Law:

Section:

Section 69 of the income-tax act, 1961-Unexplained investments-Assessment year 1969-70 relevant for accounting year end ING 30-9-1968-Unexplained cash credits of Rs. 25,500 in capital account in firm attributed to flow from share income of Rs. 38,500 from a joint venture-Amount of Rs. 38,500 added as assessee's income from undisclosed sources in assessment year 1969-70-A AC and tribunal confirmed impugned addition-Whether impugned addition legal and valid-held, on facts, no Facts The assessee's capital account in the books of a firm, in which he was a partner, indicated a cash deposit of Rs. 25,500. The assessee attributed its source to his share income from a joint venture aggregating Rs. 38,500. Besides assessing assessee's share income from the firm, the ITO included the said amount of Rs. 38,500 in assessee's income as income from undisclosed sources for the assessment year 1969-70, relevant to the accounting year ending 30-9-1968. The AAC and the Tribunal confirmed the ITO's order and rejected the assessee's contention that the sum of Rs. 38,500 could not have been added in entirety and that too in terms of the provisions of section 68. On reference, the revenue contended (i) that the impugned sum of Rs. 38,500 had been earned by the assessee and, as was the Tribunal's finding, such amount had been received by him during "this year"; and (ii) that, unless these two facts were found to be wrong, the assessment of the said sum of Rs. 38,500 for the year in question must be held to be valid. On the other hand, the assessee pleaded that the relevant accounting year for which the said income could be assessed as income from undisclosed sources would be the financial year ending 31-3-1969 and not the year ending 30-9-1968. Held An income from undisclosed sources, if credited in the books maintained by the assessee, is liable to be assessed under section 68. If such income from undisclosed sources, though invested, has not been recorded in the assessee's books of account, such investment is liable to be assessed in terms of section 69. In the instant case, the income from undisclosed sources, which is said to have been earned by the assessee, was admittedly not…

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