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2015 (12) TMI 1543 - AT - Income TaxUnexplained investment u/s 69 or unexplained credit u/s 68 - AO invoked the section 68 made an addition qua unexplained cash credit - whether the ld. CIT(A) has been correct in converting this charge of unexplained cash credit u/s 68 of the Act to that of unexplained investment u/s 69 of the Act - Held that - It is not a case of typographical or a mere wrong mention of the Section. However not able to agree with this observation of the ld. CIT(A). Section 292B of the Act and notification of the particular provisions of the Act to make certain addition is none than the jurisdictional matter going to the very root of the matter. If the provisions invoked are held to be non applicable the very charge for making the addition does not survive and it cannot be converted to that of another entirely different provision. Therefore the ld. CIT(A) has evidently erred in applying the provisions of section 69 of the Act observing that the nature and source of cash deposit of Rs. 12, 00, 000/- could not be satisfactorily explained with credible or cogent evidence and hence the section of deemed income created by section 69 comes into operation. Section 69 of the Act talks of clauses where the assessee had made investments which are not recorded in the books of account if any maintained by him for any source of income and the assessee offers no explanation about the nature and source of investments or the explanation offered by him is not in the opinion of the AO satisfactory. Section 68 of the Act on the other hand concerns the instances where any sum is found credited in the books of the assessee and the source thereof remained unexplained. In the present case the assessee is not shown to have made any investment and therefore the provisions of section 69 of the Act are entirely inapplicable. - Decided in favour of assessee.
Issues:
1. Application of sections 68 and 69 of the Income Tax Act. 2. Justification of the addition of Rs. 12,00,000 to the income of the assessee. 3. Interpretation of the provisions of section 292B of the Act. 4. Comparison between unexplained cash credits and unexplained investments. Analysis: Issue 1: Application of sections 68 and 69 of the Income Tax Act The AO initially applied section 68 of the Income Tax Act to add Rs. 12,00,000 to the assessee's income. However, the ld. CIT(A) held that the correct provision to apply was section 69, not section 68. The ld. CIT(A) confirmed the addition under section 69, citing the provisions of section 69B for justification. Issue 2: Justification of the addition of Rs. 12,00,000 The AO added Rs. 12,00,000 to the assessee's income under section 68 due to unexplained cash credits. The explanation provided by the assessee regarding the cash deposit was found contradictory and unsatisfactory by the AO. The ld. CIT(A) upheld the addition but under section 69, emphasizing the lack of credible evidence to explain the nature and source of the cash deposit. Issue 3: Interpretation of the provisions of section 292B of the Act The ld. CIT(A) invoked section 292B of the Act to rectify the AO's error in applying section 68 instead of section 69. However, the Tribunal disagreed with this interpretation, stating that the incorrect application of a specific provision cannot be rectified by invoking a different provision. The Tribunal emphasized that the jurisdictional matter is crucial and cannot be overlooked under section 292B. Issue 4: Comparison between unexplained cash credits and unexplained investments The Tribunal highlighted the distinction between unexplained cash credits under section 68 and unexplained investments under section 69. It clarified that the provisions of section 69 are not applicable when there is no evidence of investments made by the assessee. The Tribunal concluded that the ld. CIT(A) erred in applying section 69 to the case, as the nature of the cash deposit did not align with the criteria of unexplained investments. In conclusion, the Tribunal found in favor of the assessee, deeming the addition of Rs. 12,00,000 unjustified under section 69 and deleting the same. The appeal of the assessee was allowed, and the judgment was pronounced on 14th December 2015.
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