2016 (12) TMI 502 - HC - Income Tax

Unexplained investment - Held that - More particularly when the assessee discharged its onus by submitting and producing necessary material in support of his case that the aforesaid transactions belongs to one one Rakesh Panchal HUF and thereafter onus was shifted upon the A.O. to hold necessary inquiry with respect to the said alleged transactions and/or the amount belongs to Rakesh Panchal HUF, which the A.O. failed to discharged, it cannot be said that the learned tribunal has committed any error in deleting such addition. We are in complete agreement with the view taken by the learned CIT(A) as well as the learned tribunal. - Decided in favour of assessee Unexplained expenditure under section 69C - Held that - From the material on record and the findings recorded by the learned CIT(A) as well as the learned tribunal, it appears that there was no evidence whatsoever collected by the A.O. that the assessee incurred expenditure towards discounting of the cheques. It was the specific case on behalf of the assessee that as the assessee did not incur any expenditure towards discounting of the cheques, thereafter it was for the A.O. to collect evidence showing that in fact, the assessee incurred expenditure. Once it was the case on behalf of the asseessee that it had not incurred any expenditure, in that case, thereafter onus is upon the A.O. to disprove the same by collecting material evidence, which in the present case, A.O. failed. Under the circumstances, the learned CIT(A) has rightly deleted the addition made by the A.O. on account of unexplained expenditure as well as the learned tribunal. - Decided in favour of assessee

Summary

Issues Involved:
1. Unexplained investment of ?58,01,339
2. Unexplained expenditure under section 69C of ?1,28,670

Analysis:

Unexplained Investment of ?58,01,339:
The appellant, the revenue, challenged the order of the Income Tax Appellate Tribunal (ITAT) regarding the addition made on account of unexplained investment. The appellant contended that the amount belonged to Rakesh Panchal HUF and provided details and an affidavit to support this claim. However, the Assessing Officer (AO) made the addition without verifying the claim or conducting any inquiry. The Commissioner of Income Tax (CIT-A) deleted the addition based on the appellant's submissions and the affidavit provided. The High Court upheld the decision, emphasizing that the appellant had fulfilled its burden by providing complete details and shifting the onus to the AO to investigate further. The court agreed that there was no basis for the addition and dismissed the appeal regarding this issue.

Unexplained Expenditure under Section 69C of ?1,28,670:
The second issue pertained to the addition made by the AO on account of unexplained expenditure under section 69C. The appellant denied incurring any expenditure towards discounting of cheques, and it was the AO's responsibility to provide evidence contradicting this claim. However, the AO failed to collect any evidence supporting the expenditure. The CIT-A deleted the addition, which was later confirmed by the tribunal. The High Court concurred with this decision, stating that the AO did not disprove the appellant's claim of not incurring the said expenditure. Therefore, the court dismissed the appeal concerning this issue as well.

In conclusion, the High Court upheld the decisions of the CIT-A and the tribunal regarding both the unexplained investment and unexplained expenditure issues. The court found no errors in the decisions and dismissed the appeal accordingly.