2014 (6) TMI 965 - AT - Income Tax

Addition of the receipts reflected in form No.26AS - Held that - As based on 26AS alone no additions can be made. This can at best be a starting point for necessary verification by the assessee, but it cannot, on standalone basis, justify the impugned additions. However, we also considered it appropriate to remit the matter to the file of the Assessing Officer for strictly limited purpose of verifying the information. In case, he can find any independent evidence of the assessee s having actually received the said rent, he can bring the same to tax. We make it clear that the onus will be on the Assessing Officer to find such evidence and that the assessee cannot be expected to discharge the impossible burden of proving a negative i.e. that the assessee did not receive such rent. With the observations as above, and for the limited purposes set out above, the matter stands restored to the file of the Assessing Officer. Needless to add that any material, adverse to the assessee, will have to be confronted to the assessee by the Assessing Officer, and that, in case Assessing Officer intends to pass any fresh order as a result of these directions, he will do so only after giving due and fair opportunity of hearing to the assessee, in accordance with the law and by way of a speaking order.

Summary

Issues Involved:
Challenge to correctness of CIT(A)'s order on penalty under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2008-09.

Analysis:
1. The Assessing Officer challenged the CIT(A)'s order regarding penalty under section 271(1)(c) of the Income Tax Act, 1961. The grievances raised by the Assessing Officer included the deletion of additions made by the AO based on Form No. 26AS, understating interest income, and seeking to quash the CIT(A)'s order. The primary issue revolved around the correctness of the additions made by the Assessing Officer.

2. The core issue in the appeal was the discrepancy in the amount reflected in Form No. 26AS and the amount claimed by the assessee. The Assessing Officer treated the difference as undisclosed rent receipt, while the CIT(A) deleted the addition after considering the appellant's explanation and evidence. The CIT(A) observed that the onus was on the AO to prove the contrary, which was not discharged. The appellant provided an affidavit and evidence to support the claim that the amount in question was not received.

3. The ITAT, after hearing the Departmental Representative and examining the material, concluded that additions based solely on Form No. 26AS were not justified. While acknowledging the need for verification, the ITAT remitted the matter back to the Assessing Officer for limited verification purposes. The onus was placed on the Assessing Officer to find independent evidence of the rent receipt. The ITAT emphasized that the burden of proving a negative, i.e., that the assessee did not receive the rent, should not fall on the assessee.

4. The ITAT allowed the appeal for statistical purposes and directed the matter to be restored to the file of the Assessing Officer. Any adverse material found during verification must be presented to the assessee, and any fresh order must be passed after giving a fair opportunity of hearing to the assessee. The decision was pronounced in open court on 27.06.2014.