2022 (12) TMI 284 - AT - Income Tax

Unexplained expenditure on commission - addition made on account of unexplained income being the commission earned for giving accommodation entry - HELD THAT - We find that the A.O. after examining the records and for the detailed reasons given in the assessment order has made the addition and the same was upheld by the Ld. CIT(A). When appeal is filed before the Tribunal by the assessee against the order of lower authorities, it is expected that the assessee may put-forth some documentary evidences in support of his contentions to decide the appeal as it is the duty of the assessee to lead evidence in support of it s claim and for the adjudicating authority to decide upon the sustainability of the claim or the basis of the evidence led by the parties before it. In the instant case, at the time of hearing, the assessee neither appeared nor brought on record any material to substantiate it s claim. We, therefore, find no fallacy in the findings of Ld. CIT(A) and accordingly, the order of the Ld. CIT(A) is upheld. Resultantly, the ground of appeal raised by the assessee before the Tribunal is dismissed.

Issues:
1. Validity of addition made on account of unexplained expenditure.
2. Failure of the assessee to appear during the hearing and consequences.
3. Upholding of the addition by the lower authorities.

Issue 1: Validity of addition made on account of unexplained expenditure:
The case involved the assessee company filing its return of income for A.Y. 2013-14, which led to scrutiny assessments due to search operations. The Assessing Officer (A.O.) noted unexplained expenditure and made additions to the total income of the assessee. The A.O. concluded that the company was used for channelizing unaccounted funds, resulting in the addition of Rs. 39,06,250 as commission earned for providing accommodation entries. The A.O. determined the total income of the company after making protective additions and additions for unexplained expenditure. The assessee appealed to the Ld. CIT(A) who partially granted relief. However, the Tribunal upheld the addition made by the A.O., stating that the assessee failed to provide any evidence during the appeal process to substantiate its claims. The Tribunal found no fault in the findings of the lower authorities and dismissed the appeal.

Issue 2: Failure of the assessee to appear during the hearing and consequences:
Despite the notice of hearing being issued to the assessee, no one appeared on behalf of the assessee, and no adjournment application was filed. The notice was returned by postal authorities with remarks indicating no person at the address. The Tribunal emphasized that merely filing an appeal is not enough; the assessee must actively pursue it by ensuring the correct address is provided for communication. Due to the failure of the assessee to update their address, the Tribunal proceeded ex-parte and disposed of the appeal after considering the submissions of the Learned DR and the material on record.

Issue 3: Upholding of the addition by the lower authorities:
The A.O. made additions to the total income of the assessee based on the findings of unexplained expenditure and use of the company for channelizing unaccounted funds. The Ld. CIT(A) upheld the additions made by the A.O. The Tribunal, after reviewing the orders of the authorities below and the available material on record, found no merit in the grounds raised by the assessee. The Tribunal noted the absence of the assessee during the hearing and the lack of documentary evidence to support their contentions. Consequently, the Tribunal upheld the order of the Ld. CIT(A) and dismissed the appeal of the assessee.

In conclusion, the Tribunal upheld the addition made on account of unexplained expenditure, emphasized the importance of active participation by the assessee during the appeal process, and dismissed the appeal due to the lack of evidence presented by the assessee.

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