AO adds Rs. 30 crore as Unexplained Investment: ITAT restores matter in Interest of Justice with Penalty [Read Order]

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) remanded the matter back to the Assessing Officer (AO) in interest of justice with penalty in a case where an addition of Rs. 30 crore was made as unexplained investment.

Samarttha Developers (assessee) is a partnership firm purchased 11 immovable properties for consideration of Rs. 28,62,78,460 made investments amounting to Rs. 30 crore that were not properly explained during the assessment.

The AO issued notice to the assessee. The assessee failed to comply with notices and therefore, the AO made an addition of Rs. 30 Crore under section 69 of the Income Tax Act.

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Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (appeals)[CIT(A)]. The assessee failed to appeal before the CIT(A). Therefore, the CIT(A) dismissed the appeal of the assessee.

Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT. The counsel for the assessee submitted that in the interest of justice the assessee should be given an opportunity to explain the source of investment.

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On the other hand, the counsel for the revenue supported the AO’s action. The counsel also highlighted that the assessee did not file any submission nor filed Return of Income despite giving a number of opportunities.

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The two-member bench comprising R.K. Panda (Vice President) and Ms. Astha Chandra (Judicial Member) observed that the assessee did not reply to the notice issued by the AO. The tribunal also observed that the assessee failed to file any submission even after giving several opportunities during the proceedings. 

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The tribunal remanded the matter to the AO in the interest of justice to give an opportunity to substantiate the claim of the assessee. The tribunal also imposed a cost of Rs. 5,000 to the assessee.

The appeal of the assessee was thus allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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