2016 (5) TMI 696 - HC - Income Tax

Addition u/s 69A - Held that - Assessee has no valid explanation regarding the source of his income for making gifts to the tune of ₹ 1.8 crores during the AY in question. The person he named as the source was an accommodation entry provider. The addition was made on substantive basis in the hands of Mr. Amar Khosla and on protective basis in the Appellant s hands. The addition in Mr Khosla s hands could not be sustained since the re-opening of his assessment was set aside on technical grounds. The Court is unable to find any legal infirmity in the impugned order of the ITAT sustaining the additions in the hands of the Appellant under Section 69A of the Act. No question of law arises for determination.

Summary

Issues: Delay in re-filing the appeal due to changed e-filing procedure, Addition under Section 68 of the Income Tax Act, 1961, Sustaining of addition under Section 69A of the Act by ITAT, Validity of ITAT's decision on sustaining addition under Section 69A.

Delay in re-filing the appeal:
The appellant sought condonation of a 521-day delay in re-filing the appeal, attributing it to the changed e-filing procedure. However, the court noted that similar applications by the Revenue had been rejected previously, emphasizing that adequate notice had been provided regarding e-filing requirements. The court concluded that the delay was not justified, as the change in procedure did not warrant such an extensive delay, ultimately dismissing the appeal on this ground.

Addition under Section 68 of the Income Tax Act, 1961:
The Assessing Officer had made additions in the appellant's hands on a protective basis under Section 68 of the Act, as the appellant failed to explain the source of a significant sum received as a gift. The Commissioner of Income Tax (Appeals) upheld this order, leading to an appeal to the ITAT. Despite the ITAT's dismissal of the appeal under Section 68, citing the absence of maintained books of accounts, the court found that unexplained money in the form of gifts justified the addition under Section 69A in the bank account.

Sustaining of addition under Section 69A of the Act by ITAT:
The appellant contended that the ITAT erred in sustaining the addition under Section 69A once Section 68 was deemed inapplicable. However, the court determined that the appellant lacked a valid explanation for the substantial gifts made during the assessment year, with the alleged source being an accommodation entry provider. The addition was made in the appellant's hands on a protective basis, as the addition in the recipient's hands was not sustainable due to technical reasons.

Validity of ITAT's decision on sustaining addition under Section 69A:
In analyzing the facts, the court found no legal flaw in the ITAT's decision to uphold the additions under Section 69A in the appellant's hands. Given the lack of a valid explanation for the substantial gifts and the questionable source of income, the court concluded that no legal issue merited further examination. Consequently, the appeal was dismissed based on the significant delay in re-filing and on the merits of the case, with no legal questions warranting consideration.