2017 (8) TMI 190 - HC - Income Tax

Addition u/S 68 and u/s 69C - Held that - In the present case the burden was not discharged by the Assessee. According to him, the CIT (A) failed to notice that the AO had in fact conducted the enquiry and it is the Assessee who is unable to furnish a satisfactory explanation for the credit entries in his account. The Court is unable to agree with the submissions of Mr. Chaudhary. The order passed by the CIT (A) is a reasoned one. It correctly notes that once the Assessee produced the agreement to sell entered into with CCRP, the onus shifted to the AO to make a further enquiry by summoning the directors of CCRL to determine whether the explanation offered by the Assessee was tenable. As further noted by the CIT (A), the AO failed to furnish to the Assessee a copy of the statement of Mr S. K. Gupta, which formed the main basis for making the additions. Mr Gupta was not even offered for cross-examination.

Summary

Issues:
1. Condonation of delay in re-filing the appeal.
2. Appeal by the Revenue against ITAT order deleting additions under Sections 68 and 69C of the Income Tax Act, 1961.

Analysis:
1. The delay of 58 days in re-filing the appeal was condoned by the court. The application for condonation of delay was disposed of.

2. The appeal by the Revenue was against the ITAT order deleting additions of ?60 lakhs under Section 68 and ?60,000 under Section 69C of the Income Tax Act, 1961 for the Assessment Year 2005-06. The Revenue contested the findings of the CIT (A) and ITAT regarding the deletion of these additions.

3. The Revenue's case was based on information that the Assessee received accommodation entries of ?60 lakhs from a paper company controlled by certain individuals. The AO initiated proceedings under Section 147 of the Act and held that the amount received was to be treated as the Assessee's income under Sections 68 and 69C of the Act.

4. The CIT (A) allowed the Assessee's appeal noting that the AO failed to conduct proper verification and enquiry to disprove the Assessee's claims. The CIT (A) shifted the onus to the AO after the Assessee produced an agreement to sell, which the AO did not attempt to disprove.

5. The ITAT confirmed the CIT (A)'s decision, noting that the AO's additions were not justified. Despite the Revenue's appeal, the ITAT found no merit in the Revenue's arguments and upheld the deletion of the additions.

6. The Senior Standing Counsel for the Revenue relied on a Supreme Court decision to argue that the burden of explaining income from undisclosed sources lay on the Assessee, which was not discharged. However, the Court disagreed, stating that the CIT (A) and ITAT's orders were reasoned and legally sound.

7. The Court found no legal infirmity in the orders passed by the CIT (A) and ITAT. It dismissed the appeal, stating that no substantial question of law arose for consideration in this case.