Facts of the Case

The assessee, Ravindra Kumar Kesarwani, was subjected to scrutiny assessment by the Assessing Officer. During assessment proceedings, certain deposits, financial transactions, or amounts reflected in the assessee’s accounts were examined.

The Assessing Officer treated the disputed sums as unexplained income on the ground that the assessee failed to provide satisfactory evidence regarding their nature and source. Accordingly, additions were made to the returned income.

The Commissioner of Income Tax (Appeals) confirmed the additions. Aggrieved by the appellate order, the assessee preferred an appeal before the Income Tax Appellate Tribunal, Agra Bench.

Issues Involved

  1. Whether the additions made by the Assessing Officer were legally sustainable.
  2. Whether the assessee had discharged the burden of proof regarding the source of the disputed amounts.
  3. Whether the CIT(A) properly evaluated the evidence and explanations furnished.
  4. Whether additions could be sustained in the absence of adequate supporting material. 

Petitioner’s Arguments (Assessee)

  • The additions were made without proper appreciation of the evidence submitted.
  • The amounts in question had identifiable and genuine sources.
  • Relevant documents and explanations were furnished during assessment proceedings.
  • The Assessing Officer adopted an arbitrary approach and ignored material evidence.
  • The CIT(A) erred in confirming the additions without independent consideration.

Respondent’s Arguments (Department)

  • The assessee failed to satisfactorly establish the source and genuineness of the disputed amounts.
  • Supporting evidence was inadequate or unreliable.
  • The additions were made strictly in accordance with statutory provisions.
  • The CIT(A) rightly upheld the assessment order.

Court Order / FINDINGS (ITAT)

  • The burden of proving the nature and source of unexplained deposits or amounts lies on the assessee.
  • Mere explanations without credible documentary support are insufficient.
  • Where the assessee fails to substantiate the explanation, additions under the relevant provisions of the Act are justified.
  • The lower authorities acted within their jurisdiction in sustaining the additions based on the material available.

Important Clarification by the Tribunal

  • In matters involving unexplained income, the assessee must establish:
    • Identity of the source
    • Creditworthiness or capacity
    • Genuineness of the transaction
  • Failure to satisfy these conditions empowers tax authorities to treat the amounts as taxable income.

Link to download the order –

https://itat.gov.in/public/files/upload/1615972078-ITA%20%20164%20of%202019%20Ravindra%20Kumar%20Kesarwani.pdf

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