Commissioner of Income Tax-I vs Nagindas T. Kapadia

M.R. Shah, J.

Leave to substitute the question of law.

Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal, Ahmedabad, ''D'' Bench dated 17.10.2014 passed in IT(SS)A No. 125/Ahd/2010 by which, the learned Tribunal has allowed the appeal preferred by the assessee and has deleted the addition made by the Assessing Officer under Section 69/69(C) of the Income Tax Act (hereinafter referred to as the ''Act''), the Revenue has preferred the present tax appeal.

That the assessee filed return of income for A.Y. 2004-2005 declaring the total income at Rs. 2,49,970/-. That search and seizure operation under Section 132 of the Act was carried out on 14.12.2005 at the residential premises of the assessee and survey under Section 133A of the Act was also conducted at the business premises of the assessee on the same date. It appears that during the post-search inquiries, the assessee accepted the undisclosed income and/or undisclosed investments and/or undisclosed expenditure and admitted unaccounted income at Rs. 2.75 crores which was subsequently retracted.

3.1. That the notice under Section 153A of the Act was issued on 16.10.2006 which was served upon the assessee requesting her to file return of income for A.Y. 2004-2005 being one out of six assessment years (i.e. A.Y. 2000-01 to 2005-06). That in response to the notice under Section 153A of the Act, the return of income was filed on 31.07.2007 declaring total income at Rs. 5,00,498/-. The case was selected for scrutiny assessment and notice under Section 143(2) of the Act was issued and duly served upon the assessee. Simultaneously, the notice under Section 142(1) of the Act along with the questionnaire dated 10.08.2007 and 02.11.2007 were issued which were duly served upon the assessee. That on the basis of one chit recovered during the search, in which, name of the assessee was reflected with the amount of Rs. 43,07,179/-, the assessee gave explanation with respect to the same, however, the Assessing Officer did not agree with the same and made addition of Rs. 43,07,179/- as unexplained expenditure under Section 69/69(C) of the Act.

3.2. Feeling aggrieved and dissatisfied with the order passed by the Assessing Officer in making addition of Rs. 43,07,179/- under Section 69/69(C) of the Act, the assessee preferred appeal before the learned CIT(A) and the learned CIT(A) dismissed the said appeal confirming the order passed by the Assessing Officer of making addition of Rs. 43,07,179/- under Section 69/69(C) of the Act.

3.3. Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A), the assessee preferred appeal before the learned Tribunal and by impugned judgment and order, the learned Tribunal has allowed the said appeal by deleting addition made by the Assessing Officer under Section 69/69(C) of the Act as confirmed by the learned CIT(A), by observing that when the assessee did not offer Rs. 43,07,179/- as expenditure and did not claim deduction of Rs. 43,07,179/- as expenditure, the Assessing Officer was not justified in invoking Section 69/69C of the Act and/or in making the addition of Rs. 43,07,179/- as unexplained expenditure under Section 69/69(C) of the Act.

3.4. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the Revenue has preferred the present tax appeal with the following proposed substantial question of law:--

"Whether on the facts and circumstances of the case and in law, the ITAT was justified in deleting the addition made by the A.O. on account of unexplained expenditure of Rs. 43,07,179/- u/s. 69C of the Act and duly confirmed by the CIT(A) in the absence of any cogent evidence in support of the claim of the said expenses of the Assessee?"

We have heard Shri Sudhir Mehta, learned advocate appearing on behalf of the Revenue and perused the impugned judgment and order passed by the learned Tribunal. We have also considered the order passed by the Assessing Officer in making addition of Rs. 43,07,179/- as unexplained expenditure under Section 69/69(C) of the Act as well as the order passed by the learned CIT(A) confirming the addition made by the Assessing Officer.

4.1. At the outset, it is required to be noted that the Assessing Officer made addition of Rs. 43,07,179/- as unexplained expenditure under Section 69/69C of the Act. However, it is required to be noted that the assessee never offered and/or claimed deduction of Rs. 43,07,179/- as expenditure. Therefore, it is rightly observed by the learned Tribunal that there was no question of making any addition under Section 69/69(C) of the Act. Section 69(C) of the Act would be applicable in a case where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year.

Under the circumstances, the learned Tribunal has rightly held that the Assessing Officer has committed error in making addition of Rs. 43,07,179/- under Section 69/69Cof the Act. We are in complete agreement with the view taken by the learned Tribunal in deleting addition of Rs. 43,07,179/- made under Section 69/69C of the Act.

Under the circumstances, no substantial question of law arises in the present appeal and the present appeal deserves to be dismissed and is accordingly dismissed.