Income Tax--Income from undisclosed sources
Failure of Assessee to Explain Difference in Stock Furnished to Bank and in Books--Whether Liable for Addition Under Section 69B
CA. Nisha Bhandari
Addition under Section 69B can be made when assessing officer finds that amount of any investment not fully disclosed in the books of accounts of the assessee. Many a times it is observed that addition is made by the assessing officer by invoking the provisions of Section 69B when difference is found between stock furnished to banks and that of appearing in books of accounts. The learned author analyses the issue with help of various judicial decisions in this regard.
1. Addition when can be made under Section 69B
Section 69B states that where the assessing officer finds that the amount expended by an assessee in making an investment or acquiring any bullion, jewellery or other valuable articles exceeds the amount recorded in this behalf in his books of account, and the assessee offers no explanation about such excess or the explanation offered by him is in the opinion of the assessing officer not satisfactory, the excess amount may be deemed to be the income of the assessee for the financial year in which the investment is made or the assessee is found to be the owner of the said bullion, jewellery or other valuable article.
Thus, the following conditions must be cumulatively satisfied before Section 69B can be invoked :--
(a) It must be established that in any financial year the assessee had made investments or is found to be the owner of any bullion, jewellery or other valuable article.
(b) The assessing officer must establish that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income.
(c) The assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory.
When the above three conditions are satisfied then the excess amount may be deemed to be the income of the assessee for such financial year.
2. Onus to prove circumstances enabling invocation of Section 69B
The onus of proving the existence of the circumstances which enable the assessing officer to invoke the provisions of Section 69B is on the assessing officer. The assessing officer should not act arbitrarily. The assessing officer should have material evidence before invoking the provisions of Section 69B.--Vide Amar Kumari (Smt.) v. CIT (1979) 120 ITR 747 (Raj.