Facts of the case:
- The return of income was filed on 31.10.2005 at an income of Rs. 4,04,020/- for AY 2005-06.
- During the course of assessment proceedings, the AO took note of the fact that the assessee and his wife purchased property at front and rear side of portion at ground floor for a consideration of 40 Lakh each and 3,20,000 was paid as stamp duty on each portion.
- AO observed that the assessee had no details regarding particulars of payment made by him; and regarding the source to purchase these properties other than what the assessee informed about a home loan from HSBC Bank for Rs.55 lakhs and Rs.25 lakhs.
- AO observed that assessee has maintained a bank account with Dena bank. AO asked bank by summon u/s 133 (6) and found that Rs. 1,58,52,816/- in bank account whereas as per bank statement submitted by assessee total credit/deposits were Rs. 37,10,872/-.
- AO further observed that assessee has a joint bank account with his wife in HSBC and he has made cash deposits of Rs. 9,15,000/- on various dates. This bank account was not declared by assessee in his return.
- AO also observed from the information of HSBC that the assessee and his wife were maintaining Punjab National Bank loan account to which an amount of Rs.27 lakhs and Rs.28 lakhs were released.
- AO asked the information from Punjab National Bank and found that the assessee was maintaining Home Loan account in his name and another account in his wife’s name and one joint account also which were not declared by the assessee.
- On the above basis AO made the assessment u/s 143 (3) at Rs.1,37,75,290/- by making following additions:
- In view of deposit and withdrawal made of Rs.12,42,000/- in Dena Bank which was found unexplained
- Unexplained credit entries with Dena Bank of Rs.88,94,226/-
- Cash deposit of Rs.9,15,000/- u/s 68 on account on different dates in HSBC
- 15,20,000/- on account of peak cash credits in this account were unexplained
- 8,00,000/- on account of alleged sale of property
- Aggrieved from the assessment order assessee filed appeal before CIT (A) who admitted additional evidence filed by assessee and sought remand report from AO.
- AO in his remand report elaborated various addition which he made under section 68 or he added in absence of proper explanation and evidence.
- The ground of the revenue’s appeal in AY 2006-07 is against the deletion of addition of Rs.72,50,000/- without invoking the provisions of Rule 46A.
- In AY 2006-07 assessee returned the income of Rs.3,04,172/-.
- AO found that the assessee derived income mainly from house property and there are some credits/debits in his bank accounts.
- AO being unsatisfied with the explanation given by the assessee added Rs.1 lakh on cash deposits in the bank account and further added Rs.72,50,000/- claimed to have been received as an advance from Vivek Titus against agreement to sale of property as income from undisclosed sources.
- In this way he computed income of assessee at Rs.76,54,170/- in place of the assessee’s returned income of Rs.3,04,172/-.
Contention of the revenue:
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