ITAT Partly Allows Appeal, Sets Aside Additions Under Section 69A for Lack of Basis in Disbelieving Evidence
Introduction
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has partly allowed an appeal concerning additions made under Section 69A of the Income Tax Act, 1961. The Tribunal ruled that the assessee had satisfactorily explained the sources of deposits in his NRE/NRI accounts, except for an amount of ₹63,133.
Factual Background
The assessee, Somnath Bandopadhaya, a non-resident, had not filed his return of income for the Assessment Year 2018-19. The Revenue observed substantial financial transactions and issued a notice under Section 148 of the Income Tax Act. The Assessing Officer (AO) proposed an addition of ₹2,28,14,293 as unexplained money under Section 69A read with Section 115BBE.
Issues
- Whether the assessee had satisfactorily explained the sources of deposits in his NRE/NRI accounts?
- Whether the additions made under Section 69A were justified?
Contentions of the Parties
Appellant’s Contention: The appellant argued that all deposits were explained with supporting evidence, including bank statements, investment details, and an employment verification letter. The appellant contended that ignoring these verifications and treating the entire deposits as unexplained was unjustified.
Revenue’s Contention: The Revenue contended that the appellant failed to satisfactorily discharge the burden of proving the sources of deposits, thereby warranting the additions made under Section 69A.
Reasoning and Analysis
The Bench of Dr. B.R.R. Kumar, Vice President and Suchitra Kamble, Judicial Member observed that the remand reports recorded verification of almost all transactions, and the only unexplained entry was for ₹63,133. The Tribunal held that disbelieving the employment verification letter and other evidence without basis was unjustified.
Decision
The Tribunal partly allowed the appeal, setting aside the majority of the additions proposed by the AO. The Tribunal directed that the addition be restricted to ₹63,133, which was unexplained.
Implications
The judgment highlights the importance of considering evidence and verification reports in a fair and impartial manner. It also underscores the need for the Revenue to provide clear reasons for rejecting explanations offered by the assessee.
In this case the appellant was represented by Mr. P.F. Jain, Advocate. Meanwhile the Revenue was represented by Mr. Prathvi Raj Meena, Advocate.