Addition on Foreign Remittance Unsustainable Due to Non Consideration of Documentary Evidence: ITAT Sets Aside Addition of ₹23.13 Lakh [Read Order]

The Income Tax Appellate Tribunal (ITAT) Delhi Bench set aside the addition of ₹23.13 lakh made on account of unexplained foreign remittances holding that the failure of the lower authorities to examine relevant documentary evidence renders the addition unsustainable. The matter was remanded to the Assessing Officer (AO) for fresh adjudication.

The assessee HPC Infotech Pvt. Ltd. engaged in the business of import and trading of UHF RFID tags and readers made foreign remittances amounting to ₹23.26 lakh during the Assessment Year 2019–20.These remittances were made to the overseas vendors from China and USA for the purpose of purchasing inventory through authorized modes as per FEMA provisions.

However, the AO was doubtful about the source of such remittances and added ₹23.13 lakh as unexplained income which was confirmed by CIT(A).

The assessee argued that such remittance had been effected with unsecured loans raised from one Pradeep Kumar by the directors of the assessee. In order to establish the validity of the transactions, the assessee has produced several documents which lenders confirm ITRs, bank statements, bank statements of directors, bank statements of the assessee, bills and SWIFT copies.

The AO and CIT(A) have ignored these documents although they were before the authorities, which made their orders illegal.However, the department argued that the CIT(A) had adequately dealt with the arguments.

The Tribunal, comprising Judicial Member Shri Vikas Awasthy, observed that although the CIT(A) claimed to have considered the documents the impugned order did not reflect any analysis or findings on the evidence submitted. The Bench noted that the core issue was limited to verification of the source of funds, and the assessee had placed sufficient material on record to support its claim.Thus, the Tribunal held that the matter requires fresh verification.

Accordingly, the ITAT set aside the impugned order and restored the issue to the AO for de novo consideration after granting adequate opportunity to the assessee. The appeal was allowed for statistical purposes.

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