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TMI Blog2012 (12) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... ber This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals) I, Coimbatore in Appeal No. 219/09- 10 for the assessment year 2007-08. Shri S. Sridhar, Advocate represented on behalf of the assessee and Shri T.N. Betgeri, JCIT represented on behalf of the Revenue. 2. The only issue in the grounds of appeal of the assessee is that the Commissioner of Income Tax (Appeals) erred in not allowing set off of loss computed under the head Profit and gains of business against income assessed as unexplained investment under section 69 of the Act. 3. The facts of the case are that the assessee is an individual filed the return of income for the assessment year 2007-08 on 31.07.2007 admitting income of Rs..1,98,210/-. The assessment was completed under section 143(3) of the Act on 23.12.2009 determining total income of the assessee at Rs..31,98,212/-. While completing the assessment, the Assessing Officer made an addition of Rs..30.00 lakhs representing the credits in the saving bank account of the assessee treating them as unexplained investment under section 69 of the Act. The Assessing Officer did not allow set off of the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer is also an income and cannot be excluded from the total income of the Act and therefore, shall be chargeable under the head other sources . The counsel further submitted that as per section 4 of the I.T. Act, the income tax is payable on the total income of the previous year of every person. He submitted that section 5 defines the scope of total income and as per section 14, all the income shall, for the purpose of charge of income tax and computation of total income be classified under the following five heads. i) Salaries ii) Income from house property iii) Profits and gains of business or profession iv) Capital gains v) Income from other sources He submitted that by harmonious construction of section 4, 5 and 14, all income must be brought under any one of the five heads only. According to section 56(1), income which is not otherwise chargeable under heads specified in A to E of section 14 shall be chargeable under the head income from other sources . The counsel for the assessee relied on the decision of the Hon ble Supreme Court in the case of CIT v. D. P. Sandu Bros. Chembur P. Ltd.[273 ITR 1] in support his contention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee could not give any explanation and therefore offered the same as his income from other sources. The Assessing Officer while completing the assessment accepted the explanation of the assessee in respect of cash deposits of Rs..7.00 lakhs made into bank account and treated the balance cash deposits of Rs..30.00 lakhs as unexplained investment under section 69 and assessed as deemed income. The Assessing Officer did not allow set off of loss determined from trading of shares because the deemed income was assessed as unexplained investment under section 69 and the deemed income shall not fall under any of the heads of income. Therefore, the Assessing Officer rejected the claim for inter-head set off of loss claimed by the assessee. In coming to this conclusion, the Assessing Officer and also the Commissioner of Income Tax (Appeals) relied on the decision of the Hon ble Gujarat High Court in the case of Fakir Mohammed Hazi Hasan vs. CIT (supra). 8. The facts in the decision of the Hon ble Gujarat High Court are that the Custom Department had seized 2320 tolas of gold of foreign origin valued at Rs..48,72,000/- while smuggling by the assessee and was confiscated. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owrooms sold and that they represented amounts which were, over and above, the amounts mentioned in the agreements with the purchasers. There was absolutely no reason to disbelieve the said explanation. Consequently, the amounts in question should have been treated as trading receipts as pleaded by the assessee. 3. Even if we hold that the explanation of the assessee about the nature and source of those amounts was not satisfactory, as has been held by the Income-tax Officer, the only consequence thereof would be that sums credited in the books of the assessee would be liable to be charged to income-tax, as the income of the assessee of the previous year in which the books were maintained. Section 68 does not expressly state as to under what head the said income should be assessed. Section 68 is silent about the head under which the said income should be assessed. Consequently, the assessing authority has to look to the surrounding circumstances in order to determine as to under what head the said income should be assessed. 10. The Hon ble High Court of Andhra Pradesh in the case of CIT v. Maduri Rajaiahgari Kistaiah [120 ITR 294] held that the ITO is not only prevent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CIT v. D. P. Sandu Bros. Chembur P. Ltd (supra), while deciding whether the amount received by the assessee on surrender of tenancy rights is liable to capital gains tax under section 45 of the Income-tax Act held as under: Section 14 of the Income-tax Act, 1961 as it stood at the relevant time similarly provided that all income shall for the purposes of charge of income-tax and computation of total income be classified under six heads of income, namely:- (A) Salaries; (B) Interest on Securities; (C) Income from house property; (D) Profits and gains of business or profession; (E) Capital gains; (F) Income from other sources unless otherwise, provided in the Act. Section 56 provides for the chargeability of income of every kind which has not to be excluded from the total income under the Act, only if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E. Therefore, if the income is included under any one of the heads, it cannot be brought to tax under the residuary provisions of section 56. 12. The Hon ble Supreme Court held that section 56 provides for the chargeability of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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