C. FRANCIS ANTHONY,CHENNAI vs. ITO, CHENNAI

Shri J. Vinil Kumar, the Ld. representative for the assessee submitted that the assessee introduced ₹1,25,000/- in the balance sheet as capital. The assessee has income from business. Earning of ₹1,25,000/- cannot be doubted by the Assessing Officer. According to the Ld. representative for the assessee, the reopening itself is bad in law. Therefore, the addition made by the Assessing Officer cannot be sustained.

Shri Sanat Kumar Raha, the Ld. Departmental Representative submitted that the Assessing Officer reopened the assessment by issuing notice under Section 148 of the Income Tax Act, 1961 (in short ‘the Act’) on 31.03.2011. The assessee has introduced ₹1,50,000/- in the balance sheet as capital. The assessee could not explain the source for introduction of ₹1,25,000/-. The only source of income for the assessee is the business. The assessee’s wife is not the earning member of the family. One of the child is studying IX standard in the school. The assessee has also borrowed loan from ICICI bank to the extent of ₹31,388/-. In those circumstances, the assessee could not explain the source for introduction of ₹1,25,000/- as capital in the balance sheet. Hence, the CIT (Appeals) has rightly confirmed the addition made by the Assessing Officer.

I have considered the rival submissions on either side and perused the material available on record. The assessee challenging the reopening of the assessment under Section 147 of the Act and also the addition made by the Assessing Officer on merit. Admittedly, the addition made by the Assessing Officer is introduction of capital of ₹1,25,000/-. While making addition of ₹1,25,000/- the Assessing Officer failed to 3 appreciate the economic condition which prevails in the country. The assessment year under Section is 2006-07. The salary of a labourer was ₹200/- per day. In a family of husband and wife, both of them goes for coolie work, they can earn ₹350/- to ₹400/- per day. In this case the assessee admittedly doing business. The assessee has also borrowed business loan from ICICI bank. Taking into consideration of the economic condition which prevails in our country and also the fact that the assessee was engaged himself in the business, this Tribunal is of the considered opinion that the addition made by the Assessing Officer to the extent of ₹1,25,000/- is not justified. Accordingly the orders of both the authorities below are set aside and the addition of Rs.1,25,000/- is deleted.

In the result, the appeal of the assessee is allowed.