I.T.A. NO.1003 OF 1985-86, DECIDED ON 4TH AUGUST, 1986. Versus I.T.A. NO.1003 OF 1985-86, DECIDED ON 4TH AUGUST, 1986.
ORDER
In this further appeal relating to assessment year 1977-78 the assessee, an individual, derived income as a practising advocate. The assessee started practice in the year 11368. For this year the assessee earned salary income as M.P.A. The declared income of Rs.9,324 comprised of salary at Rs.6,224 and professional income at Rs.3,100. The Income-tax Officer determined that assessee's salary at Rs.2,000 and net income from practice at. Rs.8,000. Thereto an addition of Rs.26,016 was made :is an income from unexplained sources. The reason, which led the Income Tax Officer for making the addition as income from unexplained source was that in three different bank accounts, the assessee's total deposits were at Rs.54,720. The assessee's explanation regarding these deposits did not find favour with the Income Tax Officer who allowed a credit of Rs.28,704 and made an addition of balance amount of Rs.26,016 as income from unexplained sources.
2. On appeal the learned Assistant Appellate Commissioner after making good deal of discussion on the issue of addition of Rs.26,016 as unexplained investment, vacated the Income Tax officer's order directing de novo decision after affording proper opportunity to th e assessee.
3. The assessee's Authorised Representative contended that neither any notice was issued by the Income Tax officer showing intention, of making addition of Rs.26,016 as income from unexplained sources, nor prior approval of the learned Inspecting Assistant Commissioner was obtained. The Departmental Representative tried to rope the legal objection raised by the assessee's Authorised Representative by contending that the assessment order, as a whole, having been approved by the learned Inspecting Assistant Commissioner, there was no legal requirement for seeking approval of the Inspecting Assistant Commissioner for making addition of any specific amount a; unexplained investment
4 After hearing the representatives of, the parties I feel no hesitation in accepting the legal objection raised by the assessee's Authorised Representative. For the year under review the return having been filed under the provisions of repealed Income Tax Act, any addition as unexplained investment could have been made under section 4 of the Act. The Income Tax Officer did not bother, to mention the sub-clause of section 4 of the Act under which the' addition was made as unexplained investment Another aspect of the matter is that approval of the assessment order, as a whole, is not sufficient approval of the amount to be added as unexplained investment. For making any addition under section A of the r-pealed Act, a show-cause notice to the assessee was a must and or) receipt of reply the Income Tax Officer was required to obtain prior approval' of the learned Inspecting Assistant Commissioner for making addition of any specific amount. In the facts and circumstances of the instant case the requirements of law having not been fulfilled, the addition of Rs.26,016 as made by the Income Tax Officer was illegal. The first appellate authority failed to appreciate the correct legal position. When the addition was found to be illegal it had to be deleted. There, was no occasion for setting aside -the assessment order on the issue t, while granting fresh lever in the hands of the department for filling in the lacuna of law as omitted in the earlier assessment. In these' circumstances the impugned orders are modified and the addition of Rs.26,016, as made by the Income Tax Officer, under the head incomer from unexplained sources, is deleted.
5. The appeal succeeds accordingly.
M.B.A./485/T. Appeal accepted.