which has been accepted by Ld. CIT(A). However, the quantum has, inadvertently, been mentioned as Rs.3,72,568/- in the impugned order. Therefore, Ld. AO is directed to restrict the addition to the extent of Rs.2,72,568/- as computed by the assessee himself. The deduction u/s 54 could not be allowed since the assessee has failed to substantiate the same. This addition for AY 2000-01 does not require any interference on our part since the same has been computed by the assessee himself.
Both the appeals stand partly allowed. Order pronounced on 24th February, 2026.