S. 69 : Unexplained investments-Addition to fixed assets recorded in books of account-No enquiry regarding source of investment made by Assessing Officer-Deeming provisions cannot be invoked merely because complete invoices were not furnished-Addition deleted-Cash credits-Unsecured loans from shareholders/directors-Assessee furnished confirmations and bank statements-Additional evidences in form of income-tax returns and bank statements of lenders admitted and matter restored to Assessing Officer for fresh verification.[S. 32, 68]
The assessee company had made additions to fixed assets during the year and claimed depreciation thereon. During assessment proceedings, the Assessing Officer called for details regarding fixed assets, invoices and depreciation claim. Though the assessee furnished fixed asset register, depreciation working, sample invoices and other details, the Assessing Officer invoked section 69 and treated the entire additions to fixed assets as unexplained investments on the ground that complete documentary evidence was not furnished. The Tribunal held that the very basis of the enquiry undertaken by the Assessing Officer related to verification of additions to fixed assets and the allowability of depreciation, and not regarding the source of investment. The Tribunal observed that no adverse finding had been recorded regarding the claim of depreciation, and the fixed assets were admittedly recorded in the books of account. Further, no specific enquiry was ever raised requiring the assessee to explain the source of investment. The Tribunal held that for invoking section 69, two conditions are mandatory, viz., the investments should not be recorded in the books of account and the assessee should either fail to explain the nature and source of investment or the explanation offered should be unsatisfactory. Since the investments were duly recorded in the books and no enquiry regarding source was made by the Assessing Officer, invocation of section 69 was wholly unjustified. Accordingly, the addition was deleted. The assessee had received unsecured loans from its shareholders/directors. The Assessing Officer treated the loans as unexplained cash credits u/s 68 on the ground that the assessee failed to conclusively establish the identity, creditworthiness and genuineness of the transactions. The Tribunal observed that the loan transactions were with existing shareholders/directors with whom similar transactions existed in earlier years, and the assessee had furnished confirmations and bank statements during assessment proceedings. The Tribunal further noted that the assessee subsequently furnished income-tax returns and bank statements of the lenders to establish their creditworthiness. Considering that these documents were relevant and their non-submission earlier was reasonably explained, the Tribunal admitted the additional evidence and restored the matter to the file of the Assessing Officer for fresh verification in accordance with law.( ITA No. 7670/Mum/2025, dt. 21-05-2026) .(AY. 2023-24 )
Pebble Street Hospitality Pvt. Ltd. v. ITO (Mum.) (Trib.) www.itatonline.org.
[Coram : Hon’ble Shri Vikram Singh Yadav, AM and Hon’ble Shri Rahul Chaudhary, JM]