Inadequate Decision by CIT(A) on Rs. 11.45 Lacs Unexplained Money Addition: ITAT Remits Matter [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) remitted the matter back due to inadequate discussion by the Commissioner of Income Tax(Appeals)/National Faceless Assessment Centre[CIT(A)/NFAC] on the Rs. 11.45 lacs unexplained money addition under section 69A of Income Tax Act,1961.

Rajesh Kumar Vij,appellant-assessee,challenged the order dated 20.03 .2024 passed by NFAC for the Assessment Year 2017-18.

It was noted with input from both parties that the CIT(A)/NFAC, while upholding the Assessing Officer's addition of Rs. 11.45 lacs under section 69A read with section 115BBE in the order dated 10.03.2023, did not properly address the factual details as required under section 250(6) of the Act, which mandates clear points of determination and detailed reasoning.

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Section 69A of the Act addresses unexplained money, bullion, jewellery, or valuable articles. If a person is found in possession of such items and cannot satisfactorily explain their source, the value is treated as income for that financial year and taxed at the highest rate without deductions or exemptions.

The burden of proof lies on the individual to justify the source of the assets to the tax authorities. Additionally, penalties under Section 271AAC may apply if such income is identified during assessment or searches, aiming to curb black money and ensure accountability for unexplained wealth.

Section 115BBE of the Act, imposes a flat tax rate of 60% on unexplained income covered under Sections 68 to 69D, such as unexplained cash credits, investments, or expenditures. With a 25% surcharge on the tax and a 4% cess, the effective tax rate reaches 78%.

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No deductions, exemptions, or loss adjustments are allowed when calculating this tax. Introduced to curb tax evasion, this section ensures stringent taxation on unaccounted income, promoting transparency and deterring the concealment of wealth.

The Tribunal decided to send the case back to the CIT(A)/NFAC for a fresh review, with the condition that the taxpayer must present and prove all relevant facts during three opportunities in the next proceedings.

In short,the appeal filed by the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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