The Chandigarh Income Tax Appellate Tribunal (ITAT) has recently held that assessing officers are bound to give explanation for not accepting submissions of assessee through a speaking order under section 69 of Income Tax Act 1961.
Section 69 of Income Tax Act 1961 states that if a taxpayer has made any investment in any year which are not recorded in the books of account of his business transactions and he did not offers any explanation about the nature and source of investment then the amount shall be deemed to consider the income of such taxpayer
A Survey operation under section 133A of the Income Tax Act 1961 was conducted at the business premises of the assessee Vijay Bajaj on 04/10/2017. The assessee thereafter filed his return of income and income was offered amounting to Rs. 7,16,107/- under the head “Income from business/profession”. Thereafter the matter was selected for compulsory scrutiny. On perusal of the return of income, it is noticed that assessee have not declared loan and advances amounting to Rs. 8,05,000/- which was given to certain persons .
Also assessing officer found that such income did not disclose under section 69 read with section 115BBE of the Income Tax Act 1961
Against this order assesee filed an appeal before the Commissioner of Income Tax (Appeal) CIT (A).But the CIT (A) confirmed the addition made by the assessing officer
Rajiv Saldi, counsel for the Assessee Submits that without bringing any evidence on record and without making any further inquiry, simply ignored and rejected the submissions of assessee and treated the advances as undisclosed investments under section 69 of Income Tax Act1961 which were normal business advances as explained assessing officer during assessment proceedings.
Moreover the assessee was not required to maintain books of account being covered under section 44AD of the Income Tax Act 1961 that is why the assessee could not explain these entries to the survey team at the time of survey.
Akashdeep,counsel for the revenue submits that the assessee had not been able to furnish the identity of the persons to whom such advances were made nor to specify the nature of business transactions carried out with these persons along with documentary evidence.
Further the revenue observed that “assessee had himself offered on voluntary basis such loans and advances as additional income keeping in view his inability to explain the source of the same and therefore the loans and advances made by the assessee to various persons constitute unexplained investment and same was brought to tax as deemed income within the meaning of Section 69 of the Income Tax Act 1961”.
After considering the contentions of the both parties the single bench of ITAT, Vikram Singh Yadav, (Accountant Member ) allowed the appeal filed by the assessee and observed that “assessee has offered business receipts amounting to Rs 41,81,800/- in his return of income which is sufficient to make business advances of Rs 8,05,000/- and thus, no separate addition is called for.”
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