2022 (12) TMI 1014 - AT - Income Tax

Addition u/s 69A/68 - unexplained credit - Onus to prove - CIT(A) treated the addition as unexplained money u/s 69A and confirmed the addition - HELD THAT - Section 68 of the Act deals with unexplained Credit in the books of the assessee and section 69A of the Act deals with unexplained money, bullion, jewellery or other valuable article . Both are entirely different. Though the AO has not mentioned the section 68 of the At in his order, the very fact that he calls it unexplained credit and not unexplained money as done by the ld. CIT(A), while he invoked section 69A of the Act, it proves that the AO invoked section 68 of the Act. We find merit into the contention of assessee that there is no power conferred upon the ld. CIT(A) to assess a particular item under different provision of the Act what the AO had done without giving a specific notice to the assessee regarding such action. Law does not permit for such change of provision of law. As per section 250 of the Act, the ld. CIT(A) is empowered to make further inquiry as he thinks fit or may direct the Assessing Officer to make further inquiry and report to the ld. CIT(A). As per section 251(1)(a) of the Act, in appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment, but there is no such power provided by the law that ld. CIT(A) could change the provision of law qua the item of which assessment was made. Therefore, in the absence of such power, CIT(Appeals) could not have treated the addition made under section 69A of the Act. Therefore, the addition made by the ld. CIT(A) under section 69A of the Act is liable to be deleted. AO found credit in the bank statement and the assessee s husband Shri S. Sekar has furnished confirmation by way of duly notarized affidavit, the assessee has discharged the onus cast upon her. On perusal of the orders of authorities below, both the AO and the CIT(A) failed to discharge their onus by getting the details from the bank under section 133(6) of the Act. Considering the entire facts and circumstances of the case, the addition made by the ld. CIT(A) under section 69A of the Act is deleted.Appeal filed by the assessee is allowed.

Summary

Issues: Delay in filing appeal due to Covid-19 pandemic, Addition of unexplained credit under different sections of the Income Tax Act, Failure to discharge onus by authorities, Power of CIT(A) to change provision of law in assessment.

1. Delay in filing appeal due to Covid-19 pandemic:
The appeal was delayed by 248 days due to the Covid-19 pandemic. The delay was condoned, and the appeal was admitted for adjudication.

2. Addition of unexplained credit under different sections of the Income Tax Act:
The Assessing Officer made an addition of Rs. 6,00,000 as unexplained credit in the bank account under section 147 of the Income Tax Act. The ld. CIT(A) confirmed this addition under section 69A of the Act. However, it was argued that the ld. CIT(A) erred in adding the amount without considering the confirmation provided by the assessee's husband. The Tribunal found that the Assessing Officer invoked section 68 of the Act by referring to the addition as "unexplained credit," and not "unexplained money" as done by the ld. CIT(A) under section 69A. The Tribunal held that the ld. CIT(A) did not have the power to assess a particular item under a different provision without giving specific notice to the assessee, and as such, the addition under section 69A was deemed inappropriate and was deleted.

3. Failure to discharge onus by authorities:
Both the Assessing Officer and the ld. CIT(A) failed to discharge their onus by not obtaining details from the bank under section 133(6) of the Act. The Tribunal noted that the assessee had provided confirmation from her husband, thereby discharging the onus cast upon her.

4. Power of CIT(A) to change provision of law in assessment:
The Tribunal emphasized that the ld. CIT(A) does not have the power to change the provision of law regarding an item of assessment without specific notice to the assessee. Section 250 of the Act empowers the ld. CIT(A) to make further inquiries or direct the Assessing Officer to do so, but changing the provision of law without notice is not permitted. The Tribunal held that the ld. CIT(A) could not have treated the addition under section 69A of the Act, and therefore, the addition was deleted.

In conclusion, the Tribunal allowed the appeal filed by the assessee, deleting the addition of Rs. 6,00,000 made under section 69A of the Income Tax Act. The order was pronounced on 21st December 2022 in Chennai.