No Relief If Assessee Failed to Prove Source of Income Even If Wrong Section Was Invoked By AO | HC

Case Details: Rajmeet Singh v. Income Tax Officer - [2024] 160 taxmann.com 83 (Jharkhand)

Judiciary and Counsel Details

• • Rongon Mukhopadhyay & Deepak Roshan, JJ.
  • Biren Poddar, Mahendra Kr. Chowdhary & Rakhi Sharma, Advs. for the Appellant.
  • Ratnesh Nandan Sahay for the Respondent.

Facts of the Case

For the relevant assessment year, assessee’s case was selected for scrutiny. During the scrutiny proceedings, the Assessing Officer (AO) noticed that the assessee deposited cash in the Corporation Bank. The assessee submitted the copy of Income Tax Return, sale deed, Bank Account, and other details when asked. However, the assessee failed to explain the source of such cash deposit, AO proceeded to make additions to the income of the assessee under section 68.

The assessee contended that section 68 had no application in his case as the assessee was not maintaining any books of accounts.

On appeal, CIT(A) and the Tribunal confirmed the additions made by AO. Aggrieved by the order, the assessee filed a writ petition before the Jharkhand High Court.

High Court Held

The High Court held that it was true that the passbook itself could not be treated as a book of accounts. However, only by not mentioning the correct provision in the assessment order can an amount that may be an income under the provisions of the Act not be allowed to go untaxed.

Admittedly, under section 69, there is a provision for undisclosed investment, and an amount deposited in the Bank will come under the purview of investment. Otherwise, no prejudice has been caused to the assessee as he failed to show any prejudice even when a wrong provision was mentioned in the assessment order. Further, it is a settled legal principle that if a source of power can be traced, the mere mentioning of the wrong section/provision will not invalidate the order.

In the instant case, the source of income was not proved, and the assessee failed to establish the identity/creditworthiness/genuineness of the creditors who gave cash loans as he claimed.

Usually, the matter would have been remitted to the AO for mentioning the correct provision and proceeding per law. But in the instant matter, as the source of income and the creditors’ identity/creditworthiness/genuineness were not proved, it will be tantamount to a futile exercise.

Accordingly, the additions made by the AO were justified.

List of Cases Reviewed

• • Rajmeet Singh v. ITO in I.T.A No. 189/RAN/2018 and Harmeet Singh v. ITO in I.T.A No. 190/RAN/2018 , both dated 27-8-2019. (para 17) – affirmed.
  • CIT v. Bhaichand H. Gandhi (1983) 141 ITR 67 Bombay (para 15) – distinguished
  • Anand Ram Raitani v. CIT (1997) 223 ITR 544 (Gau) (para 15) – distinguished
  • Mumbai v. Manisha M. Sah reported in 2016 SCC Online Bom. 6479 (para 15) – distinguished