Jai Prakash Virmani Vs DCIT/ACIT (ITAT Delhi)
ITAT Delhi Holds Additional Income Applied Towards House Construction Cannot be Taxed Again as Unexplained Investment – Section 69 & 115BBE Not Applicable
A survey u/s 133A was conducted at Assessee’s business premises on 23.01.2019. Loose papers indicating cash withdrawals & expenditure on construction of house were impounded. Assessee, in survey statement, offered additional income of Rs.1.28 crore. Later, by letter dated 20.01.2020, he partially retracted. AO, in scrutiny, treated Rs.17,66,380/- as unexplained investment in construction of house u/s 69 & taxed it at special rate u/s 115BBE. CIT(A), Gurgaon confirmed the addition.
Assessee argued that investment of Rs.17,66,380/- was not unexplained; it was duly reflected as drawings in audited books. Additional cash receipts of Rs.18,78,500/- were already offered as income & accepted by AO. Out of this, Rs.17,66,380/- was withdrawn for house construction. Once income is declared & accepted, its utilisation in house construction cannot be taxed again as unexplained.
Tribunal noted that Section 69 applies only where investments are not recorded in books or where explanation about source is unsatisfactory. Here, additional income was already recorded in books & accepted in return. Withdrawal for house construction was shown as drawings, hence duly explained. AO’s rejection of explanation lacked objective basis. At most, it was application of disclosed income; it could not be taxed again as unexplained investment. Consequently, provisions of section 115BBE were also inapplicable. Tribunal deleted addition of Rs.17,66,380/- & directed that it be treated as application out of disclosed income.
