2013 (12) TMI 723 - HC - Income Tax

Undisclosed investment - purchase of shares on credit from different 207 persons - Held that - The details and other evidences in the nature of cheques, their dates, amounts, particulars of banks and addresses of the persons who are stated to have sold the shares, which have also been transferred by the Company in the name of the assessee - The burden which initially lay upon the assessee stood effectively discharged - No addition ought to have been made - Decided against Revenue.

Summary

Issues:
Challenge to the order of the Income Tax Appellate Tribunal under section 260-A of the Income Tax Act, 1961 for the assessment year 1995-96 regarding the addition of Rs. 70,02,178 made under section 69-A of the Act.

Analysis:
The Department's appeal challenged the Tribunal's order regarding the addition made under section 69-A of the Income Tax Act. The key questions of law framed in the memo of appeal were related to the justification of deleting the addition and the shifting of burden of proof. The respondent-assessee had purchased shares worth Rs. 91,37,900 from 207 persons during the relevant financial year. The Assessing Officer (A.O.) sought to make an addition of this amount, stating that the burden of proof was undischarged as no response was received from the sellers of the shares. However, the CIT (A) found that the assessee had disclosed the list of persons from whom the shares were purchased in her books of accounts, thereby discharging the burden of proof. The A.O. proceeded to make the addition under section 69-A, but the CIT (A) held that since the transaction was recorded in the books of account, the burden was effectively discharged.

The CIT (A) further emphasized that the A.O. had the means to verify the transaction details from the books of account and other available evidence. The Tribunal also noted that the A.O. ignored crucial details and evidence, leading to the dismissal of the Department's appeal. The provisions of section 69-A were examined, highlighting that if the assessee fails to explain the acquisition of valuable assets not recorded in the books of account, such assets may be deemed as income. However, in this case, the details and evidence provided by the assessee effectively discharged the burden of proof, leading to the dismissal of the Department's appeal.

The High Court found that the evidence on record supported the assessee's position, and the burden of proof was effectively discharged. The Court ruled in favor of the assessee, stating that no addition should have been made based on the available evidence. Consequently, the appeal filed by the Department was dismissed.

This detailed analysis of the judgment showcases the assessment of the burden of proof, the application of section 69-A, and the significance of evidence in tax-related disputes, ultimately resulting in the dismissal of the Department's appeal.