INCOME TAX ACT, 1961

Section 69C

Income from undisclosed sources - Addition under section 69C - Outstanding purchases shown under the head 'Capital WIP' treated as undisclosed -

Loose slips found during search related to certain purchases made by the assessee in respect of his real estate projects. AO made the addition holding that these were undisclosed purchases made by assessee in respect of his undisclosed projects not reported in the return of income. Assessee contended that he filed his return of income disclosing his other income, however, given that these real estate projects were started during the financial year itself, no sales were booked, he barely booked a liability shown under capital work-in progress and not having made any payment discharging such liability, there was no occasion to report such liability for tax purposes more so where there was no requirement to report the same while filing the return under presumptive basis. Further, during the course of assessment proceedings, balance sheet duly disclosing the capital work-in-progress and amount payable towards such purchases was duly submitted.Held: Where liability towards purchases had been shown under the head 'Capital work-in progress' which corresponded to document found during the course of search and which continued to remain outstanding (and payment not being made during the year) in the books of account at the year end, it was a case where assessee has neither claimed the expenditure during the year under consideration nor any payment was made during the year under consideration, therefore, question of making an addition towards the same did not arise.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

Section 69

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