Kolkata bench of Income Tax Appellate Tribunal (ITAT) recently held that if the assessee has disclosed investment under current assets in the balance sheet, then the same cannot be treated as unexplained for the purpose of Section 69 of the Income Tax Act, 1961.
Assessee in the instant case is an individual engaged in the business of Indian made foreign liquor and trading of marble and construction business. Assessee was running his business under three proprietorship concerns and has duly filed his return of income.
During the course of assessment proceedings the Assessing Officer (AO) has noticed that the amount of investment shown by assessee in his income tax return was Rs.98000 only out of Rs.1, 16, 89,080. Thus the difference of Rs. 1,15,91,080 which the assessee failed to explain with any documentary evidences and accordingly he treated the same as undisclosed investment under section 69B of the Income Tax Act 1961 and also added to the total income of assessee.
After hearing the rival submissions and perusing the materials, the bench comprising of Judicial Member N.V.Vasudevan and Accountant Member Waseem Ahmed has objected the addition made by the AO. The bench observed that the addition made by AO merely on the basis of difference observed by him between the amount of investment shown by the assessee in the audited financial statement in the Income Tax returns. However while verifying the books of accounts it is clear that the assessee has shown a sum of Rs.98000 in the balance sheet under the head investment and the remaining investment was shown under the head “current asset”. Hence it cannot be concluded that the assessee has made unexplained investment under section 69B of the Act, the bench said.
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