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2024 (3) TMI 525 - AT - Income TaxAddition of opening capital as unexplained investment u/s 69 - income from undisclosed sources - HELD THAT:- Once the assessee based on the all the evidence which are not under dispute submit that the same is out of the opening cash in hand no addition can be made in the year under consideration. AO assumed opening cash balance as 'Nil' on the suspicion that whatever the assessee had earned in the preceding years stood utilized towards expenses or in making the investments and also alleged that the assessee failed to prove the existence of cash in hand and accordingly he considered sum as undisclosed income of the current year. What the ld. AO added was the opening balance of cash in hand in this year which is legally impermissible on the face of it. Although the ld. AO has not invoked any particular provision of law yet however, assuming that it was a case of S.68 (or even u/s 69A), the provision speaks of the credit found during the previous year in the books of account maintained by the assessee. Therefore, the law is well settled that credit found on the first day or carried forward from the preceding year cannot be added in this year. As decided in CIT v/s Parmeshwar Bohra [2007 (1) TMI 105 - RAJASTHAN HIGH COURT] Opening capital cannot be added as unexplained investment u/s 69 of the Act for the AY 1993-94 - clear finding recorded by the Tribunal that the impugned amount was credited in the books of account of the assessee in the earlier previous year and was shown as closing capital of that year – carried forward amount of the previous year does not become an investment or cash credit of the relevant year. Thus we direct to delete the addition - Decided in favour of assessee.
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