Unexplained Investment Addition of ₹96.99 Lakh: ITAT Remands Matter to AO for Fresh Examination [Read Order]

The Raipur Bench of Income Tax Appellate Tribunal (ITAT) remanded the matter to the Assessing Officer (AO) for fresh examination regarding the addition of ₹96.99 lakh as unexplained investment .

Panchsheel Solvent Pvt. Ltd., appellant-assessee, was engaged in manufacturing and trading edible oil and rice bran oil. It filed its return for AY 2016-17 on March 27, 2018, declaring Nil income. The case was selected for limited scrutiny under Computer-Assisted Scrutiny Selection (CASS), and a notice under section 143(2) was issued on August 21, 2018. Subsequent notices under section 142(1) were issued, but there was no compliance.

Club Your Income – Maximize Your Earnings

After a reminder, the assessee submitted an acknowledgment and computation of income on November 29, 2018. A final notice under section 144 was issued on December 4, 2018, but the explanations provided were not found satisfactory. As a result, additions were made, and the total income was enhanced to ₹1,14,90,060.

The assessee challenged the assessment before the Commissioner of Income Tax (Appeals) [CIT(A)] but failed to respond adequately. The CIT(A) dismissed the appeal, confirming the additions made by the AO. 

Read More: Unexplained Investment of ₹1.65 Crore: ITAT Restores Matter Back to AO for Fresh Verification

A key issue was the lump-sum addition of ₹96,99,743, treated by the AO as an unexplained investment under section 69 due to the absence of supporting documents. The assessee contended that the amount was invested in land, cameras, building construction, plant and machinery, and an old truck during FY 2015-16, and that supporting documents were provided. The AO, however, found that the source of investment was not adequately explained and added the amount to total income. 

During appellate proceedings before CIT(A), the assessee argued that investments were made through banking channels and that sufficient documentary evidence, including ledger accounts, bank statements, and invoices, had been provided. However, CIT(A) upheld the AO's decision, confirming the additions. 

Club Your Income – Maximize Your Earnings

The two member bench comprising Ravish Sood (Judicial Member) and Arun Khodpia (Accountant Member) reviewed the submissions and available records. It found that while the assessee had submitted documents, the AO had not fully considered the bank statements reflecting recorded transactions. The ITAT observed that the AO did not specifically verify the source of investment despite some information being provided.

Given these findings, the tribunal remanded the matter to the AO for fresh examination. The appellant was directed to cooperate during the proceedings, and the AO was instructed to reassess the issue based on verification of available records and decide the matter as per law.  

In short,the appeal filed by the assessee was partly allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates