Addition sustainable if assessee fails to rebut unexplained investment

CIT Vs Sanjay Chhabra (Chandigarh High Court)- The sole point for consideration in this appeal is that once the Revenue had come to the conclusion that the assessee had made sales of apples amounting to Rs. 5,75,654/- to one Jagdish Chawla, whether it was the entire amount, or the 5% profit thereof, being commission on such sale, that was to be added to the income of the assessee.

According to the Revenue, the judgement of the Gujarat High Court reported in President Industries’s case (supra), was not applicable and the entire sale amount was asses-sable in the hands of the assessee. On the other hand, learned counsel for the assessee on the strength of the aforesaid decision argued that only 5% profit on the sale amount as commission was exigible to tax.  10. We find force in the contention of the learned counsel for the Revenue.

Reference is now made to judgement reported as President Industries’s case (supra). In that case, the CIT(A) and the Tribunal had found as a fact that there was no material on record to indicate that any investment was made outside the books of accounts to make the sales and in such circumstances the entire sale proceeds could not be added as undisclosed income of the assessee but the addition could be only of the profits embedded in the sales. The High Court in the light of the aforesaid finding of fact while dismissing the reference application under Section 256(2) of the Act filed by the Revenue had held that no question of law arose for consideration. In the present case, in the absence of any clear cut and unambiguous finding recorded by the CIT(A) and the Tribunal on the basis of the material on record, that the investment in the apples was accounted for in the books of accounts of the assessee, no advantage or support can be gathered by the assessee from the said decision.