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Section 68 incorporates only a rule of evidence, placing the onus of proof on the assessee. There have been hardly any amendments in this section since its introduction.
Sub-section (2) of said section provides that no deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed to the assessee under any provision of the Act in computing his income referred to in clause (a) of sub-section (1).
ACIT Vs. Shri Jayantilal T. Jariwala (ITAT Ahmedabad)- In thie Case Assessing Officer found that assessee had constructed a residential house, B-3, Mamta Flats, Surat and plot No.158/21 GIDC, Pandesara, Surat. The AO was not satisfied with the cost of construction shown
Delhi High Court held In the case of R.S. Bedi vs. ACIT that no addition u/s 69B is maintainable on the sole basis of DVO report. In the given case, although AO found some document during the search, but the same was not the basis for addition as also noted by ITAT.
Tribunal examined two main issues in this case firstly, whether any addition is required to be made in the hands of assessee on account of unexplained investment in purchase of house property. Secondly, whether assessees have paid any amount over and above the consideration shown in the sale deed
Entire sales which are unaccounted cannot be undisclosed income of the assessee, particularly as the purchase had been accounted for. It was held that only net profit which would arise on such unaccounted sales can rightly be taken as the amount which could be added to the Respondent Assessee’s income for the purpose of tax.
In the present case, there was no basis for the AO to determine that the true value of the property was Rs. 1.25 crores, by adopting the return on capital method. The AO was under a duty first to ascertain what was according to him the true cost of the property.
Assessee in his return submission dated 6.11.2009 had explained that the purchase of 2 JCB machines were made from Yantraman Automac Pvt.Ltd., Baroda and both these purchases were on hypothecation with Centurion Bank of Punjab.
The law seems to be well settled that unless and until there is some other evidence to indicate that extra consideration had flowed in the transaction of purchase of property, the report of the DVO cannot form the basis of any addition on the part of the revenue. In the present case there is no evidence other than the report of the DVO and, therefore, the same cannot be relied upon for making an addition. In these circumstances, the question which has been framed is decided in favour of the assessee and against the revenue. The appeal is dismissed.
We have considered submissions of ld representatives of parties and orders of authorities below. We agree that ld CIT(A) is justified to hold that the entire sales which are unaccounted cannot be the undisclosed income of the assessee. It is a fact that department has not disputed that there is unaccounted purchases. Therefore, all the purchases are accounted for. If the sales are unaccounted, which is outside the books of account, only net profit rate should be taken as income of the assessee, as rightly held by ld CIT(A). Therefore, we uphold the order of ld CIT(A) and reject ground of appeal taken by department.
