2018 (1) TMI 599 - AT - Income Tax

Undisclosed income of the assessee - search u/s 132 - transactions recorded in the loose sheets - burden with regard to the ownership of the documents mentioned in Annexure GVS/3 & GVS/4 - Held that - Merely relying on the statement of the assessee s son, the A.O. cannot make addition in the hands of the assessee without bringing any tangible evidence. Once the assessee furnished the details of the transactions, the name and address of the person, the burden of the assessee stands discharged and shifts to the revenue and the revenue has to discharge its burden making necessary enquiries. In this case, even though assessee has discharged the burden, the A.O. has not discharged its burden. Therefore, we hold that the A.O. has not made out a case for making addition in the hands of the assessee and the transactions recorded in the Annexure GVS/3 & GVS/4 do not related to the assessee and related to Smt. S. Venkata Ratnam and the addition if any required to be made in her hands but not in the hands of the assessee. Accordingly, the additions made on the basis of Annexure GVS/3 & GVS/4 stands deleted. With regard to the additions made in respect of the seized material marked as Annexure GVS/1, the assessee s son in question No.4 has stated that the copies of the relevant documents in page Nos.18 to 22 represents the money lending transaction done by his father. This fact was neither disputed by the assessee nor disputed by his son. In the subsequent replies filed before the A.O., the assessee has not disputed the contents of the loose sheets numbered in GVS/1, GVS/18 to 22. In the loose sheets found and seized during the course of search in GVS/1, there was a principal amount as well as the interest recorded which not was disputed by the assessee and did not explain. Therefore, we hold that the amounts recorded in the loose sheets in GVS/1 from page Nos.18 to 22 are related to the money lending transactions of the assessee as stated by the assessee s son in his statement dated 18.3.2009. Accordingly, we uphold the additions for the assessment years 2005-06 to 2006-07 accordingly - decided partly in favour of assessee

Summary

Issues involved:
Assessment of unaccounted income based on seized material - Ownership of transactions in loose sheets - Burden of proof on assessee - Addition in the hands of correct person - Appeal against CIT(A) order.

Analysis:
1. The appeals were filed by the assessee against the order of the Commissioner of Income Tax (Appeals) for the assessment years 2005-06, 2006-07, 2007-08 & 2009-10, following a search operation under section 132 revealing incriminating material related to advances given by the assessee.

2. The Assessing Officer (A.O.) quantified unaccounted transactions based on loose sheets found during the search, leading to the assessment of undisclosed income for the mentioned years. The assessee claimed the transactions belonged to Smt. S.V. Ratnam, not him, and requested non-assessment in his hands, which the A.O. rejected due to lack of supporting evidence.

3. The A.O.'s decision was upheld by the CIT(A), prompting the assessee to appeal before the ITAT. The assessee argued that the loose sheets belonged to Smt. S.V. Ratnam, supported by her statements and submissions, shifting the burden of proof to the revenue authorities.

4. The ITAT found that the assessee had sufficiently proven that the transactions in the seized material belonged to Smt. S.V. Ratnam, not the assessee. The A.O. failed to provide tangible evidence to counter the assessee's claims, leading to the deletion of additions made based on the loose sheets related to Smt. S.V. Ratnam.

5. However, regarding another set of seized material (GVS/1), the ITAT upheld the additions for the assessment years 2005-06 to 2006-07 as the son of the assessee confirmed these transactions as related to the money lending activities of the assessee, which were not disputed subsequently.

6. The ITAT ruled that the burden of proof was on the revenue authorities to verify ownership and content of the seized material, and in the absence of concrete evidence against the assessee's claims, the additions based on the loose sheets were deleted for the transactions related to Smt. S.V. Ratnam but upheld for the money lending transactions of the assessee.

7. Consequently, the ITAT partially allowed the appeals of the assessee, emphasizing the importance of proper verification and burden of proof in such cases.

This detailed analysis outlines the key aspects of the judgment, including the assessment of unaccounted income, burden of proof, ownership of transactions, and the ITAT's decision on the additions made by the revenue authorities.