2016 (4) TMI 1386 - AT - Income Tax

Addition on account of low house hold withdrawal - HELD THAT - The section mandates that where in any financial year the assessee has incurred any expenditure and offers no explanation about the source of such expenditure or part thereof or the explanation, if any, offered by him is not in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee. From these provisions, it is apparent that the onus is on the Revenue to prove that the assessee has actually incurred the expenditure. There is no evidence or cogent material being brought on record or placed before us by learned D.R. which may prove that the assessee has incurred the expenditure much more than the sum of ₹ 85,000/- which has been withdrawn by the assessee as drawings except the payment of electricity. AO just estimated the expenditure. Once the Revenue discharges its onus only then the onus gets shifted on the assessee to give explanation proving the nature and source of the expenditure to the satisfaction of the Assessing Officer. Since the Revenue did not discharge its onus we therefore, set aside the order of CIT(A) and delete the addition of ₹ 3 lac made on account of low drawings. Thus, ground No. 1 stands allowed. Addition made on account of payment of electricity bill except the change in the figures - HELD THAT - Assessee even though vehemently argued before us but could not prove or submit any cogent material or evidence which may prove the nature and source of these expenses incurred by the assessee. Revenue has discharged its onus by bringing the evidence on record but the assessee could not prove the nature and source therefore, we sustain the order of CIT(A) confirming the order of the Assessing Officer in respect of the addition being made for the payment of electricity bill - Decided against assessee.

Summary

Issues:
1. Addition on account of low household withdrawal
2. Addition on account of payment of electricity bill

Analysis:

Issue 1: Addition on account of low household withdrawal
In the assessment year 2004-05, the Assessing Officer added an amount to the income of the assessee on account of low household withdrawal. The Assessing Officer estimated the monthly expenditure of the assessee without concrete evidence. The Tribunal noted that the burden of proof lies on the Revenue to establish that the expenditure was actually incurred by the assessee. As the Revenue failed to provide sufficient evidence, the Tribunal set aside the CIT(A)'s order and deleted the addition made on account of low drawings. The Tribunal emphasized that under section 69 of the Act, the Revenue must prove that the expenditure was incurred by the assessee before shifting the burden of proof to the assessee.

Issue 2: Addition on account of payment of electricity bill
Regarding the addition made for the payment of electricity bill, the Tribunal found that the Revenue had presented evidence supporting the addition. The assessee, however, failed to provide any substantial material or evidence to prove the nature and source of these expenses. As a result, the Tribunal upheld the CIT(A)'s decision to confirm the addition made for the payment of the electricity bill. The Tribunal stressed the importance of the assessee meeting the burden of proof when contesting such additions.

In subsequent assessment years 2005-06 and 2006-07, the Tribunal maintained consistency in its decisions. The additions made for low household withdrawals were deleted for both years, while the additions made for payment of electricity bills were confirmed. The Tribunal's decisions were based on the evidence presented and the burden of proof required from both the Revenue and the assessee.

In conclusion, the Tribunal partly allowed the appeals of the assessee, deleting certain additions while confirming others based on the evidence and legal principles discussed in the judgment.