M. MANOHAR REDDY, HYDERABAD,HYDERABAD vs. ITO, WARD-9(3), HYDERABAD, HYDERABAD

Brief facts of the case are that the assessee, an individual, is an iron and steel merchant and was carrying on his business activity under the name and style of M/s. Balaji Iron, Steel & Hardware Mart. For the relevant A.Y, he filed his return of income on 14.11.2008 declaring a total income of Rs.2,30,245/- and agricultural income of Rs.25,000/-.

During the assessment proceedings u/s 143(3) of the Act, the AO noticed that the assessee had introduced additional capital of Rs.7,64,736/- during the year without offering the same to income tax in the computation statement and that he did not

Aggrieved, the assessee is in second appeal before us by raising the following grounds of appeal: “1. On the facts and in the circumstances of the case, the order of the Id. Commissioner of Income Tax (Appeals) dismissing the appeal of the Appellant is erroneous, illegal and unsustainable in law. 2. The Id. Commissioner (Appeals) erred in sustaining the action of the Assessing Officer on the issue of reopening assessment, dehors any material. The Id. Commissioner (Appeals) ought to have appreciated that even in a case where there is no scrutiny assessment, assessment can be reopened based on the fresh information that has come into the possession of the Assessing Officer. 3. Without prejudice to above ground, the Id. Commissioner (Appeals) erred in sustaining the addition of Rs.7,64,736 made under section 69 as unexplained capital introduced by the Appellant. The Id. Commissioner (Appeals) failed to appreciate the evidence submitted by the Appellant and so also the submissions made by the Appellant in proper perspective. For these and other grounds that may be urged at the time of hearing, it is prayed that the Hon'ble Tribunal may be pleased to allow the appeal”.

The learned Counsel for the assessee submitted that the additional capital of Rs.7,64,736/- was introduced by the assessee in various stages and the sources are stated to be out of the contribution made by his wife Mrs. Girija out of her personal savings. Observing that no details with regard to his wife’s income or tax statements are filed by the assessee, the CIT (A) confirmed the addition. The learned Counsel for the assessee reiterated the submissions made before the authorities below. On a query raised by us during the course of hearing, the learned Counsel for the assessee admitted that the assessee’s wife has no independent source of income and that she is not an independent tax assessee. But he submitted that it cannot be ruled out that she had her own personal savings which she has contributed to her husband and some amount may be accepted as her contribution.

The learned DR, however, supported the orders of the authorities below and submitted that the onus was on the assessee to prove the sources of investment and since the assessee has failed to discharge the onus, the CIT (A) has rightly confirmed the additions made by the AO towards the unexplained investment to tax.

Having regard to the rival contentions and the material on record, I find that the assessee has tried to explain the sources for the additional capital as a contribution from her wife. Admittedly, the assessee’s wife has no independent source of income. Although assessee’s contention that she also could have contributed from her personal savings cannot be ruled out totally,

In the result, assessee’s appeal is dismissed.