Law:

Section:

Section 69 of the Income-tax Act, 1961 – Unexplained investments – Assessment year 1970-71 – Whether addition made to income of assessee as income from intangible sources in past could be treated as income available with assessee for investment in assessment year in question and, therefore, investment to that extent in assessment year in question could not be treated as assessee's income from undisclosed sources – Held, yes FACTS The ITO found that out of the purchases made outside the books of account, total purchases of Rs. 71,977 were made in unaccounted cash. The ITO after making an inquiry into the claim of the assessee rejected the version of the assessee and made an addition of Rs. 71,977 as income of the assessee from undisclosed sources. The assessee contended before the AAC that in any case the investment of Rs. 71,977 should be considered to have arisen out of the intangible additions of Rs. 76,210 made to the income of the assessee in the past. The AAC declined to give any relief of these additions to the assessee and he confirmed the addition of Rs. 71,977 to the income of the assessee from undisclosed sources. On further appeal, the Tribunal held that the sum of Rs. 76,210 of intangible additions made to the income of the assessee during the preceeding four assessment years could be available with the assessee for investment in the assessment year in question and that the source of investment of the disputed sum of Rs. 71,977 was thus satisfactorily explained by the assessee. The Tribunal, therefore, accepted the contention of the assessee and deleted the addition. On reference : HELD In view of the decision of the same High Court in CIT v. Shri Dinanath Dhawale (Misc. Civil Case No. 352 of 1970 dated 4-4-1972) and of the Allahabad High Court in CIT v. Ram Achal Ram Sewak [1969] 73 ITR 501 , it could not be contended that the income which had been added up as income from intangible sources in the previous years of assessment was not available to the assessee. Accordingly, the Tribunal was justified in law in deleting the addition of Rs. 71,977 as the income of the assessee from undisclosed sources, holding the same to be covered by the intangible…

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