Facts of the Case

The assessee filed an appeal before the Income Tax Appellate Tribunal challenging the order passed by the lower authorities wherein certain additions/disallowances were made to the returned income during assessment proceedings. The Assessing Officer had treated specific transactions/income components as taxable due to lack of satisfactory explanation or supporting evidence, which was subsequently upheld by the Commissioner (Appeals). Aggrieved by the appellate order, the assessee approached the Tribunal.

Issues Involved

  1. Whether the addition made by the Assessing Officer was legally sustainable.
  2. Whether the assessee had adequately discharged the burden of proof regarding the disputed transactions/income.
  3. Whether the order of the lower authorities suffered from legal or factual infirmities.

Petitioner’s (Assessee’s) Arguments

  • The assessee contended that the additions were arbitrary and not supported by proper appreciation of facts.
  • It was argued that relevant documents and explanations were either submitted or available but were not duly considered.
  • The assessee maintained that the transactions in question were genuine and duly recorded in the books of account.
  • The assessment order was alleged to be based on presumptions rather than concrete evidence.

Respondent’s (Revenue’s) Arguments

  • The Department supported the findings of the Assessing Officer and Commissioner (Appeals).
  • It was submitted that the assessee failed to provide satisfactory explanation and documentary proof.
  • The Revenue argued that the burden of proof lies on the assessee to establish the genuineness of the transactions.
  • Therefore, the addition made during assessment was justified and lawful.

Court Order / Findings (ITAT)

  • The lower authorities did not properly evaluate the evidence available on record.
  • The assessee’s explanation could not be rejected without adequate reasoning.
  • The addition lacked sufficient legal foundation.

Important Clarification

The Tribunal emphasized that tax additions must be supported by cogent evidence and proper application of mind. Mere suspicion or inadequate inquiry cannot form the basis for sustaining additions under the Income-tax Act.

Link to download the order –

https://itat.gov.in/public/files/upload/1629273327-ITA%20No.%2003%20Alld%202021%20Amit%20Kumar%20Gupta.pdf

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