| Question And Answer | |
|---|---|
| Subject: | NON RESOPONSE TO NOTICE U/sec. 133(6) and claim of expenses |
| Category: | Income-Tax |
| Querist: | Manali |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Expenses, non response to S. 133(6) |
| Date: | March 22, 2023 |
Assessee is partnership firm engaged in business of real estate development. The assesse firm had appointed few contracteors to carry out construction of the project. In support of its claim for expenses , asssssee firm had submitted confirmations from all parties, giving details such as name, address, PAN and detailed account extract of all the parties and also submitted that all the payments were Made through normal banking channels. Ao issued Notices U/Sec. 133(6) to 6 parties, out that only one party responded even though the Notice U/sec 133(6) were duly served. However while completing the assessment AO had disallowed the payments made to two parties amounting to Rs. 56 lakhs on the ground that these parties have not responded to Notice U/sec 133(6) and have not filed the their Return of Income. Assessee has submitted that in the confirmation letter submitted by these parties mentioned that since their income was below taxable limit they have not filed return of income.
Whether the action of the Ao is legally justified.
The Assessee can file their response to the Notice issued under section 133(6) of the Act before the Hon’ble CIT(A) in the form of additional evidence by making an application under Rule 46A of the Income-tax Rules, 1962.
An addition cannot be made merely because of non-response to the Notice issued under section 133(6) of the Act. [Refer to the case of Sonicwall Technology System India Pvt. Ltd. v. ACIT ITA no.3860/Mum./2019 dated December 02, 2022 (Mum) (Trib) and M/s Kesha Appliances Pvt. Limited v. ITO ITA No. 2175/Del/ 2016 March 09, 2018 (Del)(Trib)]
The AO seeks to make additions under Section 69C dealing with unexplained expenditure.
The onus of proving the expenditure is on the assessee to substantiate the claim of expenditure by producing the relevant documents and other evidence. This has been done. The onus then shifted to the Revenue and the Revenue served notices which were not responded to. In such circumstances, the assessee would have to produce some evidence to substantiate the expenses since it is now the case of the AO or seems to be, that the parties are fictitious or non-existent or there the invoices may be fake. Once, further evidence is brought to the notice of the AO before the assessment order is passed or before the CIT(A) by leading evidence under Rule 46A, the assessee may substantiate the claim of expenditure.