ITAT Remits Matter For Re-Adjudication As Taxpayer Fails To Disclose Identity Of Source of Fund
The Kolkata bench of the Income Tax Appellate Tribunal has remitted the matter back to the Assessing Officer (AO) for further
ITAT Remits Matter For Re-Adjudication As Taxpayer Fails To Disclose Identity Of Source of Fund
Cites the judgment of the Delhi High Court in a previous case
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has remitted the matter back to the Assessing Officer (AO) for further adjudication de-novo on the legal and factual aspects of the assessee. It noted that the issue was agitated for the first time before the bench and was covered by a previous decision under homogenous facts.
The bench comprising Anikesh Banerjee (Judicial Member) and Rajesh Kumar (Accountant Member) referred to the decision of the Delhi High Court in the CIT vs. Insecticides (India) Ltd 2013 case.
It reiterated, “Where if the re-opening of the assessment on the vague allegation that on the basis of the report of the Director of Income Tax, the assessee was involved in accommodation entries without specifying details and without disclosing the director’s report, the entire assessment was invalid.”
The assessee company received Rs.9.36 crores from Falcon Tyres Ltd and the amount was transferred to its sister concern Miller Traders Pvt Ltd.
On receiving a notice under Section 133(6) from the IT department, Miller Traders filed the documents related to the funds received from the assessee. But Falcon Tyres was not served a notice, thus it did not inform the AO about the funds. Since the identity of the fund’s source was not established, the amount was added to the assessees’ total income.
The tribunal observed that the assessee was able to prove the transaction of the funds to Miller Traders, however, in case of Falcon Tyres, it was not done due to lack of notice. Therefore, there was no evidence before the AO to prove the genuineness of the transactions.
The bench pin-pointed that even before the AO, the issue was not agitated, and the objection was not filed by the assessee during the time of assessment proceedings. Hence, it remanded the matter for re-adjudication.