2024 (6) TMI 423 - AT - Income Tax

Addition u/s 69C r.w.s.115BBE - unexplained/ unaccounted import expenditure - HELD THAT - Assessee had not recorded the impugned furniture import expenditure in the books of account. We wish to reiterate here that the furniture supplier herein is China based and therefore, we fail to comprehend as to how the assessee could get such huge imports items on credit without proving any past business relation even if it is accepted that no actual payment had been made. There is further no issue that custom duty (supra) stood duly paid on imports. These assessee s explanation herein fails to satisfy the test of human probabilities going by Sumati Dayal 1995 (3) TMI 3 - SUPREME COURT and CIT vs. Durga Prasad More 1971 (8) TMI 17 - SUPREME COURT We thus see no reason to accept the impugned identical sole substantive ground(s) raised in both these appeals. We further wish to make it clear that it was the bounden duty of the assessee only to plead and prove all the relevant facts including the import agreement conditions so as to buttress the point that in case of any eventuality of quality defect on the furniture items ought to be returned to the China based supplier. No such explanation, much less a satisfactory one, has come from the assessee s side all along. We thus affirm the learned lower authorities action deleting the impugned addition. Assessee s alternative prayer that we ought to grant relief of the foregoing custom duty component against the impugned addition(s) also carries no substance in light of the fact that the learned NFAC has already granted sufficient relief(s) to this effect in lower appellate proceedings. Coupled with this sec.69C proviso also bars such addition. The assessees instant alternative prayer is declined in very terms. Assessee appeal dismissed.

Summary

Issues:
1. Validity of sec.69C addition(s) in the case of Mrs. Moureen Camara and Mr. Melwyn Camara.
2. Challenge to the validity of sec.148/147 proceedings and transfer of Assessing Officer's jurisdiction.
3. Treatment of unexplained import expenditure addition(s) under sec.69C r.w.s.115BBE.

Analysis:

Issue 1: Validity of sec.69C addition(s) in the case of Mrs. Moureen Camara and Mr. Melwyn Camara

The appeals by the twin assessees contested the addition of Rs. 58,91,080 under sec.69C in the case of Mrs. Moureen Camara, linked to unaccounted imports added in Mr. Melwyn Camara's assessment. The contention was based on the Assessing Officer's action and the subsequent assessment in Mrs. Moureen Camara's hands. The Tribunal examined the common substantive ground challenging the addition, emphasizing the lack of recorded import expenditure in the books of account. The argument presented by the assessees regarding non-payment to the supplier and the need for further documentation was considered insufficient. The Tribunal upheld the lower authorities' decision, highlighting the failure to provide satisfactory evidence supporting the import agreement conditions and the absence of a valid explanation for the unrecorded expenditure.

Issue 2: Challenge to the validity of sec.148/147 proceedings and transfer of Assessing Officer's jurisdiction

Although the assessees questioned the validity of sec.148/147 proceedings and the transfer of the Assessing Officer's jurisdiction under sec.127 r.w.s.129 of the Act, these arguments were not pursued during the hearing. The Tribunal proceeded to address the substantive issue of sec.69C addition(s) raised by both assessees in their appeals.

Issue 3: Treatment of unexplained import expenditure addition(s) under sec.69C r.w.s.115BBE

The Tribunal reviewed the NFAC's detailed discussion affirming the sec.69C r.w.s.115BBE addition made during the assessments. It emphasized the crucial fact that the import expenditure was not recorded in the books of account, raising questions about the plausibility of substantial imports from a China-based supplier without a documented business relationship. The Tribunal found the assessees' explanations lacking in credibility, citing legal precedents to support its decision. Additionally, the Tribunal rejected the assessees' request to offset the custom duty component against the addition, as relief had already been granted in lower appellate proceedings and sec.69C proviso prohibited such adjustments.

In conclusion, the Tribunal dismissed the appeals of the twin assessees and rejected their stay applications, affirming the lower authorities' decisions regarding the sec.69C addition(s) and custom duty component.

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