2022 (2) TMI 494 - HC - Income Tax

High Court affirms Tribunal decision on income addition under Income Tax Act

Kishan Kothwal Versus Income Tax Officer, Ward-I, Siddipet, Medak.

The High Court affirmed the Tribunal's decision to uphold the addition to the income of the assessee under Section 69A of the Income Tax Act, 1961. The ... Addition u/s 69A or 68 - unexplained cash deposits in the bank account - HELD THAT:- We find that it was a case of sale transaction of diamonds u/s 68 of the Act. The parameters for making addition u/s 68 and u/s 69A, though may appear to be similar, however, is not so; therefore, addition of cash credit u/s 68 of the Act would stand on a different pedestal. The principles governing cash credit under Section 68 of the Act cannot be extended to unexplained investments u/s 69A of the Act. See TILAK RAJ KUMAR AND OTHERS [2014 (10) TMI 1 - ANDHRA PRADESH HIGH COURT] - Decided against revenue. Issues Involved:Confirmation of addition made by Assessing Officer to income of assessee under Section 69-A of Income Tax Act, 1961.Analysis:The judgment involves an appeal against an order passed by the Income Tax Appellate Tribunal regarding the addition made by the Assessing Officer to the income of the assessee under Section 69-A of the Income Tax Act, 1961. The Assessing Officer found cash deposits in the bank account of the assessee totaling to a specific amount. The assessee claimed that a portion of the deposit was from savings accumulated over the years. However, the Assessing Officer added a sum to the returned income of the assessee as unexplained deposits, invoking Section 69A of the Act. The Commissioner of Income Tax (Appeals) upheld a part of the addition made by the Assessing Officer. The Tribunal, after considering all submissions and evidence, upheld the addition of a specific amount to the income of the assessee under Section 69A. The Tribunal found that the explanations provided by the assessee were not substantiated with sufficient documentary evidence, leading to the confirmation of the addition. The Tribunal also noted that as a government employee, the assessee was not permitted to enter into certain financial transactions, further supporting the decision to uphold the addition.In the appeal before the High Court, the court examined the arguments presented by the appellant in light of relevant legal precedents. The court distinguished between the principles governing cash credit under Section 68 of the Act and unexplained investments under Section 69A. The court emphasized that the parameters for making additions under these sections are distinct, and the principles applicable to one may not be extended to the other. The court also analyzed an English decision cited by the appellant, highlighting that the facts of that case were not applicable to the present matter. Ultimately, the High Court dismissed the appeal, affirming the decision of the Tribunal to uphold the addition to the income of the assessee under Section 69A of the Income Tax Act, 1961.Therefore, the High Court upheld the decision of the Tribunal, finding no error or infirmity in the view taken. The court concluded that there was no question of law arising from the Tribunal's order, leading to the dismissal of the appeal. The court also addressed the legal precedents cited by the appellant, clarifying their applicability to the present case. The judgment serves as a comprehensive analysis of the issues involved in confirming the addition made by the Assessing Officer to the income of the assessee under Section 69A of the Income Tax Act, 1961.