Addition u/s 69A made by AO without Bringing any Concrete Evidence Incriminating the assessee not Sustainable: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) Mumbai deleted an addition of Rs. 2 crore made under Section 69A of the Income Tax Act, 1961, as the Assessing Officer (AO) made the addition without bringing any concrete evidence incriminating the assessee.

Coming to the facts of the case, a search and seizure action was conducted under Section 132 of the Income Tax Act in October 2017 at the premises of M/s. Evergreen Enterprises. During the search, documents were seized, and statements were recorded from Nilesh Bharani, a partner of the firm, and other employees. Based on these documents, the AO noted that had given a cash loan of Rs. 2 crores to Nilesh Bharani during the relevant financial year.

The AO reopened the assessment under Section 147 of the Income Tax Act and issued a notice under Section 148 of the Income Tax Act on 31-03-2021.

Read More: Addition of Rs. 3.53 Crore as Unexplained Income u/s 69A: ITAT Sets Aside CIT(A)'s Order

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

In response to the above-mentioned notice, the assessee filed his return of income, declaring the same total income as previously filed, without any modifications.

 The AO made an addition of Rs. 2 crore under Section 69A of the Income Tax Act, treating the amount as unexplained cash. The assessee, who was aggrieved by the above order, appealed before the CIT(A), but there were no favourable results.

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The assessee’s counsel contended that the AO had not recorded valid reasons for reopening the assessment and had failed to dispose of the objections raised by the assessee. It was also contended that no incriminating evidence was shared with the assessee before making the addition, and the AO had relied solely on unauthenticated documents and statements from third parties without allowing the assessee to cross-examine them.

The ITAT noted that the facts of the case were identical to a previous case involving the assessee for the assessment year 2012-13, where a similar addition had been deleted by the tribunal in which the tribunal held that the AO had not brought any concrete evidence to show that the assessee had entered into the alleged cash transactions.  The ITAT noted the assessee was not given an opportunity to cross-examine one of the key witnesses, Nilesh Bharani, whose statement was used by the AO to make an addition to the assessee.

The ITAT held that the addition of Rs. 2 crore made under Section 69A of the Income Tax Act, 1961, was not sustainable due to the lack of concrete evidence incriminating the assessee.

The ITAT, comprising BR Baskaran (accountant member) and Sunil Kumar Singh (judicial member), partly allowed the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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