2012 (11) TMI 51 - AT - Income Tax

Addition u/s 69 of the Income Tax Act on account of unexplained investment in shares Held that - No increase in the value of investment - books of accounts of the assessee have not been rejected by the assessing officer - assessee appellant has explained that the difference in Notes to Accounts was noticed only because of typographical error and no fresh investment was made during the relevant year as the assessee succeeded in categorically confirming that no new or additional shares were acquired during the F.Y. 2001-02 - assessing officer has not brought any substantial detail or documentary or other evidence to rebut the fact that the difference noted in Notes to Accounts was only because of typographical error and on the other hand, the audited accounts of the assessee show that there was no change in the figure of investment as per Balance Sheet dated 31.3.2001 and 31.3.2002 and there was no increase in the value of the investment in the said balance sheets addition deleted

Summary

Issues:
Appeal against deletion of addition under section 69 of the Income Tax Act, 1961 for unexplained investment in shares.

Analysis:
1. The Assessing Officer (AO) noted an unexplained investment of Rs.33,96,250 by the assessee in shares of a company. The AO reopened the assessment and added the amount to the income of the assessee under section 69 of the Income Tax Act, initiating penalty proceedings as well.

2. The CIT(A) allowed the appeal by the assessee, deleting the addition. The CIT(A) found that the AO did not provide any evidence to support the addition made under section 69. The difference in the Notes to Accounts was explained as a typographical error, with no new shares acquired during the relevant year. The audited accounts confirmed this explanation.

3. The Revenue challenged the CIT(A)'s decision, arguing that the addition should not have been deleted based on a typographical error. The Revenue contended that the action of the AO was justified and that there was no evidence to suggest no fresh investment was made.

4. The ITAT Delhi upheld the CIT(A)'s decision, stating that there was no increase in the value of investment from the previous year to the relevant year. The ITAT noted that the books of accounts were not rejected by the AO and that no substantial evidence was presented to counter the explanation provided by the assessee regarding the typographical error.

5. Ultimately, the ITAT Delhi found no basis to interfere with the CIT(A)'s order, dismissing the Revenue's appeal as devoid of merit. The appeal was thus dismissed, upholding the deletion of the addition under section 69 of the Income Tax Act.