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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 ..... nder 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 loss against such income, because addition was made towards unexplained investment under section 69 on the ground that the income of Rs..30.00 lakhs does not fall under the head "income from other sources". Therefore, according to the Assessing Officer, it cannot be set off against business loss of the assessee in view of the decision of the Hon'ble Gujarat High Court in the case of Fakir Mohammed Haji Hasan v. CIT [247 ITR 290]. 4. On appeal, the Commissioner of Income Tax (Appeals) dismissed the appeal of the assessee agreeing with the view taken by the Assessing Officer. Against this order of the Commissioner of Income Tax (Appeals), the assessee is in appeal before us. 5. The counsel for the assessee submits that the Assessing Officer computed the total income of the assessee at Rs..31,98 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 income assessed under section 68/69 shall, for the purpose of charge of income and computation shall fall under any one of the heads of income as specified in section 14 of the Act. The counsel submits that the decision of the Hon'ble Gujarat High Court in the case of Fakir Mohammed Haji Hasan vs. CIT (supra) relied on by the Assessing Officer/Commissioner of Income Tax (Appeals) is impliedly overruled by the Hon'ble Supreme Court in the case of CIT vs. D.P. Sandu Bros. Chembur (P) Ltd. (supra). The counsel further submitted that the unexplained cash deposits into SB account deemed as income under section 68/69 is also income chargeable to tax and shall form part of total income. Therefore, he submits that such deemed income also shall be assessed under any one of the five heads specified under section 14 of the Act. He submits t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 Officer found that the assessee was the owner of the gold, which was found concealed in the car and the value of the gold was, therefore, added in assessee's income, which finding was confirmed by the Commissioner of Income Tax (Appeals). The Tribunal held that the value of the gold was liable to be added as income of the assessee under section 69A of the Act. The Tribunal also found that it was not the assessee's case that it was derived any income from any business of smuggling and, therefore, it could not be said that confiscation of gold represented a trading loss in the hands of the assessee. Therefore, it was held that no deduction could be allowed as claimed by the assessee. Under the circumstances, the Hon'ble Gujarat High Court held that the source not being known, such deemed income will not fall even under the head 'other sources' and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 prevented, but also entitled him to treat the unexplained cash credits as income from undisclosed source, which falls under the head 'income from other sources', which falls under head income from other sources. The Hon'ble High Court held as under: "5. The same view has been reiterated by the Supreme Court in CIT v. Devi Prasad Vishwanath Prasad . The learned judge, Shah J. (as he then was), speaking for the court, ruled thus : " There is nothing in law which prevents the Income-tax Officer in an appropriate case in taxing both the cash credit, the source and nature of which is not satisfactorily explained and the business income estimated by him under Section 13 of the Income-tax Act, after rejecting the books of account of the assessee as unreliable......... Whether in a given case the Income tax Officer may tax the cash credit entered in the books of account of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. It was held that if the income is included in any one of the heads, it cannot be brought to tax under the residuary provisions of section 56. Therefore, as observed by the Hon'ble Supreme Court that all income for the purpose of charge of income tax and computation of total income, the income should fall under any one of the head as specified under section 14 of the Act. In view of the decision of the Hon'ble Supreme Court, the cash deposits made into SB account of the assessee assessed as unexplained investment under section 69 by the Assessing Officer shall, for the purpose of charge of income tax and computation of total income shall fall under any one of the 5 heads specified under section 14 of the Act. In this case, since the assessee has no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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