INCOME TAX ACT, 1961

Section 69

Income from undisclosed sources - Addition under section 69 - Unexplained investment -

Assessee filed his return of income admitting total income of Rs. 1,76,230. Based on a piece of information received during course of post search investigation of said officer in case of M/s. Vizag Profiles Group, that assessee had invested an amount of Rs. 65,00,000 viz., Rs. 21,66,000 for civil works, Rs. 12,60,000 for land and a portion of cash worth Rs. 30,74,000 in Green City Project of Vizag Profiles group, AO reopened case by issue of notice under section 148. During course of assessment proceedings, assessee furnished sources and supporting documents towards purchase of house property to tune of Rs. 47,20,000 and for remaining amount of Rs. 17,80,000, no evidence was submitted. Accordingly, basing on information available on record, AO made an addition of Rs. 17,80,000 to income returned, treating same as unexplained income. Aggrieved by order of AO, assessee preferred an appeal before CIT(A) and submitted that assessee was not provided with company's admission so as to rebut the statement. CIT(A) dismissed appeal of assessee. Hence this appeal. Held: As seen from material available on record, except admission of vendor, that assessee had paid unaccounted cash for purchase of villa to extent of Rs. 30,74,000 in Green City Project of Vizag Profiles group, there was no supporting evidence by revenue establishing that assessee had paid extra amount. Revenue authorities had placed one appraisal report, wherein at Sl. No. 22, name of assessee was mentioned showing that assessee had paid Rs. 30,74,000 in cash. Based on that, case was reopened and AO examined issue and came to conclusion that assessee had not established an amount of Rs. 17,80,000, therefore, he treated said amount of Rs. 17,80,000 as unexplained investment. Assessee was not given copy of said statement of admission, nor he was given any opportunity for purpose of rebutting said statement. Mere admission of third party could not be a basis for making addition in hands of assessee without confronting assessee about incriminating material. Apart from this, M/s. Vizag Profiles made a general statement that they had received some amount from purchasers. Therefore, addition of unaccounted investment in hands of assessee could not be sustained. So far as reopening was concerned, since appeal had been disposed on merits in favour of assessee, therefore, reopening of assessment needed no adjudication.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2010-11

SUBSCRIBE FOR FULL CONTENT