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Facts
The assessee filed an ITR and later a revised return for AY 2017-18, declaring an income of Rs. 10,67,540/-. During scrutiny, the AO discovered credit card payments totaling Rs. 32,97,500/-. The assessee could only explain Rs. 12,11,289.98/-, leading the AO to add the remaining Rs. 20,86,210.02/- as undisclosed income, an addition subsequently confirmed by the CIT(A).
Held
The Tribunal noted the assessee's primary contention that the credit cards linked to the unexplained expenses did not belong to them. It set aside the CIT(A)'s order and remanded the matter back to the AO to conduct a fresh examination to determine the ownership of the credit cards and provide the assessee a fair opportunity to present all relevant documents.
Key Issues
1. Whether the credit cards through which unexplained expenses of Rs. 20,86,210/- were incurred truly belonged to the assessee. 2. Whether the said amount should be treated as undisclosed income if the assessee fails to substantiate the source of funds or deny ownership of the cards.
Sections Cited
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Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA
आदेश / O R D E R The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 26.11.2024 passed for Assessment Year 2017-18. 2. The only issue raised by the assessee is with regard to sustenance of addition by the ld. CIT(A), NFAC made by the ld. Assessing Officer on account of difference of expenses explained by the assessee against the total expenses incurred by the assessee through credit card. 3. Brief facts of the case are that the assessee filed his original return of income for the Asst. Year 2017-18 on 08-06-2017, declaring a total income of Rs.10,67,540/-. He filed his revised return of income for the year on 03-08-2017, declaring a same total income of Rs.10,67,540/-. Nature of his business/income during the year was mainly income from company trading besides some other income during the year. The case of the assessee was selected for scrutiny under CASS in Limited Category.
2 ITANo.2621/KOL/2024 Statutory notices were issued and served on the assessee. The assessee has filed some documents on two instances however, thereafter the assessee was continuously non-compliant during course of assessment proceedings as has been stated by the Assessing Officer in the assessment order at para 2.1.1. Accordingly, from the departmental online record during F.Y.2016-2017, the Assessing Officer found that the assessee has made the following payments through credit cards :- Last Date of Identification No. Amount Transaction 31-03-17 4386280017116210 4,96,000 29-03-17 4196074957043038 14,25,000 31-03-17 5546377012526470 65,500 31-03-17 4386280012220820 5,76,000 31-03-17 4412850067930000 7,35,000 Total 32,97,500 4. However, on perusal of the ledger copy relating to M/s Arambagh Hatcheries Ltd. filed by the assesse during the course of assessment proceedings, the AO found that the company has paid total amount of Rs.12,11,289.98 on the different dates as shown in the table incorporated by the Assessing Officer in his assessment order at para 3.1.3. Therefore, the Assessing Officer was of the view that the assessee could not explain the details and source of fund of expenses of balance amount of Rs.20,86,210,02 and added the same to the total income of the assessee treating the same as undisclosed income.
In appeal, the ld.CIT(A), NFAC confirmed the addition made by the Assessing Officer holding that the assessee could not explain nor substantiate his claim before either of the authorities.
Now, the assessee is in further appeal before the Tribunal.
3 ITANo.2621/KOL/2024 7. Ld. Counsel for the assessee submitted that the addition as made by the AO of Rs.20,86,210/- on account of payments made through credit cards of the assesse is arbitrary as the credit cards disputed by the department are not belonged to the assesse. He pleaded that the assesse has already denied before the ld. CIT(A) that the credit card numbers shown by the department are not related to the assesse. The AO has not disputed the expenses incurred by the assesse through the credit cards related to the assesse only. Therefore, he pleaded that the addition made by the AO and confirmed by the ld.CIT(A) is not sustainable and prayed for one more opportunity to substantiate its claim before the AO.
On the other hand, the learned Departmental Representative submitted that before the AO the assesse could not explain about the repayment of loans through credit cards for an amount of Rs.20,86,210/-. The assesse also failed to explain the same before the ld. CIT(A). Therefore, he pleaded to confirm the orders passed by both AO and ld. CIT(A).
After hearing the submission of the parties and perusing the material available on record, I find that the main contention of the assesse is that the above mentioned credit cards are not pertaining to the assesse. The AO has not considered this aspect and erroneously made an addition of Rs.20,86,210/-. Therefore, he pleaded for one more opportunity before the AO to examine this issue afresh. After considering the facts and circumstances, I am of the view that it is a fit case to remand back the issues involved in the present appeal to the file of AO to examine as to whether the credits cards are belonged to the assesse or not. If it is not belonged to the assesse, the assesse is entitled for relief. Thus, the order of the ld. CIT(A) is set aside and the matter is remanded