Law: Income Tax Act, 1922

Section: 4

Income-tax Act (XI of 1922)---S. 4--Addition from unexplained sources of income without any show-cause notice and specific approval of I.A.C.--Held, approval of assessment order, as a whole by I.A.C. being not sufficient approval of the amount to be added as unexplained investment, for making any addition under S.4, a show-cause notice to the assessee was a must and or receipt of reply, the I.T.O. was required to obtain prior approval of the I.A.C. for making addition of any specific amount--Where such requirement of law was not fulfilled, such .gin addition was illegal and had to be deleted ORDER In this further appeal relating to assessment year 1977-78 the assessee, an individual, derived income as a practising advocate. The assessee started practice in the year 11368. For this year the assessee earned salary income as M.P.A. The declared income of Rs.9,324 comprised of salary at Rs.6,224 and professional income at Rs.3,100. The Income-tax Officer determined that assessees salary at Rs.2,000 and net income from practice at. Rs.8,000. Thereto an addition of Rs.26,016 was made :is an income from unexplained sources. The reason, which led the Income Tax Officer for making the addition as income from unexplained source was that in three different bank accounts, the assessees total deposits were at Rs.54,720. The assessees explanation regarding these deposits did not find favour with the Income Tax Officer who allowed a credit of Rs.28,704 and made an addition of balance amount of Rs.26,016 as income from unexplained sources. 2. On appeal the learned Assistant Appellate Commissioner after making good deal of discussion on the issue of addition of Rs.26,016 as unexplained investment, vacated the Income Tax officers order directing de novo decision after affording proper opportunity to the assessee. 3. The assessees Authorised Representative contended that neither any notice was issued by the Income Tax officer showing intention, of making addition of Rs.26,016 as income from unexplained sources, nor prior approval of the learned Inspecting Assistant Commissioner was obtained. The Departmental Representative tried to rope the legal objection raised by the assessees…

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