INCOME TAX ACT, 1961

Section 69A

Income from undisclosed sources - Addition under section 69A - Addition of processing charges of bill alleged to be paid outside the books of account -

Assessee-company was engaged in processing of shrimps and export the same to different countries. AO issued notice under section 131 to M/s. U and from the reply, AO observed that assessee had paid an amount in respect of three bills raised by M/s. U and these bills did not appear in the accounts of processing charges and AO made addition of said amount under section 69A. AO made addition as processing charges paid in cash to M/s. U on eight occasions and this addition was made under section 69A. Held: On receipt of reply along with 34 documents from M/s. U, neither AO nor CIT(A) show-caused the assessee by way of written notice or note sheet entry and proceeded to make addition under section 69A by treating the impugned amount of three bills and processing charges paid to the assessee in cash. If assessee fails to explain and reconcile the differential amount, the revenue authorities were well empowered to make addition in the hands of the assessee under section 69A. Assessee should have been allowed to reconcile and explain the differential amount of all the bills and processing charges paid to the assessee in cash as per reply of M/s. U furnished before AO. Therefore, matter was remanded back to AO to re-examine the issue after allowing reasonable opportunity of hearing to the assessee.

Followed:National Thermal Power Company Limited v. CIT (1998) 229 ITR 383 (SC) : 1998 TaxPub(DT) 0342 (SC)

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2014-15

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