Mufaddal Najmuddin Indorewala Vs ITO (ITAT Mumbai)
7-Day Opportunity Is NOT Effective Hearing- Mumbai ITAT Restores Credit Card Addition Made u/s 69C
The Mumbai ITAT held that dismissal of an appeal by the CIT(A) after granting barely 7 days’ time for compliance violated principles of natural justice and deprived the assessee of effective opportunity of hearing. Accordingly, the Tribunal restored the matter back to the CIT(A) for fresh adjudication on merits in respect of addition made towards alleged unexplained credit card payments.
The assessee, a salaried individual regularly filing returns, was subjected to limited scrutiny for verification of credit card payments. Based on SFT information, the AO observed that the assessee had made payments aggregating to ₹12.09 lakh towards various credit card dues. Since the assessee allegedly failed to explain the source of such payments during assessment proceedings, the AO treated the entire amount as unexplained expenditure u/s 69C and completed best judgment assessment u/s 144.
Before the Tribunal, the assessee contended that the credit card payments merely represented utilisation of credit facilities and repayment through banking channels and therefore could not automatically be treated as unexplained expenditure. It was also pointed out that the AO had apparently duplicated one ICICI Bank credit card entry of ₹2.59 lakh while computing the addition.
