2006 (4) TMI 230 - AT - Income Tax

Summary

Issues:
1. Revenue's appeal on cancellation of assessment as barred by limitation.
2. Assessee's appeal on confirming addition made by Assessing Officer on merits.

Analysis:

Issue 1: Revenue's Appeal - Cancellation of Assessment as Barred by Limitation
The appeal by the revenue challenges the cancellation of assessment by the Commissioner of Income-tax (Appeals) on the grounds of being barred by limitation. The Assessing Officer had issued a notice under section 148 on 7-11-2000 for the assessment year 1996-97. The Commissioner held that the assessment should have been completed by 31-3-2002 as per the amended provision of section 153(2). However, the assessment was completed on 13-2-2003, leading to it being considered as barred by limitation. The Commissioner relied on judicial decisions, including the Madras High Court's decision in Chettinad Corpn. (P.) Ltd. v. CIT, to support the application of the amended provision. The Tribunal upheld the Commissioner's decision, emphasizing the application of the amended provision and dismissing the revenue's appeal.

Issue 2: Assessee's Appeal - Addition Made by Assessing Officer on Merits
Regarding the addition made by the Assessing Officer on the merits of the case, the assessee contended that the funds for purchasing a property were received as loans from relatives. The Commissioner dismissed the assessee's appeal on merits, but the Tribunal partially allowed the assessee's appeal. The Tribunal emphasized the burden of proof on the assessee to establish the genuineness of credits received, including proving the identity of creditors, their capacity to lend, and the authenticity of transactions. The Tribunal found that for a specific amount received from a creditor working abroad, the burden shifted to the revenue to prove otherwise, which was not done. Hence, this credit was accepted as genuine. However, for other credits where no evidence of income source or tax assessment was provided, the additions were sustained. Consequently, the Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal.

In conclusion, the Tribunal upheld the cancellation of assessment on limitation grounds and addressed the merits of the case by accepting certain credits as genuine while sustaining additions for others.