INCOME TAX OFFICER -19(2)(2), MUMBAI vs. KAMLESH GUPTA AND SONS HUF, MUMBAI

The Assessee before the Ld. Commissioner challenged the aforesaid additions who though issued various notices to the Assessee, however, the Assessee except files responses on some of the dates, made no compliance. The Ld. Commissioner noticed the following facts :

The Revenue Department, being aggrieved, is in appeal before us.

We have heard the parties and perused the material available on record and given thoughtful consideration given thoughtful considerations to the rival contention of the parties and peculiar facts and circumstances of the case. We are in agreement with the Ld. Commissioner in concluding that addition on the opening balance cannot be made in the current assessment year as it is a well settled law that addition u/s 68 of the Act can be made only during the year in which such credit has been received. We further observe that the Ld. Commissioner while directing the AO to /M/2024 & M/s. Kamlesh Gupta and Sons HUF verify the opening balance of unsecured loans also consciously clarified that all fresh unsecured loans during the assessment year under consideration including those representing secured up loans shall be brought to tax u/s 68 of the Act as the Assessee has not discharged the onus of proving the identity, financial capacity and genuineness of the loan parties. We even otherwise do not find any reason/material to contradict the findings of the Ld. Commissioner in directing the AO as such. Hence, the appeal filed by the Revenue Department stands dismissed.

Coming to the appeal filed by the Assessee, we observe that the AO has also made the addition of Rs.79,14,292/- being difference between the interest paid or borrowed capital and investment income and added the same to the income of the Assessee u/s 36(1)(iii) of the Act by observing and concluding as under :

The Assessee, being aggrieved, also challenged this addition before the Ld. Commissioner and during the appellate proceedings submitted /M/2024 & M/s. Kamlesh Gupta and Sons HUF several documents along with application for submission of additional evidence under rule 46A of the Income Tax Rules, 1962 (in short ‘the Rules) on 22.12.2023.

The Ld. Commissioner though examined the admissibility of the evidence u/r 46A of the Rules, however, upheld the addition of Rs.79,14,292/- by observing as holding mainly as under:

The Assessee, being aggrieved, is in appeal before us. The Ld. Counsel for the Assessee at the outset has claimed that due to various circumstances, the Assessee was prevented from submitting its response in the assessment proceedings as the Assessee has not received any notices allegedly issued by the AO, which resulted into non-compliance by the Assessee. However the Ld. Commissioner did not accept the claim of the Assessee and rejected the documents/ evidence without being admitting the same. Though the evidence is essential for proper and just decision of the case and therefore for substantial justice, may be by imposing reasonable cost, direction may be given to the Ld. Commissioner to consider the evidence.

On the contrary, the Ld. DR refuted the claim of the Assessee.

We have heard the parties and given thoughtful considerations to the rival claims of the parties and the peculiar facts and circumstances of the case. We observe that the Ld. Commissioner has duly taken into /M/2024 & M/s. Kamlesh Gupta and Sons HUF consideration the aforesaid reason given by the Assessee and refused to entertain the evidence by observing and holding as under “The Assessee is making an incorrect statement, as in the statement of facts the Assessee has admitted that all the notices were subsequently downloaded from the e-filing portal by the tax consultant. Thus there has been valid service of all electronic notices as envisaged in section 282 of the Act. The Assessee cannot be absolved his responsibility to respond to statutory notices on the plea of ignorance and negligence. The Assessee was aware of the fact that the e-mail address used in the return of income was that of her husband. Therefore he is not satisfied that the Assessee had sufficient cause which prevented him from furnishing the relevant details before the AO. It is also not a case that the AO refused to admit the evidence or sufficient opportunities were not given by the AO during the course of assessment proceedings”.

In the result, the appeal filed by the Revenue Department stands dismissed, whereas the appeal filed by the Assessee stands allowed for statistical purposes.