2010 (12) TMI 1355 - HC - Income Tax

Summary

Issues involved: Determination of substantial question of law u/s 260A of the Income-Tax Act, 1961 regarding justification of upholding the order of the CIT (A) in proving the source of funds with documentary evidence.

Summary:
The High Court of Punjab and Haryana heard Income Tax Appeal Nos. 373 to 375 of 2006 collectively as they involved a common question of law. The appeal was filed by the Revenue against the order of the Income Tax Appellate Tribunal related to the assessment year 2000-01. The main issue was the explanation of cash deposits made by the assessee in his bank accounts, totaling Rs. 36,80,000. The assessing officer considered this amount as income from undisclosed sources due to the failure of the assessee to satisfactorily explain the source of the deposits. The CIT (A) accepted the appeal and deleted the addition, which was further upheld by the Tribunal, leading to the Revenue's appeal before the High Court.

The Revenue argued that the deposits were undisclosed income as the assessee failed to provide documentary evidence supporting his claim that the amounts were received from the sale of land. The assessing officer added the amount under Section 68 of the Act as the initial onus was not discharged by the assessee. The High Court noted that the burden lies on the assessee to show that the receipt is not taxable, and if the explanation offered is unsatisfactory, the amount can be charged as income tax. The assessing officer found discrepancies in the explanations provided by the assessee regarding the source of the deposits, leading to the addition of Rs. 36,80,000.

The High Court held that the initial onus was wrongly placed on the Revenue, and the assessee failed to provide convincing evidence that the deposits were from the sale of land. Therefore, the addition made by the assessing officer should not have been deleted by the CIT (A) and the Tribunal. The High Court ruled in favor of the Revenue, stating that the deposits were not satisfactorily explained by the assessee, and the addition was justified. Consequently, the appeals were allowed in favor of the Revenue.