The Mumbai bench of Income Tax Appellate Tribunal (ITAT) recently upheld the addition made under Section 69 of the Income Tax Act 1961 on unaccounted, undisclosed income on the basis of the seized loose papers.
Section 69 of the Income Tax Act states that if a taxpayer made an investment in a year which is not recorded in the book of account, and he did not give any explanation relating to the investment, such investment is deemed to be the income of the taxpayer.
Hiral Sejpal appeared for the assessee. Yashwant Kumar Bhaskar appeared for the revenue.
Assessee Vinod K. Faria is an individual engaged in the business of trading in plywoods, veneers glass and aluminum. Pursuant to the search and seizure action carried out at the business premises and residential premises of the assessee/ Milan Dalal Group of company, it was observed that the unaccounted cash payments for purchase of immovable property, transfer of tenancy, development rights, share investments, accommodation entries for bogus loans, misappropriation of funds of companies, unaccounted cash sales of galas of high-speed project, cash payments through hawala parties in India as well as outside India and understating value of immovable property were alleged to have been found and relevant evidences were said to be seized pertaining to the said allegation.
Thereafter, the assessee is said to have failed to furnish the income tax return in spite of several opportunities given by the A.O. and had filed the return of income on 19.11.2010, which was after the specified period.Hence the A.O. treated the returns as nonest and invalid.
Finally, the AO made an ex parte order along with making various additions.
Among this, assessing officer made addition of Rs.20 lacs as unexplained unaccounted investment under Section 69 of the Income Tax Act on the basis of the loose papers reflecting alleged payment made to Shri Salim Babaji.
Against the order, the assessee filed an appeal before the CIT(A) who confirmed the said addition made by the A.O. Further, the assessee filed a second appeal before the tribunal.
When the matter was considered before the tribunal, counsel for the assessee submitted that loose papers relied upon by the A.O. did not state that the assessee had made investment in the SRA project of Sadabahar CHS at Dharavi.
Also, the payment made to Shri Salim Babaji was brokerage charges paid in respect of purchase of land out of funds from Vinod Faria HUF.
Counsel for the revenue submitted that the assessee has failed to explain the source of the expenditure incurred by way of brokerage charges paid to Shri Salim Babaji either before the A.O. or during the remand proceedings.
Thereafter, the tribunal while confirming the impugned addition made by the A.O observed that assessee has failed to furnish the details of Shri Salim Babaji to prove the identity, genuineness and creditworthiness mandated as per the provisions of the law.
Hence the two member bench of the tribunal comprising Prashant Maharishi, (Accountant member) and Kavitha Rajagopal, (Judicial Member) dismissed the appeal filed by the assessee.
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