Addition on the basis of mis-reporting of insurance company unsustainable

Kamal Binani Vs ITO (ITAT Mumbai)

ITAT Mumbai held that addition under section 68 of the Income Tax Act on the basis of mis-reporting of insurance company is unsustainable in law.

Facts- Notices u/s. 143(2) and 142(1) of the Act were issued and served on the assessee. The reasons recorded for reopening the assessment are “The information was received from the DDIT(Inv.) Unit 7(3), Mumbai that the assessee had paid the annual premium of ₹.6,00,000/- which is much higher than the total income declared by the assessee i.e., ₹.1,60,630/- in the return of income.

AO on a perusal of the details submitted by the assessee, he observed that there is no bank entries of ₹.6,00,000/- paid in two installments by the assessee from HDFC bank. To verify the claim Assessing Officer issued notice to the insurance company STAR UNION DAI-ICHI LIFE INSURANCE COMPANY LIMITED for confirmation of payment of ₹.6,00,000/-.

A show-cause notice u/s 142(1) was issued to the assessee to submit the details of the statement of account maintained with Bank of India, Andheri branch that there are no entries pertaining to the payment made to the insurance company as per details provided by the insurance company. Further he observed from the AIR, it is seen that assessee has deposited ₹.5,00,000/- with Shriram Transport Finance Limited. Further, he directed the assessee to provide details of share transaction amounting to ₹.29,45,122/- whether Capital Gain/Loss, if any, on the share transaction are offered to tax. Since, assessee did not respond to the above said notices based on the information available on record, AO proceeded to make the addition u/s. 68 of the Act.

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