Nature and source of investment duly explained hence addition u/s 69 not sustained

PCIT Vs Joginder Singh Chatha (Punjab and Haryana High Court)

Punjab and Haryana High Court held that addition under section 69 of the Income Tax Act towards unexplained investment unsustainable as nature and source of the investment duly explained.

Facts- The assessee is an agriculturist and visited U.K. three times in the year 1985, 2006 and 2012. It is alleged that the assessee had deposited $2496835.89 equivalent to Rs.11,13,83,849/- @ Rs.44.61 per US$ in the said bank account during the financial year 2005-2006 and relevant to the assessment year 2006-2007. Similarly, there was another deposit of $226509.38 equivalent to Rs. 1,00,04,919/- @ of Rs. 44.17 per US$ in the year financial year 2006-2007 and relevant to the assessment year 2007-2008.

AO concluded that the assessee had failed to offer any explanation about the nature and source of investment of the deposits. While relying upon the provisions of Section 69 of the Act penalty proceedings were initiated under Section 271(1)(c) of the Act and income was accordingly assessed for the requisite amounts of the deposits, vide order dated 29.04.2015.

CIT(A) dismissed the appeal. ITAT allowed the appeal and deleted the addition. Being aggrieved, revenue preferred the present appeal.

Conclusion- Held that the assessee had given the explanation about the nature and source of the investments and the explanation offered by him was wrongly not accepted by the Assessing Officer and the Commissioner of Income Tax. Once the Tribunal as such noticed the said background and had rightly come to the conclusion that the name of the assessee was withdrawn even prior to the notice being served upon him, the addition could not be made by the Assessing Officer. The factual matrix could not be disputed regarding this aspect by the counsel for the revenue. The justifiable explanation as such is given that the nephew had got his signatures. Sufficient explanation has been given regarding this fact by filing an affidavit, which has not been taken into consideration by the Assessing Officer or by the Commissioner of Income Tax. The assessee being an agriculturist and only having a small holding of land apparently could not be in possession of such huge amounts, which were also in foreign currency. Nothing as such was produced on record that the same was transferred from India where he was doing some business. It is neither the case of the revenue that the amounts were. credited from his income while doing business at abroad and neither he was based abroad for such long periods to generate that kind of income.