Addition made to income on account of travelling expenses to Pakistan – ITAT remands case to AO for verification
In a recent judgment, the Amritsar ITAT has restored the issue of addition made to income on account of travelling expenditure to Pakistan for verification of source of expenditure.
ABCAUS Case Law Citation:
4245 (2024) (08) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the addition on account of travelling expenses to Pakistan.
the assessee was the sole Proprietor of a firm and he was in the business of trading of fruits and vegetables etc. During the year under consideration the assessee was also a partner of a firm which was also engaged in similar business.
The Assesseing Officer (the AO) had reopened the case by issuing notice u/s 148 of the Income Tax Act, 1961 based on the information received from the Investigation Agency (NIA) that the assessee has visited Pakistan and claimed to have made some expenditure.
Being not satisfied with reply of the assessee the AO made the addition for the alleged expenses to the returned income.
Aggrieved assessee filed an appeal before Commissioner of Income Tax (Appeals). The CIT(A) observed that the assessee has contradicted himself with respect to source of expenditure made. Moreover, the assessee had not produced any other documents to substantiate the assertion made. Therefore, the CIT(A) opined that the arguments of the assesseeis were nothing but an afterthought to secure his case and claim. Hence, the addition made by the AO on this count was upheld.
The assessee appeald to ITTA and contended that the Assessing Officer had only relied upon the information as received the National Investigation Agency (NIA), New Delhi without any independent application of mind by the Assessing Officer, which is mandatory and, thus, the reopening was bad in law in view of the various judgment.
The Tribunal observed that in the assessment proceedings, the travelling expenditure to Pakistan was claimed to be sourced from the partnership firm but during the appellate proceedings, the assessee had never produced such documents and there was a change of the stand by the assessee such expenditure was incurred from proprietorship concern referring and relying upon the drawings as per the balance sheet. It casted a serious doubt on the admissibility of the additional evidence and the arguments therein. So, it was rejected by the CIT(A).
The Tribunal restored the matter to the file of the AO to verify the veracity of the evidence filed and examine the purpose and genuineness of source of the travelling expenditure claimed by the appellant as per law.
The Tribunal opined that since the assessee had changed its stand on the source of the expenditure which makes him eligible for any relief. However, in view of natural justice, the matter is restored to the AO to examine the evidence filed on record and adjudicate de novo.
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