2015 (7) TMI 987 - AT - Income Tax

Unexplained investment - assessee has taken a new stand at the time of hearing by stating that the amounts of investment made by the assessee during the years under consideration and treated as unexplained by the A.O. were actually sourced from the funds available with assessee s HUF - Held that - Find merit in the arguments of the learned D.R. that the new stand taken by the Ld. Counsel for the assessee by attempting to explain the source of investments made by the assessee in his individual capacity as the funds available with the HUF cannot be entertained at this stage. First of all, this explanation was not offered by the assessee either before the A.O. or before the Ld. CIT(A) and in the absence of any reasons given by Ld. Counsel for the assessee to show what prevented the assessee to offer this explanation before the authorities below, the same cannot be entertained at this stage during the course of proceedings before the Tribunal. Moreover, the documents filed by the Ld. Counsel for the assessee in support of the new stand taken by him constitute additional evidence and there is no application filed by him seeking admission thereof as required by Rule 29 of ITAT Rules, 1963. Furthermore, as rightly contended by the Ld. DR, these documents filed by the assessee for the first time before the Tribunal is not a reliable evidence inasmuch as the computation of total income of the HUF is filed for A.Y. 2011-2012 and in the absence of either the computation of total income for the relevant year or even the copy of balance sheet, the availability of funds with the HUF cannot be ascertained merely on the basis of bank statement showing some cash withdrawals. As a matter of fact, the HUF is stated to be in the business of sale of packaging wooden boxes and even if it is presumed for the sake of argument that the credits appearing in the bank account represent sale proceeds of the said business, the withdrawals are generally required to be utilized for making corresponding purchases. A copy of the bank account showing some withdrawals alone therefore cannot establish the availability of funds with the HUF at the relevant time unless it is supported by a balance sheet of the HUF. Therefore decline to entertain the new stand taken on behalf of the assessee for the first time before the Tribunal and since the same, in any case, is not acceptable even on merit on the basis of documents filed by the Ld. Counsel for the assessee in support, find no infirmity in the impugned orders of the Ld. CIT(A) confirming/sustaining the additions made by the A.O. in both the years under consideration to the total income of the assessee treating the corresponding investments as unexplained. - Decided against assessee.

Summary

Issues:
- Disputed additions to total income for A.Ys. 2007-2008 and 2008-2009 based on unexplained investments.
- New explanation by the assessee regarding the source of investments sourced from the HUF.

Analysis:
1. The appeals filed by the assessee challenged the additions made by the A.O. to the total income for A.Ys. 2007-2008 and 2008-2009. The A.O. added amounts of Rs. 2,80,000, Rs. 5,00,000, and Rs. 5,05,620 based on unexplained investments found during search and seizure actions. The Ld. CIT(A) confirmed these additions as the assessee failed to provide satisfactory explanations for the sources of these investments.

2. During the Tribunal hearing, the assessee introduced a new explanation, claiming the investments were sourced from the funds of the HUF engaged in a different business. The Ld. Counsel submitted documents supporting this claim, including the computation of income of the HUF for A.Y. 2011-2012 and bank account statements showing withdrawals in 2007. The D.R. objected to this new stand, arguing it was not presented earlier and lacked sufficient evidence for the relevant assessment years.

3. The Tribunal rejected the new explanation by the assessee, stating it was not raised before the A.O. or the Ld. CIT(A), and the documents provided were not reliable evidence for the relevant years. The Tribunal found no grounds to accept the new stand as it constituted additional evidence and was not formally submitted as required by ITAT Rules, 1963. The absence of the HUF's balance sheet and relevant income computations for the disputed years further weakened the credibility of the new explanation.

4. Consequently, the Tribunal upheld the decisions of the Ld. CIT(A) to confirm the additions made by the A.O. for both A.Ys. 2007-2008 and 2008-2009. The Tribunal dismissed the appeals of the assessee, emphasizing that the new explanation regarding the source of investments from the HUF could not be entertained due to procedural and evidentiary shortcomings.

5. In conclusion, the Tribunal's judgment maintained the additions to the total income of the assessee for the relevant assessment years, emphasizing the importance of presenting credible evidence and explanations at each stage of the assessment process to support claims and refute additions made by tax authorities.