2019 (5) TMI 1164 - HC - Income Tax

Addition u/s 69 - unexplained investment in the 5 Credit Cards - Assessee submitted that cards was used by his friend Mr.Neelamegan - Affidavit given by Mr.Neelamegan that he never used the Credit Cards and took loan from the Assessee - opportunity of cross examination is not provided - HELD THAT - The very nature of the transactions involved in the present case by allowing usage of 5 Credit Cards by the Assessee to his alleged friend Mr.Neelamegan and the credit entries given through various Firms named above, in the bank account of the Assessee, created suspicion in the mind of the Assessing Authority and therefore, they called upon the Assessee to prove such credit entries. Despite the opportunity, by way of second round of litigation, provided by the learned Tribunal, it appears that the Assessee failed to prove the credit entries. We are also unable to appreciate the usage of credit cards in the name of the Assessee by third party, which requires signatures of the person concerned using such Credit Cards. Apparently, therefore, all those transactions were undertaken by the third parties on behalf of the Assessee himself and therefore, the defence pleaded by the Assessee that they were allegedly loan taken by Mr.Neelamegan and repayments made by him to the Bank account of the Assessee does not inspire any confidence. In our opinion, therefore, the fact finding Body below have rightly added the said amount in the hands of the Assessee as unexplained income/expenditure of the Assessee. Such addition does not appear to be perverse requiring our consideration u/s 260A. The Appeal is dismissed.

Summary

Issues:
1. Whether the Tribunal was correct in upholding the decisions of the lower authorities without providing an opportunity for cross-examination to the Assessee?
2. Whether the Tribunal was correct in upholding the assessment order when the Deponent reversed his version in an Affidavit, despite being denied cross-examination by the Assessing Officer and CIT(A)?

Analysis:

Issue 1:
The Tribunal directed the Assessing Officer to re-examine the explanation submitted by the Assessee regarding the usage of credit cards by his friend, Mr.Neelamegan. However, Mr.Neelamegan denied using the credit cards and emphasized that it is not possible to use a credit card as a third party. The Assessee failed to provide necessary details and proof before the CIT(A), leading to the confirmation of the addition. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Assessee's appeal. The Assessee's claim that Mr.Neelamegan used his credit card was not proven, resulting in the addition of unexplained expenditure as income from other sources under section 69 of the Act.

Issue 2:
The Assessee contended that Mr.Neelamegan used his credit cards and repaid the amounts through various modes. However, Mr.Neelamegan denied using the credit cards and stated that the transactions were related to loan repayments. The Assessing Authority disbelieved the Assessee's version based on Mr.Neelamegan's affidavit. The Tribunal found that the Assessee failed to prove the credit entries, leading to the additions in the assessment. Despite the opportunity for a second round of litigation, the Assessee could not substantiate the credit entries. The Tribunal upheld the additions as unexplained income/expenditure, as the transactions were suspicious and lacked adequate proof.

In conclusion, the High Court found no substantial question of law in the appeal. The transactions involving the usage of credit cards by a third party raised suspicion, and the Assessee failed to provide sufficient evidence to support the claimed credit entries. The Court upheld the decision of the lower authorities, considering the lack of proof regarding the transactions and the denial of credit card usage by Mr.Neelamegan. The appeal was dismissed as lacking merit, with no costs awarded.