Law:

Section:

Section 69 of the Income-tax Act, 1961 - Unexplained Investment - Assessment year 1999-2000 - Assessee was engaged in business of a commission agent and derived income by way of commission from sale of vegetables and fruits on behalf of farmers and traders - During course of survey at business premises of one J, it was found that assessee had made certain sales of apples to J - Since sale was not verifiable, Assessing Officer made addition of amount of sale to income of assessee as unexplained investments under section 69 - On appeal, Commissioner (Appeals) deleted said addition holding that only commission on sales made to J could be added to assessee's income - Tribunal upheld order of Commissioner (Appeals) - Whether since assessee was unable to show that amount of sales was either entered in books of account or was ever surrendered by his father as claimed by him, Tribunal erred in law in taking only profit of unexplained transactions as undisclosed income instead of taking investment in said transactions into account - Held, yes [In favour of revenue] FACTS The assessee was engaged in the business of a commission agent and derived income by way of commission from the sale of vegetables and fruits on behalf of the farmers and traders. During the course of survey under section 133A carried out at the business premises of one 'J', certain documents were seized which transpired that the assessee had made sales of apples of certain amount to 'J'. Since the sale was not verifiable, the Assessing Officer had made addition of amount of sale holding that the assessee had made sales to J and invested his own unexplained money in the purchase of apples. On appeal, the Commissioner (Appeals) deleted the addition. A direction was, however, given to the Assessing Officer to assess the commission earned by the assessee on the aforesaid sales at the rate of 5 per cent. The appeal filed by the revenue was dismissed by the Tribunal. On revenue's appeal to the High Court : HELD A perusal of the order passed by the Assessing Officer clearly established that the assessee had made unexplained investment in the purchase of apples which he had sold to J and in such circumstances,…

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