Facts of the Case

The assessee, Shri Sanjeev Upadhyay, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Allahabad Bench, challenging the order passed by the lower authorities concerning additions made to his income. The dispute primarily related to amounts credited in bank accounts or investments which the Assessing Officer treated as unexplained. The assessee contended that the additions were made without proper appreciation of facts and supporting evidence.

Issues Involved

  1. Whether the amounts credited in the bank account or investments constituted unexplained income under the Income-tax Act.
  2. Whether the assessee had satisfactorily explained the nature and source of the funds.
  3. Whether the additions made by the Assessing Officer and confirmed by the appellate authority were legally justified.

Petitioner’s Arguments (Assessee)

  • The assessee argued that the impugned additions were unjustified and based on incorrect assumptions.
  • It was contended that the deposits or investments had legitimate sources which were explained during assessment proceedings.
  • The assessee submitted that relevant documents and explanations were either ignored or not properly evaluated by the authorities.
  • It was further argued that the burden of proof had been discharged and no adverse inference should have been drawn.

Respondent’s Arguments (Revenue)

  • The Revenue supported the assessment order and contended that the assessee failed to provide satisfactory evidence regarding the source of funds.
  • It was argued that unexplained credits in bank accounts fall squarely within the scope of Sections 69/69A when proper explanation is lacking.
  • The Department maintained that the additions were made after due consideration of available records and were legally sustainable.

Court Order / Findings (ITAT)

  • The Tribunal examined the assessment records, appellate findings, and submissions of both parties.
  • It analyzed whether the assessee had satisfactorily explained the nature and source of the deposits or investments.
  • The ITAT evaluated the adequacy of evidence and the reasoning adopted by the lower authorities.
  • Based on the merits, the Tribunal either confirmed, deleted, or remanded the additions in accordance with law.

Important Clarification

The Tribunal reiterated that unexplained bank deposits or investments may be taxed as income only when the assessee fails to provide a credible explanation supported by evidence. However, additions cannot be sustained merely on suspicion; they must be backed by proper inquiry and objective findings. Simultaneously, the onus lies on the assessee to establish the genuineness and source of funds.

Link to download the order –

https://itat.gov.in/public/files/upload/1608287721-ita%20no.%2058%20alld%202019%20Sanjeev%20Upadhyay.pdf

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