MOTHI KUMAR HOUDEKAR,NAGAKURNOOL vs. ITO, WARD-1, MAHABUBNAGAR

The brief facts of the case are that the assessee is an individual who had not filed the return of income under section 139(1) of the Income-tax Act, 1961 (“the Act”) for the assessment year 2019-20. On the basis of information available with the Assessing Officer, the case of the assessee was reopened under section 147 of the Act and, accordingly, notice under section 148 of the Act dated 06.04.2023 was issued. In response to the said notice, the assessee filed the return of income on 29.04.2023 declaring total income of Rs. 2,30,850/-. During the course of assessment proceedings, the Assessing Officer observed that the assessee had made total purchases of Rs. 12,48,500/- and claimed expenses of Rs. 46,008/-, aggregating to Rs. 12,94,508/- during the year under consideration. However, the Assessing Officer further observed that the assessee had made cash payments through bearer cheques to the tune of Rs. 23,65,315/-. Accordingly, the Assessing Officer noticed a difference of Rs. 10,70,807/- between the payments made through bearer cheques and the total purchases and expenses claimed by the assessee. The Assessing Officer treated the said difference of Rs. 10,70,807/- as unexplained expenditure and made an addition under section 69C of the Act. Consequently, the assessment was completed by the Assessing Officer under section 147 read with section 144B of the Act vide order dated 15.01.2025, assessing the total income of the assessee at Rs. 13,01,657/-. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who dismissed the appeal and confirmed the addition made by the Assessing Officer.

Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. Before us, the Learned Authorized Representative (“Ld. AR”) submitted that the only issue arising out of the grounds raised by the assessee is with regard to the addition of Rs. 10,70,807/- made by the Assessing Officer under section 69C of the Act. Inviting our attention to para no. 4 of the assessment order, the Ld. AR submitted that the Assessing Officer himself has recorded that the assessee had made cash payments through bearer cheques to the tune of Rs. 23,65,315/-, whereas the purchases and expenses claimed by the assessee aggregated to Rs. 12,94,508/-. The difference of Rs. 10,70,807 /-was, therefore, treated by the Assessing Officer as unexplained expenditure under section 69C of the Act. Further, inviting our attention to the provisions of section 69C of the Act, the Ld. AR submitted that an addition under the said provision can be made where the assessee has incurred an expenditure and either offers no explanation about the source of such expenditure or the explanation offered by him regarding its source is not found satisfactory by the Assessing Officer. In the present case, the Assessing Officer has not doubted the source of the payment of Rs. 10,70,807/-. On the contrary, the Assessing Officer himself has recorded that the payments were made through bearer cheques drawn on the bank accounts of the assessee. Therefore, even if the assessee was unable to satisfactorily explain the purpose or destination of the excess payment of Rs. 10,70,807/-, the source of such payment was not doubted by the Assessing Officer. Accordingly, the Ld. AR submitted that the conditions prescribed under section 69C of the Act are not

On perusal of the above, we find that the Assessing Officer has categorically recorded that the assessee had made payments through bearer cheques to the tune of Rs. 23,65,315/-. Against the said payments, the assessee had claimed purchases of Rs. 12,48,500/- and expenses of Rs. 46,008/-, aggregating to Rs. 12,94,508/-. On this basis, the

On a perusal of the above, we find that the said provision, inter alia, provides that where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof may be deemed to be the income of the assessee for such financial year. Thus, for invoking section 69C of the Act, the relevant requirement is the absence of a satisfactory explanation regarding the source of the expenditure incurred by the assessee. In the present case, the Assessing Officer has not recorded any dissatisfaction