Issue before court:
Whether ITAT was correct in upholding the order of CIT (A),who deleted addition made u/s 68 as undisclosed income, relying upon the assessment orders of another year and ignored the facts that assessee himself declared receipt of certain amount.
Brief facts of the case:
- The assessee during the relevant AY 2005-06 claimed benefit of Section 44AF of Income Tax Act and filed a return disclosing income of Rs. 2,15,292/-.
- Subsequently, the assessment was reopened under Section 147 of the Act. AO.
- The AO considered the source of a separate cash deposit of Rs. 31,29,880/- and further amount of Rs.16,07,240/-. After adding these amounts, the AO reassessed the income on regular basis bringing them to tax under Section 68 on the ground that this amount was the assessee’s income from undisclosed sources.
- The assessee’s appeal was partly allowed restricting to net profit rate of 5% applied on the amount declared under Section 44AF, i.e. Rs. 2,36,856/-. The ITAT also accepted the assessee’s contention and rejected the Revenue’s appeal.
Contention of the revenue:
- Assessee did not maintain any books of accounts and failed to produce any supporting document in support of his submission that some of the amount pertain to expenditure.
- Assessee himself during assessment proceedings accepted receipt of certain amount against which he cannot produce any corroborative evidence.
Contention of the Assessee:
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