CONDITIONS OF UNEXPLAINED MONEY ETC.
- Where in any financial year the assessee is found to be the owner of any money ,bullion, jewellery, or other valuable article and
- Such money , bullion, jewellery or other valuable article is not recorded in the books of accounts ‘if any’ maintained by him for any source of the income and
- Assessee could not explain about the nature and source of the acquisition of the money , bullion, jewellery or other valuable article or
- The explanations given by the assessee is not satisfactory in the opinion of the Assessing Officer
Than the value of money, bullion, jewellery, or other valuable article may be deemed to the income of the assessee of for such financial year.
BURDEN OF PROOF
- The initial burden of proof lies on the assessee.
- He should offer the explanation with suitable proof in respect of the money, bullion, jewellery, or other valuable article.
OPPORTUNITY OF BEING HEARD
There must be an opportunity of being heard given by the A.O. to the assessee.
Following are the case law which are in the favour of the assessee:
- Smt. Kanika Rathi, New Delhi vs Ito, New Delhi on 22 August, 2017
- Dy. Commissioner of Income Tax Vs M/s. Karthik Construction Co. (ITAT Mumbai)
- Riveria Properties (P) Ltd. Vs. ITO (ITAT Mumbai) –
- ITO Vs Shri Parvez Mohammed Hussain Ghaswala (ITAT Mumbai) -No addition made when the money ,bullion, jewellery is not found in the possession of the assessee.
- CIT Vs Shri Jawahar Lal Oswal & others (Punjab & Haryana High Court) – Deeming provision can not be initiated on the basis of suspicion and doubt.
- M/s Bhagwati Motors Vs ITO (ITAT Chandigarh)
YEAR OF TAXABILITY
- The amount of unexplained any money, bullion, jewellery, or other valuable article will be treated the income of the assessee in which year such any money, bullion, jewellery, or other valuable article found unrecorded.
- Set off losses cannot be made against the deemed undisclosed income.
- The amount of income tax calculated on the unexplained investment at the rate of 60% + 25% Surcharge on such tax and cess as applicable. The effectively rate comes to 78.00 % for the A.Y. 2019-20 if such income is reflected in the return of income furnished U/s 139.
- If such income is not reflected in the return of income furnished u/s 139 then penalty of 10% of tax payable. In such case burden including penalty will come to 84%.