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Facts
The assessee filed its return of income. Information suggested the assessee obtained accommodation entry through DD/Cheque/RTGS from Mehta Finance. A search and seizure action on Mehta Finance revealed they received cash from various persons, including the assessee, for which cheques were issued.
Held
The Tribunal noted that the assessee did not appear before the lower authorities. While the Assessing Officer (AO) invoked Section 68, the CIT(A) invoked Section 69. The Tribunal held that the AO quoting a wrong section is not fatal and the issue is regarding payment of cash outside books. The addition of Rs. 8,58,515/- was considered as unexplained investment.
Key Issues
Whether the addition made by the lower authorities for unexplained investment is justified. Whether the assessee was provided with adequate opportunity and documents.
Sections Cited
139(1), 132, 148, 142(1), 68, 251(1)(a), 69, 252(1A), 144, 69A
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Income Tax Appellate Tribunal, SMC-‘C’ BENCH : BANGALORE
Before: SMT. BEENA PILLAI
ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal arises out of order dated 25.03.2024 passed by NFAC, Delhi for A.Y. 2015-16 on following grounds of appeal.
Brief facts of the case are as under: 2.1 The assessee filed the return of income u/s. 139(1) on 29.09.2015 declaring total income of Rs.70,450/-. There was information available with the department that assessee obtained accommodation entry by way of DD / Cheque / RTGS from one Mehta Finance. It is noted that, there was search and seizure action u/s. 132 conducted on the premises of Mehta Soni group of cases at the premises of Mehta Finance Nava Bajar, Tower Road. It was found that Mehta Finance received cash from various persons against which DD/Cheques were issued and, the assessee was one such party from whom cash was received by Mehta Finance.
2.2 Based on the details that were submitted/gathered during the assessment proceedings of Mehta Finance of having received cash of Rs. 8,58,515/- from assessee in lieu of providing accommodation entry, the assessment was reopened in case of assessee u/s. 148 of the act on 31.03.2021. Statutory notices u/s. 142(1) was issued calling upon assessee to furnish explanation. The Ld.AO has noted that assessee failed to explain the cash transaction and therefore the same was added back in the hands of the assessee as unexplained u/s. 68 of the act.
Aggrieved by the order of the Ld.AO, assessee preferred appeal before Ld.CIT(A).
2.3 The Ld.CIT(A) after considering the facts noted that there was delay of 4 months in filing the appeal which stood condoned. Subsequently various notices were issued which was served on the mail ID as per form 35. However, none appeared nor any communication was furnished in respect of the same. The Ld.CIT(A) thus upheld the addition made by the Ld.AO. However noted that the Ld.AO quoted a wrong section in the assessment order which is not fatal to the assessee.
2.4 The Ld.CI(T(A) confirmed the addition made by the Ld.AO by invoking section 69 of the act by observing as under: “6.3 Grounds no. 4 to 9 relate to the addition of Rs. 8,58,515/- u/s 68. The AO has referred to information received during the search in the case of Mehta Finance
Page 6 of Shri Dipak Rasiklal Mehta mentioned the appellant as one of the parties from whom cash of Rs. 8,58,515/- had been received. Shri Dipak Mehta also stated that the DD cheque/RTGS was issued as per the directions of the person who came with the cash. There is clear cut evidence that cash of Rs. 8,58,515/- had been received from the appellant, which represents unexplained investment of the appellant. In the order the AO has mentioned section 68. As against this from the perusal of the order it is clear that the evidence was with regard to payment of cash to the entry provider. The assessee has contended against the reliance of the AO on section 68. I hold that merely quoting a wrong section in the order by the AO is not fatal to the assessee and no relief is due to the assessee on account of the mistake made by the AO is quoting section 68 instead of 69. The issue is payment of cash outside the books to Shri Dipak Mehta and not receipt or credit on this amount in the books. Thus the amount of Rs. 8,58,515/- is liable to be taxed as unexplained investment during the year under consideration. On the issue of supplying of copy of material and cross examination no evidence has been led in the appeal that such a request was even made during the assessment proceedings. The addition of Rs. 8,58,515/- is hereby upheld and grounds no. 4 to 9 are dismissed.” 2.5 Aggrieved by the order of Ld.CIT(A), assessee is in appeal before this Tribunal.
At the outset, the Ld.AR submitted that, no notice u/s. 252(1A) was issued to assessee intimating the change of section under which the addition was confirmed by the Ld.CIT(A). The Ld.AR also submitted that he does not have any knowledge about the said finance company who is alleged to have issued cheques / DD/ RTGS against the cash that is allegedly have been found to be paid by assessee.
3.1 The Ld.AR submitted that there is no sworn statement that was tendered to the assessee, based on which the addition is Page 7 of made in the hands of the assessee. The Ld.AR prayed that, the assessment order was passed u/s. 144 of the act, and therefore the evidences in support of assessee’s contention could not be filed during the assessment proceedings. He thus prayed for a remand of this matter for fresh consideration in the interest of justice.
3.2 On the contrary, the Ld.DR submitted that assessee has not appeared before both the authorities which shows the careless approach of assessee. He thus prayed for the addition to be confirmed.
3.3 In respect of the addition having sustained u/s. 69A of the act by Ld.CIT(A), the Ld.DR relied on the decision of Hon'ble Karnataka High Court in case of Fidelity Business Services India Pvt. Ltd. vs. ACIT in vide decision dated 23.07.2018 wherein a view has been taken that the Tribunal has powers to sustain the addition made u/s. 69A of the act which was changed by the Ld.CIT(A).
I have given a careful consideration of the rival submissions of both sides based on the record placed before me. I am of the view that the impugned addition can be examined within the parameters of section 69A of the act as that would be the proper provision of law. I agree with the decision relied by the Ld.DR squarely applies to the facts of the present case.
Page 8 of 4.1 Admittedly assessee has not appeared before both the authorities below. However, justice needs to be substantially rendered. In the interest of justice, we remit the issue back to the Ld.AO with the direction to examine the issue afresh and we also direct that the assessee has to explain the nature/source of credits appearing in the bank statement of assessee by way of supportive documents. I also direct that the Ld.AO may afford the assessee right to cross examine the persons from whom information was received, based on which the impugned addition was made in the hands of assessee. Needless to say that proper opportunity of being heard must be granted to the assessee. Accordingly, the grounds raised by the assessee stands partly allowed for statistical purposes. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 26th June, 2024.