Facts of the Case

The Revenue filed an appeal before the Income Tax Appellate Tribunal, Allahabad Bench, against the order of the Commissioner of Income Tax (Appeals) in the case of Shri Abdul Mannan. The dispute arose from additions made by the Assessing Officer treating certain amounts as unexplained investments/money under the provisions of Sections 69/69A of the Income-tax Act, 1961.

Issues Involved

Whether the additions made by the Assessing Officer under Sections 69/69A on account of alleged unexplained investments or money were justified when the assessee had furnished an explanation regarding the source of such amounts.

Petitioner’s Arguments (Revenue)

  • The assessee failed to satisfactorily explain the nature and source of the investments/money
  • Documentary evidence furnished was insufficient to establish the genuineness of the explanation
  • Therefore, the Assessing Officer rightly treated the amounts as unexplained income

Respondent’s Arguments (Assessee)

  • A reasonable and plausible explanation regarding the source of the funds had been provided
  • Relevant supporting material was furnished before the authorities
  • The Revenue did not conduct proper inquiry nor bring adverse evidence on record
  • Hence, the addition was unjustified

Court Order / Findings

  • The assessee had offered an explanation regarding the source of the amounts in question
  • The Assessing Officer failed to bring cogent evidence to disprove the explanation
  • Additions under Sections 69/69A cannot be sustained merely on suspicion or conjecture

Important Clarification

  • The burden of proof shifts to the Revenue once the assessee provides a reasonable explanation
  • Additions for unexplained investments require positive evidence
  • Taxation cannot be based on presumptions alone

Link to download the order – https://itat.gov.in/public/files/upload/1560148781-MANNAN-241.pdf

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