1988 (9) TMI 77 - AT - Income Tax

Summary

Issues:
1. Delay in filing the appeal
2. Condonation of delay
3. Addition of loan amounts by the ITO
4. Burden of proof on the assessee regarding loans

Delay in Filing the Appeal:
The appeal in question was filed nine months late, with the assessee citing personal reasons for the delay. The assessee's affidavit detailed his illness, mental torture due to marital issues, and closure of business as reasons for the delay. The chartered accountant's advice to file a petition before the Settlement Commission further complicated matters. The Tribunal accepted the reasons provided by the assessee and concluded that there was sufficient cause for the delay in filing the appeal.

Condonation of Delay:
The Tribunal referenced the Supreme Court's stance on condoning delays to ensure substantial justice. Citing a Bombay High Court case precedent, where delay was condoned due to mistaken legal advice, the Tribunal decided to condone the delay in this case as well. The Tribunal emphasized the need for a liberal approach in such matters and proceeded to hear the appeal on its merits.

Addition of Loan Amounts by the ITO:
The ITO had added loan amounts totaling Rs. 3,49,000 due to lack of G.I.R. numbers despite confirmatory letters from creditors. The CIT(A) upheld the additions, stating that the burden of proof regarding the loans' genuineness lay with the assessee. The Tribunal noted the requirement for the assessee to establish the identity and capacity of creditors and the genuineness of transactions. However, it found that the ITO should have given the assessee an opportunity to summon creditors if needed. The matter was remanded to the ITO to allow the assessee to provide further evidence and establish the legitimacy of the loans.

Burden of Proof on the Assessee Regarding Loans:
The Tribunal highlighted the established principle that the burden of proof regarding the identity and capacity of creditors, as well as the genuineness of transactions, rests with the assessee. It noted the misconception on the part of the assessee regarding the ITO's role in summoning creditors. The Tribunal directed the ITO to provide the assessee with an opportunity to present evidence and prove the legitimacy of the loans, emphasizing the assessee's responsibility in meeting this burden.

In conclusion, the Tribunal allowed the appeal for statistical purposes, condoned the delay in filing, and directed the ITO to reassess the addition of loan amounts based on the evidence to be provided by the assessee.