2022 (7) TMI 495 - AT - Income Tax

Unexplained investment - Unsecured loans - HELD THAT - It is apparent from the records that the assessee is given many opportunities to substantiate it s case. But the assessee failed to comply with the notices and appear before the Tribunal. Hence, we are of the view that the assessee is not willing to pursue it s case. Accordingly, we allow the appeal of the revenue on this ground.

Summary

Issues:
1. Unexplained investment of Rs.4,85,85,795 under section 69 of the IT Act.
2. Acceptance of additional evidence of unsecured loans amounting to Rs.61,00,000 during appellate proceedings.

Issue 1: Unexplained Investment of Rs.4,85,85,795

The appeal was filed by the revenue against the CIT(A)'s order regarding the addition of Rs.4,85,85,795 as unexplained investment under section 69 of the IT Act for the A.Y. 2016-17. The AO had made the addition based on seized material and a sale agreement, claiming that the assessee had paid more than the recorded consideration for the purchase of a rice mill. The assessee denied this, stating they paid only the registered value. The AO found discrepancies in bank transactions and unexplained deposits, leading to the addition. The CIT(A) deleted the addition, noting the lack of proof of additional payments by the assessee beyond the recorded consideration. The Tribunal allowed the revenue's appeal as the assessee failed to substantiate its case, indicating a lack of willingness to pursue the matter.

Issue 2: Acceptance of Additional Evidence of Unsecured Loans

The second issue pertained to unsecured loans of Rs.61,00,000, treated as unexplained credits under section 68 of the IT Act for the A.Y. 2016-17. The AO found discrepancies in the details provided by the assessee regarding the loan creditors' identity and creditworthiness. The CIT(A) overturned the addition, citing confirmation letters, income tax returns, and banking transactions as evidence of the loans' legitimacy. The Tribunal upheld the revenue's appeal due to the assessee's failure to substantiate the loan details, indicating a lack of interest in pursuing the matter. Consequently, the addition of unexplained credits was reinstated.

In conclusion, the Tribunal allowed the revenue's appeal concerning both the unexplained investment and unsecured loans, as the assessee failed to provide sufficient evidence and did not actively participate in the proceedings. The cross objections filed by the assessee were dismissed as a result of the revenue's appeal being allowed.