Case Law Details
Pavuluri Sylendra Nellore Vs ITO (ITAT Hyderabad)
In a noteworthy case, Pavuluri Sylendra Nellore Vs ITO, the Income Tax Appellate Tribunal (ITAT) Hyderabad, dismissed the appeal of the assessee due to lack of a satisfactory explanation for the source of credit card payments. Despite the assessee’s failure to appear in the court, the Tribunal decided to proceed with the case, setting a strong precedent for tax disputes.
Analysis: The ITAT, in this case, was dealing with the issue of unexplained expenditure met by the assessee through a credit card. The assessee had made cash payments amounting to Rs. 5,65,950/-, for which the source remained unexplained. During the appellate proceedings, the assessee claimed that he had received Rs. 2.5 lakhs as cash gifts from his father, a claim that could not be substantiated.
The ITAT took note of the assessee’s failure to explain the source of the cash payments made through his credit card. Despite several opportunities, the assessee did not provide any convincing explanation. In the absence of contrary evidence, the ITAT upheld the additions made by the assessing officer under section 69C of the Income Tax Act.
Conclusion: The case of Pavuluri Sylendra Nellore Vs ITO serves as a significant reminder of the importance of transparency in tax affairs. The ITAT’s decision to uphold the addition under section 69C due to an unexplained source of credit card payment sets a stern example. This ruling underscores the significance of tax compliance and the responsibility of taxpayers to substantiate their financial transactions, especially in situations involving significant cash payments.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
Aggrieved by the order dated 23/01/2023 passed by the learned Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Sylendra Pavuluri (“the assessee”) for the assessment year 2017-18, assessee preferred this appeal.
2. When the matter is called, neither the assessee nor any authorised representative entered appearance. It could be seen from the record that the notices were issued to the address given in form No. 36. If the assessee is available in such address, such notice should have been served on the assessee. If for any reason, the assessee is not available there, it is for the assessee to make arrangements for service of such notice by furnishing the address where the assessee would be available, or to deliver it to some authorised person, or by making request to the postal department to detain the mail till the assessee claims the same. However, there is no appearance for the assessee. In these circumstances, I find no option but to proceed to hear the counsel for Revenue and decide the matter on merits basing on the material available on record.
3. Relevant facts necessary for the disposal of this appeal is that during the course of scrutiny of the income tax return by the assessee, learned Assessing Officer found that the assessee made cash payments to the tune of Rs. 5,65,950/- towards the expenditure met by him through credit card. According to the learned Assessing Officer when called upon, the assessee failed to explain the source and, therefore, he added the same.
4. During the appellate proceedings, learned CIT(A) recorded that though the assessee claimed to have received a sum of Rs. 2.5 lakhs by way of cash gifts from his father, out of the pension savings, no evidence to substantiate the same was forthcoming. Learned CIT(A), therefore, finding no material to take a contrary view, confirmed the addition made by the learned Assessing Officer to the tune of Rs. 5,65,950/-.
5. Learned DR submits that the finding of facts by the authorities below are undisputed and, therefore, they are justified in making and confirming the addition to the tune of Rs. 5,65,950/- and since there is no material contrary now on the record, a different view is not prompted in the proceedings.
6. I have perused the record and find that the learned Assessing Officer recorded that the assessee was called upon to explain the source for the credit card payments made in cash by specifically stating that if the assessee fails to file the statement and also explain the sources, the material available before the learned Assessing Officer will be taken into consideration for completion of the assessment by treating such cash payments as from un-explained source to bring the same to tax under section 69C of the Act. In spite of the same, the assessee failed to given any explanation and, therefore, such an amount was brought to tax.
7. I further find from the impugned order that the assessee had taken a plea before the learned CIT(A) that he received a sum of Rs. 2.5 lakhs by way of cash gifts from his father, from out of the pension savings but the assessee failed to substantiate the same with reference to the ITR, bank statement etc., of his father. In these circumstances, learned CIT(A) is justified in confirming the addition.
8. Before me also, the assessee failed to appear and to dispute the correctness of the additions made by the learned Assessing Officer and confirmed by the learned CIT(A). In the absence of any material suggesting contrary, I find it difficult to disturb the finding of fact recorded by the authorities below. In these circumstances, I find no option but to uphold the findings of the authorities. Accordingly, I find that the grounds of appeal are devoid of merit and the same are liable to be dismissed.
9. In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on this the 17th day of May, 2023.
