The present appeal was filed by the assessee, Nasim Ahmad Khan, against the order dated 11.06.2024 passed by the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi, for the Assessment Year 2017-18.

The assessee filed his return of income declaring total income of ₹54,51,340 along with agricultural income of ₹3,50,000. The case was selected for limited scrutiny for verification of share capital / capital contribution, and notice under section 143(2) of the Income-tax Act, 1961 was issued. During assessment proceedings, the Assessing Officer required the assessee to explain a cash capital contribution of ₹13,50,000.

The assessee submitted that the said amount was received in cash from his father, mother, and wife. In support of the explanation, affidavits from the donors along with copies of their income-tax returns were furnished. However, the Assessing Officer did not accept the explanation and made an addition of ₹13,50,000 under section 68 read with section 115BBE of the Act.

Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). The learned CIT(A) confirmed the addition made by the Assessing Officer without examining or verifying the evidences placed on record by the assessee. The assessee, therefore, approached the Income Tax Appellate Tribunal.

During the hearing before the Tribunal, no one appeared on behalf of the assessee. The learned Departmental Representative supported the orders of the lower authorities and submitted that the addition was justified since the alleged gifts were received in cash.

After considering the submissions and examining the material available on record, the Tribunal observed that the assessee had duly filed affidavits and copies of income-tax returns of the donors before the Assessing Officer. It was noted that the donors were close family members and that no adverse finding had been recorded by the lower authorities regarding their creditworthiness. The Tribunal further observed that the learned CIT(A) failed to address the specific submissions of the assessee and did not examine the evidences produced.

The Tribunal held that, in such circumstances, it was incumbent upon the tax authorities to verify the correctness of the evidences furnished by the assessee before sustaining the addition. Accordingly, the impugned order was set aside and the matter was restored to the file of the learned CIT(A) with a direction to decide the issue afresh on merits after due verification and in accordance with law.

As a result, the appeal of the assessee was allowed for statistical purposes.

Sources: https://itat.gov.in/public/files/upload/1766552466-5S6ZnS-1-TO.pdf

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