SUNILKUMAR SUBHASH BALWADA,MUMBAI vs. ITO WARD, - 1, PALGHAR

The Ld. AO has made addition of Rs. 25,71,658/- while passing assessment in the above appeal case as the appellant failed to produce any documentary evidence substantiating the sources of amount used for payment of credit card bill. Since the onus of proof was not discharged, additions were made by the Ld. AO. From the assessment order, it is seen that the appellant submitted a statement of income in which he has shown a gross turnover of Rs. 36 lakh and declared total ‘income from business’ as a percentage of the turnover under section 44AD of the Income Tax Act. As the appellant did not produce any details with regard to nature of business and the sources of payment of credit card bill, the Ld. AO made addition has above. Ld. CIT(A) confirmed the addition stating that the bank statement furnished by the appellant serves no purpose in establishing the nature and sources of the payments made to the credit card bill. Ld. CIT(A) has noted that the appellant received various payments from one Mr. Vishal Kannan Mudaliya before making payments to credit card bill. Ld. CIT(A) held that 2 Sunilkumar Subhash Balwada the appellant has not explained nature and purpose of these transactions and hence addition was confirmed made by the Ld. AO. Aggrieved by this addition, appellant filed appeal before the ITAT with following grounds of appeal :- Ground No. 1: Unexplained Source of Income Rs. 25,71,659/-: The learned assessing officer has grossly erred is not appreciating the facts that the amount of Rs. 25,71,659/- is paid through credit card shall be treated as turnover u/s 44AD of the Income tax act and as the assessee fall under section 44AD, the additional documentary evidence shall not be called for as per the provisions of section 44AA of the Income Tax Act.

Additional Ground No. 1: Assessment order passed and Addition made of Rs. 25,71,658/- was bad-in-law: On the fact and circumstances of the case, the Learned Assessing Officer has erred in making the addition of Rs. 25,71,658/- as it was mentioned in the Assessment order that the "addition has been made as per Para 4.5 above", however, the said paragraph was not there/available in the Assessment Order or Show-Cause Notice. Further, it is also evident that the section under which the addition has been made was also not mentioned in the said Assessment order and therefore, as it clearly evident from the assessment order that it lacks clear references to the specific sections under which the addition is made, it raises doubts about the intention and rationale behind the additions. Such an order can no longer be considered a "speaking order and provides room to surmises. Such an order cannot be held to be valid in the eyes of law.