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2022 (11) TMI 470 - AT - Income TaxAddition u/s 68 - burden of proof - Bogus profit from bogus trading in commodities through the broker - AO was of the view that onus to prove the source of income was on the assessee, and hence he had not made any further inquiry and it was sought to be justified on the ground that Section 8, read with Section 106 of the Indian Evidence Act, 1872 that when the fact is substantially within the knowledge of any person, burden of providing that fact is upon him - HELD THAT - As the burden was on the department to show that the amount of demand drafts found to be credited in the assessee s account in the books of account of GMDC belonged to the assessee by bringing proper evidence on record and the assessee could not be expected to explain the source of income or to call responsible officers of the GMDC or bank to discharge the burden that laid upon the department. As further find that in case Dr. Swati Mahesh Vinchurkar vs DCIT 2021 (6) TMI 1123 - ITAT SURAT the Division Bench of Surat Tribunal also took view that once assessee denied that she has not earned income as reflected in her form 26-AS, the onus shifts of the Revenue authorities to prove such income of such assessee. The addition solely cannot be made by ignoring the submission of assessee. AO was not justified in absence of bringing any cogent evidence to make such addition of alleged profit, when the assessee specifically denied his involvement in the transaction of Multi National Commodity Exchange and has furnished his bank statement showing that there is no such credit in his books. Hence, we direct the Assessing Officer to delete the addition of alleged bogus profit. Appeal filed by the assessee is allowed.
Issues Involved:
1. Validity of reopening the case under Section 147/148 of the Income Tax Act. 2. Addition of Rs. 3,96,370/- under Section 68 on account of alleged bogus profit from commodity trading. 3. Onus of proof regarding the non-involvement in the alleged bogus transactions. Issue-wise Detailed Analysis: 1. Validity of Reopening the Case under Section 147/148: The appellant initially contested the validity of reopening the case under Section 147/148 of the Income Tax Act. However, during the hearing, the appellant's representative decided not to press this ground. Consequently, this issue was dismissed as not pressed. 2. Addition of Rs. 3,96,370/- under Section 68 on Account of Alleged Bogus Profit: The case was reopened based on information from DGIT, Ahmedabad, indicating that the assessee received a bogus profit of Rs. 3,96,370/- from commodity trading through Jet Air Agencies Pvt. Ltd. The Assessing Officer (AO) believed that the income had escaped assessment and issued a notice under Section 148. Despite the assessee's submission that no such transactions occurred, the AO added Rs. 3,96,370/- as unexplained cash credit under Section 68, citing the assessee's failure to provide sufficient details. Upon appeal, the CIT(A) upheld the AO's decision, stating that the assessee did not discharge the onus of proving non-involvement in the transactions. The CIT(A) emphasized that the assessee's name and details were recorded in the information provided by DGIT, Ahmedabad. 3. Onus of Proof Regarding Non-Involvement in Alleged Bogus Transactions: The appellant argued that the onus of proving the non-involvement in the alleged bogus transactions was wrongly placed on him. The appellant contended that the AO should have conducted a thorough investigation, including obtaining details from the broker and verifying the transactions. The appellant provided bank statements and other financial documents to support his claim of non-involvement. The Tribunal found inconsistencies in the AO's findings, noting that the AO did not conduct any substantial investigation or inquiry to verify the claims. The Tribunal observed that the AO made an addition based on general information without concrete evidence linking the assessee to the alleged bogus transactions. The Tribunal emphasized that once the assessee denied involvement, the onus shifted to the AO to prove the assessee's involvement in the transactions. The Tribunal referred to the Gujarat High Court's decision in Krishna Textiles vs. CIT, which held that the burden of proof lies with the department to show that the amount credited in the assessee's account belonged to the assessee. The Tribunal also cited the decision in Dr. Swati Mahesh Vinchurkar vs. DCIT, reinforcing that the revenue authorities must provide concrete evidence when the assessee denies earning the alleged income. Conclusion: The Tribunal concluded that the AO was not justified in making the addition of Rs. 3,96,370/- without bringing any cogent evidence to support the claim of bogus profit. The Tribunal directed the AO to delete the addition, thereby allowing the appeal filed by the assessee. Order Pronouncement: The order was pronounced in open court on 27/10/2022.
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