Addition of Unexplained Income based on Information from SEBI not valid in Absence of Opportunity to produce Evidence: ITAT [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has held that the addition of Unexplained income based on information from SEBI is not valid in absence of an opportunity to produce evidence.

Lilaben Bhagabhai Patel, the Assessee challenged the order dated 12.04.2019 passed by the CIT(A)-1, Ahmedabad for the Assessment Year 2010-11.  The assessee challenged the order Confirming Rs.8,41,993/- addition as unexplained income for loss for Rs.8,41,993/- as assessed by the Assessing Officer from the information called for u/s.133(6) vide letter dated 01.11.2017 from the NSE, Bombay and in response to which the details of share transaction in CD format received. 

The Department observed that the assessee has invested in share/mutual funds amounting to Rs.35,14,645/-. The assessee failed to file the return of income although the assessee’s income was taxable. The Assessing Officer observed that the assessee carried out share transactions through National Stock Exchange (NSE) for an amount of Rs.35,14,645/-. 

Since the assessee failed to furnish any supporting documents/evidence, the Assessing Officer called information under Section 133(6) of the Act from the National Stock Exchange, Bombay and observed that there was a loss of Rs.8,41,993/- in share trading business which was paid by the assessee whereas the assessee failed to prove the source for making the payment.  The addition of Rs.8,41,993/- was made as unexplained income.  The CIT(A) dismissed the appeal of the assessee.

The CIT(A) has categorically observed that the printout of share trading from the brokers related to the share transaction statement was unsigned documents and the Assessing Officer has taken the loss based on information provided by the National Stock Exchange, Bombay. 

It was noted that the assessee was not confronted by the Assessing Officer related to the information received from National Stock Exchange despite the assessee’s request to give sufficient time for responding the same.

Ms Suchitra Kamble, Judicial member observed that the loss suffered by the assessee is lesser and the contention of the assessee is loss of Rs.8,41,993/- does not pertain to A.Y. 2010- and the Tribunal remanded the issue to the file of Assessing Officer for proper verification and adjudication Appeal of the assessee was partly allowed for statistical purpose. 

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