Facts of the Case

The assessee, Smt. Shakuntala Kushwaha of Allahabad, was subjected to assessment proceedings by the Income Tax Officer, Ward 2(3), Allahabad. During the course of assessment, certain assets, investments, or monetary amounts were identified which, according to the Assessing Officer, were not satisfactorily explained by the assessee.

Consequently, the Assessing Officer treated these amounts as unexplained and made additions under the relevant provisions of the Income-tax Act, 1961.

Issues Involved

Whether the impugned amounts or assets 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 adequate evidence.

Petitioner’s (Assessee’s) Arguments

The assessee contended that the additions were unwarranted and based on incomplete appreciation of facts. It was submitted that the amounts in question were derived from legitimate sources and that explanations along with supporting materials had been furnished during assessment proceedings. The assessee argued that the Assessing Officer had disregarded relevant evidence and relied on assumptions.

Respondent’s (Revenue’s) Arguments

The Revenue argued that the assessee had failed to discharge the burden of proof required under Sections 69 and 69A. According to the department, the explanations provided were either unsupported by reliable documentation or insufficient to establish a credible source. Therefore, the Assessing Officer was justified in treating the amounts as unexplained income.

Court Order / Findings (ITAT)

The Tribunal examined the evidence on record and the explanations offered by the assessee. It reiterated the legal principle that under the deemed income provisions, the onus lies on the assessee to satisfactorily explain the nature and source of investments or money.

Where the explanation is not supported by credible evidence or lacks verifiability, the Assessing Officer is empowered to treat the amount as income of the assessee for the relevant year. The Tribunal adjudicated the matter based on whether the assessee had successfully discharged this burden.

Important Clarification

The decision underscores that mere assertions or unsubstantiated explanations cannot prevent additions under Sections 69/69A. Proper documentation and credible financial records are essential to establish legitimate sources of funds and avoid treatment as unexplained income.

Link to download the order –https://itat.gov.in/public/files/upload/1582193075-SHAKUNTALA-130.pdf

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