RAKESH KUMAR GARG, J. - (1.) A search under s. 132(1) of the IT Act,1961 (for short "the Act"), was carried out at the residential premises of the been invested in shares of Indian companies, which were not declared in the income -tax returns during the preceding assessment years.
(2.) THE assessee -appellant filed return of income relevant to the asst. yr. 1988 -89 showing a total income of Rs. 51,378. As shown in the statement of assessable income, the assessee -appellant has earned the above income from several sources, namely, salary, business, house property and other sources. During the assessment year, the assessee - appellant was employed with M/s Ravi Trading Co., Gurgaon, a proprietary concern of appellant's wife. He had shown an income of Rs. 54,000 earned as salary from this concern and had claimed deduction under s. 16(i) of the Act under the head "Income from salaries". He had also received commission amounting to Rs. 19,400 from employment contract. The assessee -appellant claimed an ad hoc deduction of Rs. 5,000 against the said receipts. He had also claimed deduction under s. 80C of the Act for a sum of Rs. 10,000 paid under self -financing scheme to Rajasthan Housing Board. The assessee had also shown a business loss of Rs. 54,000 on the ground that he had incurred loss on account of investment The assessee claimed that he used this vehicle as taxi in the last three days of the year under consideration, i.e., 28th expenses incurred on petrol for running the vehicle and depreciation against the said vehicle.
(3.) 19,400 on account of commission, deduction claimed under s. 80C(2)(h)(ii) of the Act on payment of house loan, business loss of Rs. 54,000 and the income/expenditure and depreciation claimed on the car was disallowed by the AO. The deduction on account of business loss of Rs. 54,000 was also disallowed by the AO holding the same as a speculative loss. The AO observed that the primary fact for claiming depreciation was to offset or liquidate the surrendered amount of Rs. 1,25,000 at the time of the search and accordingly the AO neither included the alleged income of Rs. 715 for running the car as taxi in the income of the assessee nor allowed depreciation claim. The assessee filed an appeal before the Commissioner of Income -tax (A), Faridabad [for short the "CIT(A)"] assessee partly giving a relief of Rs. 3,904 to the assessee.;