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Assessee can’t escape liability u/s 69A by merely stating that unexplained money was received by his agent.

Assessee was deriving income from transportation business. He was given a contract by State Government to lift Bitumen from oil companies and supply it to consignees.
In course of assessment, Assessing Officer (AO) found that contracted quantity of Bitumen was not delivered to consignees. He issued a notice to assessee to explain as to why cost of short supply of Bitumen should not be added to his total income under section 69A?
Assessee in his reply stated that he had not lifted any Bitumen and produced photocopy of delivery challan showing that consignment was lifted by ‘P’ carrier.
AO opined that since ‘P’ carrier had executed work on behalf of assessee, mere fact that payments had been received in name of ‘P’ Carrier, assessee could not be allowed to avoid liability arising out of non-supply of Bitumen to consignees. He thus made addition to assessee’s income under section 69A.
The Patna High Court held that assessee introduced ‘P’ Carrier as its agent and by virtue of his authorization given in favour of ‘P’ Carrier, oil companies had allowed ‘P’ carrier to lift Bitumen. Thus, assessee could not escape liability arising out of when ‘P’ carrier, being an agent of assessee, did some unauthorized act. Therefore, impugned addition made by authorities below was to be confirmed.
Prakhar Kalaniauthor

Prakhar Kalani (B.Com, ACA, DISA), Partner at Kalani Gattani & Co. Prakhar Kalani is a Qualified Chartered Accountant . contact him @ pkalani@kgcmail.com

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