INCOME TAX ACT, 1961

Section 69

Income from undisclosed sources - Addition under section 69 - Mention of wrong section whether fatal to additions made by AO -

Assessee was aggrieved by order of CIT(A) confirming addition towards unexplained credits under section 69, whereas addition was made by AO under section 68. Assessee further contended that it had presented all documentary evidences, and further it was denied opportunity to cross-examine witnesses. Held: Not allowing assessee to cross-examination witnesses by taxing authority, even though subsequent of those statements were made basis of order amounts to a serious flaw which makes impugned order nullity, in as much as, it amounted to violation of principles of natural justice. Thus, CIT(A) by not allowing opportunity of cross-examination to assessee, has violated principles of natural justice. Further addition was not sustainable under section 69 because it was observed that assessee had repaid all loans to lenders in subsequent year through cheque, which appeared in their bank account also. When assessee had repaid the loans by cheques to respective parties, and assessee had furnished complete details and address, and thus assessee had discharged onus under section 68, thus, addition was not sustainable in law. Accordingly, addition sustained by CIT(A) under section 69 was not sustainable in law.

REFERRED : Andaman Timber Industries v. CCE (2015) 281 CTR 241 (SC) : 2015 TaxPub(DT) 5186 (SC) Aurobindo Sanitary Stores v. CIT [ITA No. 13 of 2002] dated 31-1-2005 : 2005 TaxPub(DT) 1293 (Ori-HC) Liyakat Ibrahim Shaikh v. ITO [I.T.A. No. 2659/Mum/2017, dt. 7-2-2018] : 2018 TaxPub(DT) 1469 (Mum-Trib) ABT Ltd. v. ACIT (2013) 56 SOT 42 (Chennai Trib.) : 2013 TaxPub(DT) 0497 (Chen-Trib) Rohini Builders v. DCIT (2002) 76 TTJ 521 (Ahd) : 2002 TaxPub(DT) 0125 (Ahd-Trib) Bafakyh Export House v. ITO (1995) 53 TTJ 293 (Cochin Trib.) : 1995 TaxPub(DT) 1274 (Coch-Trib)

FAVOUR : In assessee's favour

A.Y. :

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