Rs. 1.6 Crore Unexplained Credit Addition: ITAT Remands Case to CIT(A) [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the matter to the Commissioner of Income Tax(Appeals)[CIT(A)] for fresh consideration in the case of Rs. 1.6 Crore unexplained credit addition.

Trinity Touch Pvt Ltd,appellant-assessee,filed its return for A.Y. 2012-13 on 28.08.2012, reporting Nil income after offsetting a business loss of Rs. 1,33,60,278/- against House Property income. The Assessing Officer (AO) received information about an accommodation entry of Rs. 1,60,00,000/- from M/s Sperryn Gas Product Ltd.

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As a result, the AO issued a notice under section 148 on 29.03.2019. The assessee responded by filing a Nil return on 02.05.2019. The AO then passed an order on 25.12.2019 under section 143(3) read with section 147, assessing income at Rs. 1,60,00,000/- and adding the same under section 68 as unexplained credits.

The assessee filed an appeal before the CIT(A), who upheld the addition, citing the failure to submit written submissions despite multiple opportunities.The assessee aggrieved by the order of the CIT(A) appealed before the tribunal.

The assessee's counsel argued that the CIT(A) order was invalid, as it did not address the main issue. The counsel pointed out that, according to the assessment order, the assessee had only received Rs. 1 crore in its bank account, questioning how the addition of Rs. 1.60 crore was made. It was also argued that the AO's order had inconsistencies, mentioning an addition under section 68, allegations of bogus purchases, and disallowed expenses. The counsel claimed the assessment was made without proper consideration and should be quashed.

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The tribunal noted that the CIT(A) dismissed the appeal solely because the assessee did not submit written responses, without addressing key issues like the validity of jurisdiction under section 148 or the merits of the addition. It found that the CIT(A) failed to examine the reasons recorded under section 148(2) or the sanction under section 151.

The two member bench comprising Challa Nagendra Prasad(Judicial Member) and Naveen Chandra(Accountant Member) set aside the CIT(A)’s order and remanded the case for fresh consideration. It directed the assessee to cooperate and provide necessary evidence and instructed the CIT(A) to decide the case afresh after giving the assessee a fair opportunity to present its case.

To Read the full text of the Order CLICK HERE

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