Facts of the Case

During assessment proceedings, the Assessing Officer examined the financial records and bank transactions of the assessee, Rajesh Bajaj. Certain deposits and credits were considered not satisfactorily explained.

The Assessing Officer concluded that the assessee failed to establish the nature and source of the funds with adequate documentary evidence. Accordingly, additions were made treating the amounts as unexplained income under the relevant provisions of the Income-tax Act.

The assessee challenged the assessment order before the appellate authorities.

Issues Involved

  1. Whether the additions on account of unexplained deposits or credits were justified.
  2. Whether the assessee had satisfactorily explained the nature and source of the amounts.
  3. Whether the burden of proof placed on the assessee was duly discharged.

Petitioner’s (Assessee’s) Arguments

  • The assessee contended that the transactions were genuine and supported by explanations regarding their source.
  • It was argued that the Assessing Officer did not properly appreciate the evidence furnished.
  • The assessee sought deletion of the additions on the ground that the amounts did not represent undisclosed income.

 Respondent’s (Revenue’s) Arguments

  • The Revenue maintained that the assessee failed to produce credible and verifiable documentary evidence to substantiate the claimed sources.
  • Mere explanations without supporting proof could not discharge the statutory burden under law.
  • Therefore, the additions made by the Assessing Officer were justified.

Court Order / Findings (ITAT)

  • The primary onus lies on the assessee to establish the identity, genuineness, and source of funds credited or deposited.
  • In the absence of satisfactory evidence, the Assessing Officer is justified in treating the amounts as unexplained income.
  • Additions based on unexplained deposits or credits are sustainable where the assessee fails to substantiate the explanation with reliable material.

Important Clarification

Unexplained credits or deposits may be assessed as income when the assessee fails to provide satisfactory evidence regarding their source.

  • Individuals undergoing scrutiny assessments
  • Cases involving unexplained bank transactions
  • Burden of proof in unexplained income matters
  • Documentation requirements in tax proceedings

Link to download the order –https://itat.gov.in/public/files/upload/1606481052-ITA%20249%20&%20261%20-%20Rajesh%20Bajaj.pdf

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