INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Money deposited in bank account -

The assessee received by RTGS (Bank Transfer) a sum of Rs. 8,00,000 & Rs. 6,00,000 respectively from Venkata Industries and Rs. 15,00,000 from Sherwali Corporation. The amounts in question were received by RTGS i.e., bank transfer and was not a cash deposit. The assessee also explained that the aforesaid receipts were on account of sale of shares of M/s. Mag Impex Pvt. Ltd. The confirmation from the purchasers were also filed. It was the plea of the assessee that the information received by the assessing officer from Investigation Wing of the Department in Kolkata cannot be the basis to make any addition in the light of the evidence furnished by the assessee. Held: The claim of the assessee was that the receipts by the assessee from the aforesaid two parties was for sale of shares of a company by name Mag Impex Ltd., was not disbelieved either by the assessing officer or the Commissioner (Appeals). As far as the assessee is concerned, he has filed confirmation of Sherawali Corporation and Venkata Industries. The Commissioner (Appeals) has ignored this confirmation on the ground that the signature of the confirming parties were barely visible. The address of the confirming parties was very much available in the confirmation and if any doubt persisted on the veracity of the confirmation, then the proper course would have been to issue summons to the confirming parties to find out the truth or otherwise of the transactions on sale of shares on account of which monies were received by the assessee through banking channels. Without resorting to such process, the Commissioner (Appeals) has confirmed the addition made by assessing officer ignoring the evidence available on record. There was an allegation that it was assessee's money which went to Sneha International and that was deposited by Snehal International in a bank account and from that bank account funds were transferred to M/s. Sherwali Corporation and M/s. Venkata Industries, but there was no evidence to substantiate such allegation without issuing summons under section 131 of the Act to a party who filed confirmation, no adverse inference can be drawn by the assessing officer. The addition made by the assessing officer and sustained by the Commissioner (Appeals) deserves to be deleted.

Relied:CIT v. P. Mohanakala (2007) 291 ITR 278 (SC) : 2007 TaxPub(DT) 1237 (SC), CIT v. Orissa Corporation Pvt. Limited (1986) 159 ITR 78 (SC) : 1986 TaxPub(DT) 1425 (SC), Mangilal Jain v. ITO (2009) 315 ITR 105 (Del-HC.) : 2009 TaxPub(DT) 1804 (Mad-HC) and Addl. CIT v. Hanuman Agarwal (1985) 151 ITR 150 (Pat-HC) : 1985 TaxPub(DT) 208 (Pat-HC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

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