Facts of the Case
The assessee, Shri Kamalendra Bhadur Mishra of
Sonebhadra, was subjected to assessment proceedings wherein certain investments
or monetary amounts were treated by the Assessing Officer as unexplained. The
Assessing Officer concluded that the assessee had failed to satisfactorily
explain the source of the funds or investments and accordingly made additions
under the relevant provisions of the Income-tax Act, 1961.
The assessee challenged the additions, asserting
that the amounts in question were supported by legitimate sources and
explanations.
Issues
Involved
Whether the impugned investments or monetary assets
could be treated as unexplained under Sections 69/69A due to failure of the
assessee to satisfactorily establish the source and nature of such funds.
Petitioner’s (Assessee’s) Arguments
The assessee contended that the additions were
unjustified and based on incomplete appreciation of facts. It was submitted
that the funds or investments had identifiable sources and that relevant
explanations and documents had been furnished during assessment proceedings. The
assessee argued that the Assessing Officer had disregarded material evidence
and relied on presumptions.
Respondent’s (Revenue’s) Arguments
The Revenue maintained that the assessee had not
discharged the burden of proof required under the deemed income provisions.
According to the department, the explanations provided were either unsupported
by reliable evidence or insufficient to establish the genuineness and source of
the funds. Therefore, the Assessing Officer was justified in treating the
amounts as unexplained income.
Court Order / Findings (ITAT)
The Tribunal evaluated the evidence on record and
the explanations submitted by the assessee. It reiterated the settled legal
position that under Sections 69 and 69A, the burden lies on the assessee to satisfactorily
explain the nature and source of investments or money found in his possession.
Where the explanation is not supported by credible
documentation or fails to establish a legitimate source, the Assessing Officer
is empowered to treat the amount as deemed 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 emphasizes that deemed income
provisions operate when the assessee cannot satisfactorily explain the source
of funds or assets. Mere assertions without corroborative evidence are
insufficient. The ruling reinforces the importance of maintaining documentary
proof for financial transactions to avoid additions under Sections 69 and 69A.
Link to download the order –https://itat.gov.in/public/files/upload/1582192362-KAMALENDRA-240(MANJU).pdf
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