2019 (2) TMI 1586 - AT - Income Tax

Reopening of assessment - undisclosed bank account - burden of proof - HELD THAT - Assessee has failed to produce material in support of his contention that he has never opened a bank account with Dena Bank is wrong. When the assessee submits that he has never opened the said bank accounts and files a suit in the court against M/s Dena Bank alleging fraud, he cannot be asked to produce documents in support of his claim that he has not opened a bank account. The negative cannot be proved. The burden of proof cannot be placed on the assessee. It is for the revenue which is making the allegation, to investigate and obtain material to disprove the claim of the assessee that he has not opened any of these accounts in this Dena Bank branch. As the revenue has not gathered any evidence, despite the assessee denying opening of these accounts and the assessee filing a Civil Suit in the court of law on this issue, hold that the additions, in question, have been unjustly made in the hands of the assessee in all the three assessment years. Such additions cannot be sustained. - Decided in favour of assessee.

Summary

Issues:
Appeals against common order passed by CIT(A) for three assessment years - Additions under section 68 as unexplained cash credit based on bank account information - Assessee's denial of ownership of bank accounts and allegations of fraud - Burden of proof on assessee to show non-ownership - Confirmation of additions by CIT(A) - Assessee's appeal against additions.

Analysis:
In this case, three appeals were filed against a common order by the Commissioner of Income Tax (Appeals) for three assessment years. The issue revolved around additions made under section 68 of the Income Tax Act as unexplained cash credit based on information about bank accounts held by the assessee. The Assessing Officer added the deposits in these accounts as unexplained cash credit as the assessee did not provide explanations for the sources of funds. The assessee, an individual deriving income from salary and interest, denied ownership of the accounts and alleged fraud, stating that the accounts might have been opened through forgery and fraud without his knowledge.

During the appeal, the assessee argued that the reopening proceedings were unjustified and that the additions made by the Assessing Officer should be deleted. The Commissioner of Income Tax (Appeals) upheld the additions, stating that the burden of proof was on the assessee to demonstrate non-ownership of the accounts. However, the assessee's denial of ownership and the filing of a Civil Suit against the bank officials alleging fraud and forgery raised doubts about the validity of the additions.

The Tribunal considered the assessee's claims and the ongoing Civil Suit, emphasizing that the burden of proof cannot be placed on the assessee to prove a negative assertion. As the revenue authorities failed to gather evidence contradicting the assessee's denial of ownership and the filing of a lawsuit, the Tribunal concluded that the additions were unjustified. Consequently, the Tribunal ruled in favor of the assessee, deleting the additions made in all three assessment years. The Tribunal highlighted that the revenue should have investigated and obtained evidence to disprove the assessee's claims instead of placing the burden of proof on the assessee.