S. 69A Addition cannot be Based on Surmises, Conjectures and Hypothesis: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has held that Section 69A addition under the Income Tax Act, 1961 cannot be based on surmises conjectures and hypothesis.

The Revenue preferred an appeal before the Tribunal as against the orders of the CIT(A), New Delhi, pertaining to Assessment Year 2015-16.

The issue involved being in respect of invoking provisions of Section 69A of the Income Tax Act, the peculiar facts were that a search and seizure, and survey operation under Section 132/133A of the Incomeax Act, 1961, were conducted by the Investigation Wing of the department, and, the premises of the assessee were also covered. Accordingly, statutory notices were issued and served upon the assessee.

The Assessing Officer alleged that the loss earned by the had been covered up by him, by making payment to M/s Rajlaxmi Commodities Pvt Ltd, which had not been accounted for in the books of account neither in the Sharp group of companies nor in the hands of Sanjay Singhal. And thus, the assessee was show caused to explain the entire transaction.

The Assessing Officer rubbished the submissions of the assessee who proceeded by making strong allegation based upon his surmises and conjectures and came to the conclusion that provisions of Section 69A of the Income Tax Act are applicable in the case of the assessee.

The CIT(A), who, after considering the facts and submissions, found that the assessment order is based on the statement relied upon by the Assessing Officer was recorded almost two years prior to the date of search.

Hearing the opposing contentions of both sides, the Delhi ITAT observed: “We are of the considered view that the entire addition has been made merely on surmises and conjectures and hypothesis. Moreover, we fail to understand how the statement recorded on 29.12.2015 is relevant for the search conducted on 07.04.2017.”

Thus, the Delhi ITAT coram of Astha Chandra, the Judicial Member and N.K Billaiya, the Accountant Member finally held: “Considering the totality of facts from all possible angles, we do not find any reason to interfere with the findings of the ld. CIT(A). In the result both the appeals of the Revenue are dismissed.”

To Read the full text of the Order CLICK HERE

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