Facts of the Case

The assessee, Smt. Shashi Bala, was subjected to scrutiny assessment proceedings during which the Assessing Officer made additions to the declared income on account of certain transactions or amounts treated as unexplained.

The assessee challenged the assessment order before the Commissioner of Income Tax (Appeals), contending that the additions were unjustified and not supported by evidence. Upon receiving an adverse or partial relief order, the assessee preferred a further appeal before the Income Tax Appellate Tribunal, Allahabad Bench.

Issues Involved

  1. Whether the additions made by the Assessing Officer were sustainable in law and on facts.
  2. Whether adequate inquiry and verification were conducted before making the additions.
  3. Whether the explanations and documentary evidence provided by the assessee were properly considered.
  4. Whether the appellate order required interference by the Tribunal.

Petitioner’s (Assessee’s) Arguments

  • The additions were made on presumptions without proper supporting material.
  • The assessee had furnished relevant documents and explanations during assessment proceedings.
  • The AO failed to conduct meaningful verification or independent investigation.
  • The conclusions were arbitrary and not based on factual findings.
  • Therefore, the additions deserved to be deleted.

Respondent’s (Revenue’s) Arguments

  • The Assessing Officer acted within statutory authority based on available material.
  • The explanations furnished by the assessee were insufficient or not satisfactory.
  • The CIT(A) had already examined the matter, and the assessment order should be upheld.
  • The additions were justified to protect the interests of revenue.

Court Order / Findings (ITAT)

  • Additions must be supported by cogent material and proper inquiry.
  • Suspicion or conjecture cannot replace proof in taxation matters.
  • When the assessee provides reasonable explanations supported by documents, the burden shifts to the Revenue.
  • Failure of the AO to rebut such evidence renders the additions unsustainable.

 Important Clarification 

  • Assessment proceedings must be conducted in a fair and evidence-based manner.
  • Revenue authorities cannot sustain additions solely on assumptions or inadequate investigation.
  • Appellate forums must ensure that statutory requirements for making additions are strictly followed.

Link to download the order  https://itat.gov.in/public/files/upload/1669019439-ITA%20No.%2017%20alld%202022%20Smt%20Shashi%20Bala.pdf

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