Top Stories Inability to prove Unexplained Cash Credit u/s 69A of Income Tax Act: ITAT remits issue to AO for Fresh Consideration [Read Order] Assessing Officer has made the addition towards capital introduction for want of proper evidence By Arjun A P – On November 17, 2024 2:59 pm – 3 mins read The Bangalore Income Tax Appellate Tribunal (ITAT) remitted the issue to the Assessing Officer (AO) for fresh consideration as the Assessee has failed to prove the unexplained cash credit under section 69A of the Income Tax Act, 1961. The Current Appeal was filed by the assessee, Ananda Reddy Nagaraja Reddy against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2014-15. The Facts of the case is the assessee is engaged in the business of trading of jelly sand and cement, in addition to manufacture of bricks. The Assessee filed the Return of Income on 18.10.2014 declaring income of Rs.26,13,110. The case was selected for scrutiny and notices were issued to assessee.

Get a Copy of Direct Taxes Law and Practices Including Tax Planning with Free E-Book Access, Click Here During the proceedings, the assessee was asked to explain the introduction of capital of Rs.2,24,37,380, for which assessee submitted that the source of capital is from sundry creditors to whom advances were paid earlier for supply of certain items like jelly sand and advances were returned back. The Confirmation from the said creditors was also produced. But the Assessing Officer (AO) noted that these advances are not appearing in the balance sheet. In reply the assessee submitted that introduction of said capital was from his own account and hence it was not reflected in the balance sheet. But AO noted the lack of evidentiary value to substantiate the claim following which assessee was given opportunity and for want of explanation with documentary evidence, the said capital of Rs.2,24,37,380 was treated as unexplained cash credit u/s. 69A of the Act and added back into the total income of the assessee. Get a Copy of Direct Taxes Law and Practices Including Tax Planning with Free E-Book Access,

Aggrieved by such order, the assessee filed an appeal before the First Appellate Authority (FAA). After several opportunities were granted for the assessee and assessee still requested for the adjournment. The case was fixed for hearing on 15.07.2024, but due to the non-compliance from the assessee and after providing a number of opportunities, the appeal of assessee was dismissed. Aggrieved by which the assessee approached ITAT. Shri Guruswamy, ITP,the AR stressed over the submissions made before the lower authorities and submitted that during the course of assessment proceedings, the assessee was not provided with proper opportunity to substantiate his claim and even after the request for adjournment was filed before FAA, it was also dismissed. The AR requested that if a chance is given to the assessee, he undertook to respond to notices and substantiate the case of the assessee with evidence before the lower authorities. Shri Chinmay Anand Jain, Jt.CIT, the Department Representative (DR) relied on the order of lower authorities and submitted that even after being provided with various opportunities the assessee was unable to represent his case with credible evidence so DR objected for sending back the matter to lower authorities. Get a Copy of Direct Taxes Law and Practices Including Tax Planning with Free E-Book Access

The Bangalore ITAT Bench comprising Prakash Chand Yadav (Judicial Member) and Laxmi Prasad Sahu (Accountant Member) observed that AO has made the addition towards capital introduction due to the want of proper evidence. Even after ample opportunities were provided to assessee still there was no compliance from his side. So as per submissions made by the AR the amount contributed is out of his own capital, but this fact has not been verified for want of proper evidence, the court noted. So the trubunal held that in the interest of justice, the court would remit the issue to the Assessing Officer for fresh consideration and decision as per law, subject to payment of costs of Rs.10,000/- (Rupees Ten Thousand Only). And directed the assessee to file necessary documents that would be essential and required for substantiating his case and proper adjudication by the revenue. Needless to say reasonable opportunities shall be given to the assessee and is directed to cooperate with the proceedings and in case of further default, he shall not be entitled to any leniency. The appeal of assessee is allowed for statistical purposes, the tribunal added. To Read the full text of the Order