2006 (2) TMI 134 - HC - Income Tax

Additions u/s 69A - admitted facts were that the entire sum was credited in the bank accounts of the assessee by cash and the assessee through his authorised representative, Mr. Mariappa Goundar, who is none other than the father of the assessee, withdrew the entire money from the banks just prior to the date of the raid. It is clear that the entire money was in the possession of the assessee. The assessee is receiving a small amount as salary. The assessee was not disclosing the true picture of how he came into possession of such huge amount. Since the entire amount was deposited in the assessee s accounts and the assessee was not prepared to disclose the source of its receipt, the natural presumption would be that the assessee was the owner of the entire money. - Assessee failed to prove that the money does not belong to him and hence, the authorities were right in assessing u/s 69A

Summary

Issues:
1. Confirmation of addition under section 69A in reopened assessments.
2. Burden of proof regarding ownership of deposited monies in bank accounts.

Issue 1: Confirmation of addition under section 69A in reopened assessments
The case involved appeals against an order passed by the Income-tax Appellate Tribunal confirming additions made under section 69A of the Income-tax Act in reopened assessments for the years 1991-92 and 1992-93. The Revenue discovered a substantial amount credited to the assessee's bank accounts during a search operation, which the assessee claimed belonged to individuals from Ahmedabad. However, the assessee failed to provide sufficient details or evidence regarding the source and ownership of the funds. The Tribunal upheld the addition as unexplained money, considering the lack of concrete proof from the assessee to refute ownership. The High Court noted that the assessee withdrew the entire amount before a raid, raising suspicions about the source and legitimacy of the funds. The court emphasized that the burden of proof lay with the assessee to establish the funds' ownership, which the assessee failed to do, leading to the conclusion that the authorities were justified in assessing the amount under section 69A.

Issue 2: Burden of proof regarding ownership of deposited monies in bank accounts
The primary contention revolved around the assessee's claim that the substantial sum credited to their bank accounts belonged to third parties engaged in bleaching work. However, the assessee's inability to provide essential details or evidence about these individuals, coupled with the withdrawal of the entire amount before the raid, raised doubts about the veracity of the claim. The court highlighted that receiving such a significant sum without knowing the identity or address of the alleged owners was implausible for a businessman. The court reasoned that the assessee's actions, including the withdrawal of funds and lack of transparency, indicated ownership of the money. The court stressed that the assessee's failure to prove otherwise led to the presumption that the funds belonged to the assessee, justifying the application of section 69A. Consequently, the court upheld the Tribunal's decision, finding no grounds for interference and dismissing the case without costs.

In conclusion, the High Court upheld the Tribunal's decision to confirm the addition under section 69A in the reopened assessments, emphasizing the assessee's failure to discharge the burden of proof regarding the ownership of the deposited monies in the bank accounts. The court highlighted the lack of concrete evidence or details provided by the assessee, leading to the presumption that the funds belonged to the assessee. The judgment underscored the importance of transparency and evidence in establishing ownership to avoid assessments under relevant tax provisions.