2016 (4) TMI 1393 - AT - Income Tax

Addition of cash credits or investments unexplained u/s 68 / 69 - Assessee submitted that documents may help the assessee to substantiate the claim of receipt from his son-in-law - HELD THAT - As in the interest of natural justice, the assessee should be provided with one more opportunity to prove the claim of receipt from his son-in law, since the same has been claimed to have been received in 2001. If it is proved that the above said amount was received in 2001, the same cannot be assessed during the year under consideration, since what was received during the year under consideration was only refund of amount given to Shri Prasad. It is the responsibility of the assessee to substantiate the claim of receipt of loan in the year 2001. According to Ld A.R, the documents relating to criminal proceedings may throw light on the above said claim. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine the same afresh in the light of documents that may be furnished by the assessee in this regard. For remaining amount of ₹ 3.00 lakhs, the claim of the assessee is that the same is required to be given to Shri Ruban Thomas, the son in law of the assessee, i.e., according to the assessee, the same represents reimbursement of litigation expenses met by his son-in-law. This issue is connected with the claim of receipt of loan from sonin- law of the assessee. Accordingly, set aside this issue also to the file of the AO - Appeal of the assessee is treated as allowed for statistical purposes

Summary

Issues:
Assessment of addition to the income of the assessee for the assessment year 2006-07.

Analysis:
The appeal was filed against the order confirming the addition of ?11,75,000 to the income of the assessee. The case revolved around the investment of ?18.00 lakhs by the assessee in a company. The Assessing Officer (AO) reopened the assessment due to this investment. The company had paid ?6.25 lakhs to a person named Mr. A.L. Prasad and ?5.75 lakhs by the son-in-law of the assessee, Shri Ruban Thomas, to arrange a foreign loan. However, the funds were not obtained, leading to the demand for repayment. The settlement resulted in the assessee receiving ?18.00 lakhs from Mr. A.L. Prasad.

The AO accepted only ?6.75 lakhs as a credit and treated the balance of ?11.75 lakhs as the assessee's income. In the appellate proceedings, a relief of ?3.00 lakhs was granted, and the balance addition was confirmed. The assessee claimed the funds from Shri Ruban Thomas were for reimbursement of expenses, but could not provide sufficient evidence. The dispute arose over the credibility of the claim of receiving ?5.75 lakhs from Shri Ruban Thomas, who was working in Australia.

The Tribunal emphasized the initial onus on the assessee to prove the sources of investments. The assessee could not substantiate the claim of receiving funds from Shri Ruban Thomas adequately. The Tribunal directed the AO to re-examine the issue in light of any documents related to criminal proceedings that could support the claim. The Tribunal also linked the issue of ?3.00 lakhs reimbursement to the claim of receiving funds from Shri Ruban Thomas, setting it aside for further examination.

In conclusion, the appeal was treated as allowed for statistical purposes, and the case was remanded to the AO for a fresh examination based on potential additional evidence to substantiate the claims made by the assessee.