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Facts
The assessee's wife purchased furniture for Rs.17,50,000/- in cash. The Assessing Officer added Rs.14,73,895/- under section 69C as unexplained expenditure, which the CIT(A) largely confirmed, allowing only Rs.4,24,240/- as explained. The assessee appealed, arguing his wife had sufficient funds.
Held
The Tribunal found that the assessee's wife had sufficient financial capacity, evidenced by her balance sheet showing a capital account of Rs.59,84,811/- and a furniture entry of Rs.17,50,000/-. It concluded that the CIT(A) had misinterpreted the financial statements, and thus, the addition under section 69C was misplaced and bad in law. The Tribunal directed the deletion of the addition.
Key Issues
Whether the addition of Rs.14,73,895/- for furniture expenditure as unexplained under Section 69C was justified, given the documented financial capacity of the assessee's wife.
Sections Cited
153A, 69C
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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM
The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 31.07.2025 for the assessment year 2017-18 as per the following grounds of appeal:
1. That the learned CIT(A) has erred in facts and in law in confirming the assessment order passed under section 153A of the Act, wherein the learned Assessing Officer made an addition of Rs.14,73,895/- on account of expenses allegedly incurred towards furniture work by Smt. Alka Jain, treating the same as unexplained expenditure under section 69C of the Act.
2. That the learned CIT(A) has grossly erred, both in law and on facts in confirming the Assessment Order framed u/s.153A of Act on the strength of purported approval granted by the Ld. Joint Commissioner of Income Tax (Central), Raipur is void ab initio, invalid, illegal hence, deserves to be quashed and declared a nullity since, the mandatory prior approval granted is 'no approval' in the eyes of law as the same is mechanical, mere empty formality, lacks due application of mind and further, the Order was passed based on invalid, inchoate and consolidated approval. 3 The appellant craves to add, alter or delete any of the above grounds of appeal during the course of appellate proceedings.
At the time of hearing, the Ld. Counsel for the assessee pleads that he may be allowed to contest grounds on merits only at first and if he succeeds, all other grounds shall stand academic only. In this regard, he has assailed three grounds in appeal and as regards the Ground of appeal No.2, he submits that he is not pressing the same and it is signed by him accordingly. In view of his submission, Ground of appeal No.2 is dismissed as not pressed.
Ground of appeal No.3 is general and therefore, the same does not 3. call for any adjudication.
The only effective ground is Ground of appeal No.1, in which, the assessee is aggrieved by addition of Rs.14,73,895/- on account of expenses allegedly incurred towards furniture work by his wife, Smt. Alka Jain, treating the same as unexplained expenditure u/s. 69C of the Income Tax Act, 1961 (for short ‘the Act’).
It was contended by the assessee that he had purchased a residential property situated at Maruti Lifestyle, Raipur and regarding furnishing of the said house, his wife Smt. Alka Jain had purchased furniture from M/s. Jalaram Trading Company, Raipur. The total bill that was issued by M/s. Jalaram Trading Company, Raipur was Rs.18,98,135/- and it was finally settled at Rs.17,50,000/- and the said Smt. Alka Jain had paid Rs.17,50,000/- in cash to M/s. Jalaram Trading Company, Raipur.
At the time of appeal proceedings before the Ld. CIT(Appeals)/NFAC, the assessee had submitted supporting documentary evidences like copy of ITR from A.Y.2013-14 to A.Y.2020-21, computation of total income and balance sheet of his wife viz. Smt. Alka Jain to substantiate his claim and the source of cash payments and to prove the creditworthiness of Smt. Alka Jain for purchasing furniture in cash.
That on a careful perusal of the order of the Ld. CIT(Appeals)/NFAC, it is clearly mentioned therein that on scrutinizing the various documents placed on record, it was admitted by the Ld. CIT(Appeals)/NFAC, that the assessee’s wife viz. Smt. Alka Jain as shown in her ITR and balance sheet has sufficient financial capacity to purchase the goods in cash. In fact, the total income as appearing in the order of the Ld. CIT(Appeals)/ NFAC from A.Y.2013-14 to A.Y.2017-18 is Rs.22,18,330/- as per declared income as per return of income. However, the Ld. CIT(Appeals)/NFAC holds that out of the total addition of Rs.18,98,135/-, an amount of Rs.14,73,895/- still remains unexplained and he allowed an amount of Rs.4,24,240/- as the amount available as cash in hand as per the balance sheet of the assessee.
In this regard, the Ld. Counsel for the assessee had brought to the notice of the Bench the balance sheet as on 31.03.2017, Page 62 of the paper book, wherein the capital account is at Rs.59,84,811/- and regarding the expenses in the Column: ‘Furniture at Raipur’ that itself is at Rs.17,50,000/- and thereafter, in the Column “cash in hand” is at Rs.4,24,240/- which the Ld. CIT(Appeals)/NFAC had mis-read and wrongly interpreted that this is the only amount that was there with Smt. Alka Jain and therefore, she could not have purchased the furniture valued at Rs.17,50,000/-. This balance sheet and financial statements were already submitted with the department remained undisputed and it is case of mis-interpretation by the Ld. CIT(Appeals)/NFAC since in the Column ‘Furniture at Raipur’ that itself shows the amount of Rs.17,50,000/- and the total capital account is Rs.59,84,811/-. Furthermore, at the stage of adjudication by the Ld. CIT(Appeals)/NFAC, it had agreed that Smt. Alka Jain has sufficient fund to incur the said expenditure for furniture. However, the Ld. CIT(Appeals)/NFAC only restricts the relief and gets wrongly carried away with regard to the entry as cash in hand observing that it is the only amount available with the wife of the assessee which therefore is explained, the rest remains unexplained expenses.
That it is clearly evident from the capital account and the balance sheet as on 31.03.2017, the said Smt. Alka Jain had sufficient means to incur expenditure for furniture of Rs.17,50,000/- and in absence of any contrary evidence there is no reason to disagree with the amount as reflected in the balance sheet. The Ld. Sr. DR also could not bring on record any evidence contrary to the facts on record.
Considering the entire facts and circumstances the addition made u/s. 69C of the Act as unexplained expenditure is therefore, misplaced, arbitrary and bad in law. Accordingly, I set-aside the order of the Ld.CIT(Appeals)/NFAC and direct the A.O to delete the addition from the hands of the assessee and provide appeal effect of this order. Thus, the Ground of appeal No.1 stands allowed.
In the result, appeal of the assessee is partly allowed. Order pronounced in open court on 03rd day of December, 2025.