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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