2025 (1) TMI 322 - AT - Income Tax

Addition u/s 69A - cash payment towards credit card purchases unexplained - HELD THAT - Where the assessee is found be the owner of any money, bullion, jewellery or other valuable articles and such money etc. are not recorded in the books of account, if any, maintained by him of any source of income and the assessee offers no explanation about the nature and source of acquisition of the money etc., or the explanation offered by him, is not satisfactory, in the opinion of AO, the money and the value of bullion, jewellery or other valuable articles may be deemed to be the income of the assessee for such year. In the present case, assessee has purchased the credit cards by making cash payments. It is, therefore, clear that assessee was owner of money (cash) which was used to make credit card purchases. However, he has not explained the nature and source of acquisition of such money, being cash - AO has added the same u/s 69A of the Act due to non-compliance by assessee to the statutory notices as well as the show cause notice. CIT(A) has rightly confirmed the addition because assessee did not attend before him or filed any written submission in support of the grounds raised before him. Before us also, the assessee has not filed any written submission in support of the grounds raised by him. Provisions of section 69A of the Act are clearly attracted to the facts of the instant appeal - Decided against assessee.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

Whether the addition of Rs. 6,16,142/- under Section 69A of the Income-tax Act, 1961, by the Assessing Officer (AO) was justified.
Whether the CIT(A) erred in partially confirming the AO's order regarding the unexplained cash payments made by the assessee towards credit card purchases.
Whether the procedural aspects, such as the non-attendance of the assessee and the absence of written submissions, impact the validity of the appeal.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification of Addition under Section 69A

Relevant Legal Framework and Precedents: Section 69A of the Income-tax Act, 1961, allows the income tax authorities to deem unexplained money, bullion, jewellery, or valuable articles as the income of the assessee if the assessee fails to provide a satisfactory explanation for their acquisition.
Court's Interpretation and Reasoning: The Tribunal upheld the AO's decision, emphasizing that the provisions of Section 69A were clear and applicable since the assessee did not explain the source of the cash used for credit card payments.
Key Evidence and Findings: The assessee made cash payments totaling Rs. 6,16,142/- for credit card purchases, which were not explained or recorded in the books of account. The AO issued multiple notices, none of which were responded to by the assessee.
Application of Law to Facts: The Tribunal found that the unexplained cash payments fell squarely within the ambit of Section 69A, as the assessee failed to provide any explanation for the source of the funds.
Treatment of Competing Arguments: The assessee did not present any arguments or evidence to counter the AO's findings. The Tribunal noted the absence of any representation or written submission from the assessee throughout the proceedings.
Conclusions: The Tribunal concluded that the addition under Section 69A was justified due to the lack of compliance and explanation from the assessee.

Issue 2: Procedural Aspects and Impact on Appeal Validity

Relevant Legal Framework and Precedents: The procedural aspect of non-attendance and lack of submission by the assessee is addressed by the principle that appeals can be decided based on available records if the appellant fails to participate actively.
Court's Interpretation and Reasoning: The Tribunal emphasized that adequate opportunities were provided to the assessee to present their case, but the assessee chose not to avail them.
Key Evidence and Findings: The record showed multiple notices issued to the assessee, none of which were responded to, leading to the decision based on existing records.
Application of Law to Facts: The Tribunal applied the principle that the absence of participation by the appellant allows the court to decide based on the merits of the available evidence.
Treatment of Competing Arguments: There were no competing arguments from the assessee due to their non-participation.
Conclusions: The Tribunal found no procedural irregularity in deciding the appeal based on the materials on record, given the assessee's non-compliance.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "Provisions of section 69A of the Act are clear. Where the assessee is found be the owner of any money, bullion, jewellery or other valuable articles and such money etc. are not recorded in the books of account, if any, maintained by him of any source of income and the assessee offers no explanation about the nature and source of acquisition of the money etc., or the explanation offered by him, is not satisfactory, in the opinion of AO, the money and the value of bullion, jewellery or other valuable articles may be deemed to be the income of the assessee for such year."
Core Principles Established: The judgment reinforces the applicability of Section 69A in cases where the assessee fails to explain the source of funds, and the procedural principle that appeals can be decided based on available evidence if the appellant does not participate.
Final Determinations on Each Issue: The Tribunal upheld the CIT(A)'s decision to confirm the AO's addition under Section 69A, dismissing the appeal due to the assessee's failure to provide any explanation or participate in the proceedings.

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