2010 (9) TMI 109 - HC - Income Tax

Unexplained income under Section 68/69 of Act 1961 - remand proceedings neither the A.O made any averment that the deposit in the saving bank account was an amount other than the sale proceeds of the assessee s business nor did he make any other adverse finding in regard to the said deposit - Appeal is dismissed

Summary

Issues:
Challenge to Tribunal's order admitting additional evidence during appellate proceedings in contravention of Rule 46A of Income Tax Rules, 1962.
Challenge to reduction in addition made by Assessing Officer on account of unexplained income under Section 68/69 of Income Tax Act, 1961.

Analysis:
1. The appeal was filed under Section 260A of the Income Tax Act, 1961, contesting the Tribunal's order dated 11th September, 2009, for the Assessment Year 2005-2006. Ms. Sonia Mathur, representing the Revenue, argued that the Tribunal erred in law by allowing the admission of additional evidence by the assessee during the appellate proceedings, contrary to Rule 46A of the Income Tax Rules, 1962. She also contended that the Tribunal wrongly upheld the reduction in the addition made by the Assessing Officer under Section 68/69 of the Act, from Rs. 29,80,995/- to Rs. 93,282/-.

2. After considering the arguments presented by Ms. Sonia Mathur and reviewing the case file, the court found that the admission of additional evidence at the appellate stage was in accordance with Rule 46A of the Income Tax Rules, 1962. The additional evidence was duly forwarded to the Assessing Officer for a remand report, which was verified by the Officer during the remand proceedings.

3. During the remand proceedings, the Assessing Officer did not assert that the deposit in the savings bank account was unrelated to the sale proceeds of the assessee's business, nor did he make any adverse findings regarding the said deposit. Consequently, the court concluded that there was no legal flaw in the actions of the authorities in reducing the addition to Rs. 93,282/-, representing the "peak" credit in the assessee's account in IDBI.

4. In light of the above analysis, the court found the appeal lacking merit and dismissed it summarily.