2017 (6) TMI 829 - AT - Income Tax

Addition of opening capital carry forwarded from previous year - Held that - If no evidence or material was produced before the authorities below to show how assessee was having availability of any fund with him or to have any opening capital balance addition is justified. In the absence of any evidence, it is difficult to accept the explanation of the assessee. It is a clear case of building capital and to show opening capital balance. Also suppose any assessee may declare any huge amount in cash flow statement in preceding year which was not subject to scrutiny assessment whether same could be extended benefit to the assessee, the answer would be that such attempt to build capital cannot be accepted unless there was some evidence of record to justify accumulative of funds or the availability of the opening capital balance. - Decided against assessee. Addition on account of sale of trees to Shri Khalil - Held that - In the absence of any evidence to prove that assessee was owner of popular trees or he has actually sold the popular tree to Mr. Khali, no interference is called for in the matter. Similarly production of receipt and statement recorded by AO orally is not sufficient to discharge onus upon assessee to prove genuineness of the transaction in the matter and actual sale transaction of popular tree. In the absence of any evidence or material on record no interference is called for in the matter. - Decided against assessee.

Summary

Issues:
1. Addition of ?80,000 out of opening capital for assessment year 2009-10.
2. Addition of ?4,10,000 on account of sale of trees.
3. Addition of ?1,20,000 out of opening capital for assessment year 2009-10 in a separate appeal.

Issue 1: Addition of ?80,000 out of opening capital for assessment year 2009-10:
The assessee challenged the addition of ?80,000 out of the opening capital of ?1,80,000 carry forwarded from the previous year. The AO rejected the explanation due to lack of documentary evidence. The CIT(A) noted discrepancies in the assessee's claims and past filings, suggesting an attempt to build capital. The CIT(A) allowed a credit of ?1,00,000 but confirmed the balance addition of ?80,000. The ITAT Delhi Bench emphasized the need for evidence to justify the opening capital balance, dismissing the appeal due to insufficient proof of funds or capital accumulation.

Issue 2: Addition of ?4,10,000 on account of sale of trees:
The assessee contested the addition of ?4,10,000 from the sale of trees to Mr. Khalil. Despite Mr. Khalil confirming the transaction, the AO was unsatisfied with the lack of documentary evidence. The CIT(A) stressed the importance of establishing the buyer's capacity and transaction genuineness. The ITAT upheld the addition, emphasizing the need for concrete evidence of ownership and sale of trees, dismissing the appeal due to insufficient proof of the transaction's genuineness.

Issue 3: Addition of ?1,20,000 out of opening capital for assessment year 2009-10 in a separate appeal:
In a separate appeal, the assessee challenged the addition of ?1,20,000 out of the opening capital of ?2,20,000. The issue mirrored the one considered in a previous appeal, and following the reasoning of the earlier decision, the ITAT dismissed the appeal.

In conclusion, all appeals by the assessee were dismissed by the ITAT due to insufficient evidence and discrepancies in explanations provided regarding the additions to opening capital and sale of trees. The judgments emphasized the importance of concrete evidence to substantiate claims and establish the genuineness of transactions.