2008 (5) TMI 249 - HC - Income Tax

Assessee claim for spreading over of unexplained investment for several years, is not permissible because S. 69B specifically states that the unexplained investment should be treated as the income of the year in which investment is made - claim for spreading over of the investment can be granted only if it is proved that the investment is made in several years - valuation of assets which is a pure factual issue, therefore, tribunal s decision of rejecting the claim require no interference

Summary

Issues:
1. Challenge to addition under Section 69B of the Income Tax Act, 1961.
2. Valuation of assets and unexplained investment.
3. Permissibility of spreading over unexplained investment for several years.

Analysis:
1. The appellant, a firm engaged in running a tourist home, challenged the addition sustained by the Tribunal under Section 69B of the Income Tax Act, 1961. The department noticed an asset creation in the form of a building during a search, valuing it at Rs. 49 lakhs compared to the appellant's accounted value of Rs. 23 lakhs. The Assessing Officer made an addition of Rs. 22,77,068/- as unexplained investment income. The Commissioner of Income-tax (Appeal) reduced this addition to Rs. 8,44,475/-. Both parties appealed to the Tribunal, which upheld the Commissioner's decision, leading to the finality of the order.

2. The High Court found that the valuation of assets, a factual issue, was substantially reduced by the Commissioner of Income-tax (Appeal) and accepted by the Tribunal. The Court held that it had no authority to enter the valuation controversy. The appellant's request to spread the unexplained investment over several years was deemed impermissible under Section 69B, which specifies that such investments should be treated as income of the year made. The Court noted the lack of evidence to support spreading the investment over multiple years, as well as the appellant raising this issue for the first time before the Tribunal, leading to the dismissal of the appeal.

3. In conclusion, the High Court dismissed the appeal, emphasizing that no substantial question of law was raised regarding the valuation of assets or the permissibility of spreading over unexplained investments for several years. The Court upheld the Tribunal's decision, stating that the unexplained investment should be treated as income of the year in which it was made, without the option of spreading it over multiple years without sufficient evidence to support such a claim.