Non-cooperation with Income Tax Assessment Proceedings, Relevant Details and Records Not Produced: ITAT Directs Re-Adjudication [Read Order]

The Indore bench of the Income Tax Appellate Tribunal ( ITAT ) has directed re-adjudication due to non-cooperation with income tax assessment proceedings and failure to produce relevant details and records.

The assessee has challenged the validity of assessment order passed by the AO being against non-existing entity during the financial year relevant for the assessment year under consideration Mr. Siddharth Mahajan representing the assessee has submitted that the AO has reopened the assessment under Section 148 to assessee the income on account of unexplained investment in purchase of land vide sale deed dated 11.10.2010 for consideration of Rs.30 lakhs. He has submitted that the assessee company was incorporated in the subsequent year vide certificate of incorporation dated 27.07.2011 placed at page no.13 of the paper book. The Ld. AR has submitted that the assessment framed by the AO for the year under consideration is not valid as the assessee company itself has come into existence on 27.07.2011.

On the other hand, Mr. Ashish Porwal, representing respondents has submitted that the land in question was purchased by the assessee and the sale deed is executed in the name of the assessee. Though the assessee has explained that the purchase consideration was paid by the Directors of the assessee company however, the AO noted from the bank account of the directors that cash was deposited before issuing cheques from the payment of the purchase consideration. Therefore, the creditworthiness of the directors of the assessee company was not proved by the assessee.

Further, the assessee has failed to produce the copy of bank account of Shri Kapil Dave director of the assessee to establish the source of Rs.5 lakhs paid in cash. The AO has further pointed out that the assessee has also not furnished the return of income of Shri Harishankar Bagora director of the assessee company to prove creditworthiness of the director therefore, the AO has made an addition on account of unexplained investment.

The two-member bench of B.M.Biyani ( Accountant member) and Vijay Pal Rao ( Judicial member) observed that the addition made by the AO since the assessee has not cooperated during the assessment proceedings and relevant details and records were not produced consequently, the AO has made the addition for want of the explanation, relevant details and record to explain the source of investment. Hence, in the facts and circumstances of the case, ITAT granted one more opportunity to the assessee to produce all the necessary details and evidence to explain the source of investment. Accordingly the issue of addition is remanded to the record of the AO for fresh adjudication after verification and examination of the relevant record to be filed by the assessee.  Accordingly, the appeal of the assessee was partly allowed for statistical purposes.

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