2021 (10) TMI 160 - AT - Income Tax

Unexplained investment u/s 68 - Adoption of additional evidences - HELD THAT - Loan creditors are having creditworthiness and are capable of advancing the loans to the assessee; however, the additional evidences require factual verification. Considering the fact that the additional evidences sought to be furnished before us will have a crucial bearing on deciding the disputed issue, we are inclined to admit them - since the departmental authorities did not have an opportunity to verify them, adhering to the rules of natural justice, the departmental authorities have to be given an opportunity to verify them. It is also a fact on record that certain additional evidences furnished before learned Commissioner (Appeals) were not accepted purely on technical ground - we are inclined to restore the issue to the file of learned Commissioner (Appeals) for not only considering the additional evidences filed before him but also before us, as well. We further direct learned Commissioner (Appeals) to conduct adequate enquiry based on the additional evidences, either by himself, or get it done through the assessing officer by way of remand proceedings. Based on such enquiry, learned Commissioner (Appeals) must decide the issue through a speaking order after due opportunity of being heard to the assessee. Grounds are allowed for statistical purpose.

Summary

Issues:
Addition made as unexplained investment under section 68 of the Income-tax Act.

Analysis:
The appeal pertains to an addition of ?1,40,00,000 as unexplained investment under section 68 of the Income-tax Act for the assessment year 2013-14. The assessee, a resident individual engaged in the business of builders and developers, had shown unsecured loans from various parties in the return of income. The assessing officer observed discrepancies in the documentation provided by the assessee regarding the loans received. Despite the assessee's submissions and additional documentary evidence, the assessing officer treated the loans from specific lenders as unexplained cash credit and added them to the assessee's income.

The counsel for the assessee contended that the loans were obtained from acquaintances for business purposes and provided substantial documentary evidence to support the genuineness of the transactions. The counsel argued that the assessing officer and the Commissioner of Income-tax (Appeals) did not adequately consider the additional evidence submitted. The counsel sought to introduce further evidence to establish the legitimacy of the loan transactions.

The departmental representative maintained that the assessee had failed to sufficiently prove the creditworthiness of the lenders and the authenticity of the transactions before the tax authorities. However, considering the new evidence presented before the Tribunal, the departmental representative suggested that the issue be remanded to the assessing officer for a thorough examination.

After considering the arguments and reviewing the evidence, the Tribunal found that the assessee had received loans through banking channels from known individuals. The Tribunal noted that the assessee had provided documentary evidence to establish the identity of the creditors and the genuineness of the transactions. The Tribunal acknowledged the additional evidence submitted by the assessee and deemed it crucial for resolving the dispute. In the interest of natural justice, the Tribunal decided to admit the additional evidence and remand the issue to the Commissioner of Income-tax (Appeals) for further examination. The Commissioner of Income-tax (Appeals) was directed to conduct a detailed inquiry based on the new evidence and make a decision after providing the assessee with a fair opportunity to present their case.

In conclusion, the appeal was allowed for statistical purposes, and the issue was remanded to the Commissioner of Income-tax (Appeals) for a thorough review based on the additional evidence presented.