Facts of the Case

The assessee, Smt. Rashmi Mehrotra of Allahabad, was subjected to assessment proceedings by the Deputy Commissioner of Income Tax. During the assessment, certain investments or monetary amounts were identified which, according to the Assessing Officer, were not satisfactorily explained.

The Assessing Officer treated these amounts as unexplained income under the relevant provisions of the Income-tax Act, 1961 and made additions accordingly. The assessee contested the additions and pursued appellate remedies.

Issues Involved

Whether the impugned investments or monetary amounts could be treated as unexplained income under Sections 69/69A due to failure of the assessee to establish the nature and source of the funds with reliable evidence.

Petitioner’s (Assessee’s) Arguments

The assessee contended that the additions were unjustified and based on incorrect appreciation of facts. It was submitted that the funds or investments had legitimate sources and that explanations along with supporting documentation had been furnished during assessment proceedings. The assessee argued that the Assessing Officer had ignored relevant evidence and proceeded on presumptions.

 

 

Respondent’s (Revenue’s) Arguments

The Revenue maintained that the assessee had failed to discharge the burden of proof required under the deemed income provisions. According to the department, the explanations were either unsupported by credible evidence or insufficient to establish the genuineness and source of the funds. Therefore, the additions were justified.

Court Order / Findings (ITAT)

The Tribunal examined the material on record and the explanations provided by the assessee. It reiterated the legal principle that under Sections 69 and 69A, the onus lies on the assessee to satisfactorily explain the nature and source of investments or money found.

If the explanation is not substantiated by reliable and verifiable evidence, the Assessing Officer is empowered to treat the amount as income of the assessee for the relevant year. The Tribunal adjudicated the dispute based on whether the assessee had successfully discharged this burden.

Important Clarification

The ruling emphasizes that deemed income provisions operate where the assessee fails to provide credible evidence regarding the source of funds. Mere statements or uncorroborated explanations cannot prevent additions. Proper documentation and financial records are essential to establish legitimacy of transactions.

Link to download the order –https://itat.gov.in/public/files/upload/1582192980-RASHMI-14.pdf

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