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2018 (12) TMI 970 - AT - Income TaxDeemed income - unexplained money/investment toward acquisition cost of AGA through GPOA - transfer of a gas agency - Valuation of business - taxability of the impugned sum in the assessee s hands - Held that - Circumstantial evidence constitutes a good ground for inference as to ownership of an asset, i.e., of belonging to the assessee, or investment therein by him (C.K. Sudhakaran v. CIT 2005 (9) TMI 68 - KERALA HIGH COURT ), the other, overwhelming inference that arises is of the assessee being, on the contrary, a front man for others. The money, after all, could directly have exchanged hands between the owner and the Vendees. The amount disclosed as salary income could well be the commission income allowed to him for being an attorney, or for acting as a conduit of funds. The Revenue has not caused proper verification or an investigation into the facts, with the ld. CIT(A), rather than completing the process initiated by the AO, merely proceeded by, as it were, blaming the AO, whose efforts were hampered by the lack of proper assistance by the assessee, constraining him to draw inferences on the basis of the material before/information available with him. Taxability of the impugned sum in the assessee s hands is dependent on the basic facts, including the transfer of the gas agency itself, yet unascertained, the primary onus to lead which is on the assessee. No fetters are placed on either side, even as the burden to prove his return, and the claims preferred thereby, is on the assessee, who in the present case is in receipt of money CIT v. Calcutta Agency Ltd. 1950 (12) TMI 4 - SUPREME COURT and CIT v. R. Venkata Swamy Naidu 1956 (2) TMI 3 - SUPREME COURT . The AO shall adjudicate afresh, issuing definite findings of fact, in accordance with law, and after allowing the assessee proper opportunity to state his case. The matter, accordingly, setting aside the impugned order, is restored to the file of the AO for the purpose. Revenue s appeal is allowed for statistical purposes.
Issues Involved:
1. Sustainability of the addition of ?80 lacs made by the Assessing Officer (AO) in the hands of the assessee. 2. Justification of the Commissioner of Income Tax (Appeal) [CIT(A)] in deleting the addition of ?80 lacs. 3. Legitimacy of the gas agency sale without the permission of the Principal Authority. 4. Failure of the assessee to produce documentary evidence of money transferred to the Original Allottee. 5. Non-production of the Original Allottee who received the money transferred by the assessee. Detailed Analysis: Issue 1: Sustainability of the Addition of ?80 lacs The AO added ?80 lacs to the assessee's income, suspecting the sale of the gas agency was not genuine. The AO's rationale was that the assessee, a layman with no relation to the original owner, received the amount without any evidence of the payment being made to the original owner, Sh. Paramdeep Singh. The AO inferred that the assessee must have first purchased the gas agency and then sold it, deeming the ?80 lacs as unexplained money/investment. Issue 2: Justification of CIT(A) in Deleting the Addition The CIT(A) deleted the addition, criticizing the AO for not verifying the transaction by recording statements from the vendees or examining the books of AGS. The CIT(A) believed the AO's conclusions were based on doubts and misconceptions without positive material evidence. However, the tribunal found the CIT(A)'s approach flawed, as he did not complete the verification process himself or remand it for further examination. Issue 3: Legitimacy of the Gas Agency Sale The Revenue argued that the gas agency sale required permission from the Principal Authority, which was not obtained. This raised doubts about the legitimacy of the transaction. The tribunal noted that such permissions could be readily verified from the concerned company, emphasizing the need for thorough verification. Issue 4: Failure to Produce Documentary Evidence The assessee failed to produce documentary evidence showing the transfer of ?80 lacs to Sh. Paramdeep Singh. The tribunal highlighted the absence of receipts and direct confirmation from the original owner, which were critical to proving the transaction. The CIT(A) should have ensured this verification, either directly or through a remand to the AO. Issue 5: Non-production of the Original Allottee The assessee claimed that Sh. Paramdeep Singh was abroad during the assessment proceedings, preventing his production. However, no evidence was provided to substantiate this claim. The tribunal noted that the assessee had ample opportunity to produce the original allottee during the appellate proceedings, which was not done. Conclusion: The tribunal found the matter factually indeterminate and emphasized that the primary onus to prove the transaction lay with the assessee. The tribunal set aside the impugned order and restored the matter to the AO for fresh adjudication, instructing the AO to issue definite findings of fact after allowing the assessee a proper opportunity to state his case. The tribunal's decision was guided by the principle that tax proceedings are not adversarial and should be resolved consistently with justice. Final Judgment: The Revenue's appeal was allowed for statistical purposes, and the matter was remanded to the AO for fresh adjudication. The order was pronounced in the open court on October 31, 2018.
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