2022 (12) TMI 1306 - AT - Income Tax

Addition u/s. 69A - accommodation entries received by the assessee in respect of his own unexplained money - HELD THAT - As no appearance was put up by the assessee in response to the notice u/s. 142(1) of the Act. Before the CIT(A) also instead of contending that the AO did not conduct independent enquiry and no details of money trail was referred, no evidence whatsoever were filed by the assessee except an affidavit and a bank statement. There were many opportunities given by the AO as well as CIT(A) but no evidences in support of claim of assessee were ever produced before both the authorities below. The provisions u/s. 69A requires explanation of assessee about the nature and source of acquisition of money and if any explanation offered by the assessee is not satisfactory in the opinion of AO, the money is deemed to be income of the assessee. Admittedly, as discussed above, no explanation was offered by the assessee in the assessment proceedings to the satisfaction of the AO and it is established that the AO framed assessment to the best of his judgment u/s. 144 - Therefore, the provisions u/s. 69A of the Act requires explanation by the assessee and when no such information offered by the assessee, we deem it proper in the interest of justice to remand the matter to the file of AO for its fresh verification. The assessee is liberty to file evidences, if any, in support of his claim. Thus, ground No. 2 raised by the assessee is allowed for statistical purpose.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Jurisdiction of AO under section 147 of the Act.
3. Addition made under section 69A of the Act.

Analysis:
1. The appeal was filed with a delay of 107 days, which was condoned due to a decision by the Hon'ble Supreme Court during the National Lockdown imposed because of the Covid-19 pandemic.
2. The challenge against the action of the Assessing Officer (AO) in assuming jurisdiction under section 147 of the Act was not pursued by the assessee, and hence, no adjudication was required on this ground.
3. The challenge against the action of the Commissioner of Income Tax (Appeals) [CIT(A)] in confirming the addition made by the AO under section 69A of the Act was extensively discussed. The AO reopened the assessment based on information that the assessee had credited an amount to a trader engaged in providing accommodation entries. The AO added this amount to the total income of the assessee under section 69A. The CIT(A) upheld the AO's decision due to lack of proper replies and supporting evidence from the assessee. The Tribunal noted that the assessee did not provide substantial evidence to counter the AO's findings. Consequently, the matter was remanded back to the AO for fresh verification, giving the assessee an opportunity to submit supporting evidence. The appeal was allowed for statistical purposes.

This judgment highlights the importance of providing sufficient evidence and explanations during assessment proceedings to counter additions made by the tax authorities under relevant sections of the Income Tax Act. It also underscores the significance of complying with procedural requirements and deadlines in filing appeals before the appellate authorities.