2023 (12) TMI 642 - AT - Income Tax

Set off of the assessee s net loss against the addition made u/s 68 - NFAC/Ld.CIT(A) after setting off the net loss of the assessee, the balance amount addition sustained by ld CIT(A) - as submitted balance amount is a very small addition, which is covered by the exempted limit i.e., maximum amount which is not chargeable to tax of Rs. 2.50 lakh , as the assessee did not file the return of income - HELD THAT - NFAC/Ld.CIT(A) has sustained the addition - further note that maximum amount which is not chargeable to tax is to the tune of Rs. 2.50 lakh and after deducting this amount of Rs. 2.50 lakh, there is hardly any addition remains. Also find that assessee has submitted sufficient evidences to prove the genuineness of the transaction. The whole exercise is to be based on facts and it is the duty of the assessing officer to marshal all the facts and come to a logical conclusion about the income of the assessee for the year under consideration. For this reliance is placed on the Judgment of Hon'ble Supreme Court in case of Sreelekha Bannerjee 1963 (3) TMI 47 - SUPREME COURT wherein it was held that before the department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence, which it has in possession Therefore, considering the above facts and circumstances, we delete the balance addition - Decided in favour of assessee.

Summary

Issues:
1. Reopening of assessment under section 147 of the Income Tax Act, 1961.
2. Addition of Rs. 13,79,000/- under section 68 of the Income Tax Act, 1961 on account of unexplained cash credit.
3. Addition of Rs. 11,35,468/- as unexplained investment under section 69 of the Income Tax Act, 1961.

Reopening of Assessment under Section 147:
The appeal pertains to Assessment Year (AY) 2008-09 and challenges the order passed by the National Faceless Appeal Centre, Delhi, which arose from an assessment order passed by the Income Tax Officer, Surat. The assessee did not file the original return of income for AY 2008-09, leading to the case being reopened under section 147 of the Act. The Assessing Officer issued a notice under section 148, but the assessee did not file the return of income.

Addition of Unexplained Cash Credit:
During the assessment year in question, the assessee deposited Rs. 13,79,000/- in a savings bank account. The Assessing Officer, after verifying the bank statement, noted the cash deposits and requested the assessee to explain the transactions. As the assessee did not provide a reply, the Assessing Officer treated the cash credit as income from undisclosed sources under section 68 of the Act. The NFAC/Ld.CIT(A) partly confirmed this addition but allowed set off of the appellant's net loss against the deemed income under section 68.

Addition of Unexplained Investment:
Additionally, the Assessing Officer observed share transactions of Rs. 11,35,468/- as per AIR information. Despite multiple opportunities, the assessee did not produce supporting evidence for these transactions, resulting in an addition under section 69 of the Act. The NFAC/Ld.CIT(A) partly confirmed this action as well.

Judgment:
After considering the arguments and evidence presented, the Tribunal found that the assessee had submitted sufficient evidence to prove the genuineness of the transactions. Citing the duty of the assessing officer to gather all facts and reach a logical conclusion, the Tribunal relied on a Supreme Court judgment to delete the balance addition of Rs. 3,15,047/-. Consequently, the appeal of the assessee was allowed, and the balance addition was removed.