The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the case back to the Assessing Officer (AO) for verification of the unexplained investment and loss set-off due to insufficient evidence provided by the assessee.
Harpreet Kaur Kaushik Manek,appellant-assessee,failed to file an income tax return for the relevant assessment year. Despite a system-generated letter issued on 04.08.2014 and subsequent notices under Sections 148 and 142(1) of the Act, she did not respond adequately. The case was reopened under Section 147 after obtaining approval from the Principal Commissioner of Income Tax(PCIT) on 27.03.2018, and notices were served, including the reasons for reopening.
Enquiries under Section 133(6) revealed transactions through the Multi Commodity Exchange with Kunvarji Finstock Pvt. Ltd., which the assessee did not disclose in any return. In her response, she acknowledged conducting the transactions through her proprietary concern, Phoenix Technologies, but failed to explain the source of margin money invested. A Profit and Loss account reflecting losses was submitted, but no return of income was filed under Sections 139 or 148 of the Act.
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After granting multiple opportunities, the AO concluded that the margin money remained unexplained. Consequently, 8% of the total turnover, amounting to Rs. 43,75,089, was treated as unaccounted and unexplained investment under Section 68 of the Act.
Dissatisfied with the assessment order,the assessee filed an appeal before the Commissioner of Income Tax(Appeals)[CIT(A)] which was dismissed.The assessee had filed the appeal with a delay of 161 days, citing an injury in June 2023 as the reason for not filing the appeal on time. The Tribunal had accepted the affidavit and medical report, condoning the delay.
The assessee’s counsel argued that the addition had been made under Section 68, which applied to credits, not investments. The sum of Rs. 5,46,88,613 had lacked basis, as only Rs. 10,00,000 had been deposited with the broker. The counsel pointed out that the AO had ignored losses of Rs. 2,77,725 from equity and Rs. 74,364 from F&O transactions, for which documentary evidence had been provided.
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The margin money addition at 8% had been deemed unreasonable, and the set-off of Rs. 3,52,089 loss had not been granted, which should have been allowed to determine real income, citing the Godhra Electricity Co. case. Relevant case laws were also cited to support raising additional claims before appellate authorities.
The Tribunal observed that the assessee had not provided the necessary ledger details and loss working to the AO or the CIT(A) regarding the addition of Rs. 43,75,090/- as unexplained investment, the estimation of margin money at 8%, and the denial of the set-off loss. Consequently, the issue required further verification.
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The two member bench comprising Suchitra Kamble(Judicial Member) and Makarand Vasant Mahadeokar(Accountant Member) remanded the matter to the AO for proper adjudication, with instructions to verify the relevant documents and loss calculations in line with the assessee’s contentions and supporting evidence.
The assessee was to be given a fair opportunity to present their case, ensuring compliance with the principles of natural justice. The AO was to adjudicate the matter in accordance with the law after verifying all relevant information.
In short, the appeal was partly allowed for statistical purposes.
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