Assessee cannot be asked to explain the bank transactions of an unrelated party  – ITAT

Assessee cannot be asked to explain the bank transactions of an unrelated party  – ITAT deleted addition u/s 69A

ABCAUS Case Law Citation:
ABCAUS 3707 (2023) (04) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming addition representing alleged unexplained gold jewelry found at the time of search and brought to tax under section 69A r.w.s 115BBE of the Income Tax Act, 1961 (the Act).

A search was conducted at the premises of the assessee. As a result of search, certain documents were seized from the residence of the assessee which represented vouchers for sale of old jewellery made by the assessee and her family members.

During the assessment the assessee filed detailed reply supported by evidences in the form of a reply filed by the Jeweller, copy of bills issued, copy of bank statement of jeweller and copy of confirmation by jeweller along with copy of Acknowledgment of Return of Income alongwith copy of bank statement.

However, the AO dismissed the detailed reply of the  assessee alongwith supporting evidences

Before the Tribunal the assessee stated that the Assessing Officer was asking the assessee to do something which is impossible. The assessee stated that the Assessing Officer wanted the assessee to explain the source of bank transactions in the bank accounts of the Jeweller.

The assessee further stated that the assessee discharged the burden as far as the existence of the jewellery and sale of jewellery is concerned and findings of the Assessing Officer that it is bogus transaction/sham transaction or an accommodation entry was nothing but a figment of his imagination, not based on any valid material or evidence and untenable.

The Tribunal noted the documents submitted by the jewellers in response to summons u/s 131(1A) of the Act. The Tribunal opined that in view of those evidences on record submitted before the Investigation Wing, it can be safely presumed that the jeweller was a regular assessee. Therefore, it was incumbent upon the Assessing Officer to make direct enquiries from the Authorised Representative of the Jeweller if it did not appear before the Assessing Officer during the assessment proceedings.

The Tribunal observed that the Assessing Officer had questioned the deposits made in the bank account of the Jeweller. The Tribunal questioned that how the assessee was responsible/answerable to the transactions made by an unrelated party in its bank accounts.

The Tribunal opined that nothing prevented the Assessing Officer to force the attendance of the Jeweller since the Assessing Officer has all the powers vested with that of a court u/s 131 of the Act.

The Tribunal stated that the assessee cannot be asked to explain the bank transactions of an unrelated party. 

Considering the evidences in the form of confirmation, books of account, stock register, ledger account along with bank statement the Tribunal opined that there was no merit in the impugned addition made u/s 69A of the Act.   

Accordingly, it directed the Assessing Officer to delete the addition.

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