Facts of the Case

The assessee, Raj Kumar Bajpai, was subjected to scrutiny assessment during which certain credits, deposits, or investments were noticed by the Assessing Officer. The assessee was required to explain the nature and source of these amounts. Unsatisfied with the explanation furnished and supporting evidence produced, the Assessing Officer treated the amounts as unexplained income and made additions accordingly. The assessee challenged the additions before the appellate authorities.

Issues Involved

  1. Whether the assessee satisfactorily explained the nature and source of the impugned amounts.
  2. Whether the Assessing Officer was justified in invoking provisions relating to unexplained income.
  3. Whether the evidentiary burden placed on the assessee was duly discharged.

Petitioner’s Arguments (Assessee’s Contentions)

  • The assessee contended that the amounts in question represented explained sources such as savings, business receipts, loans, or other legitimate funds.
  • It was argued that the Assessing Officer failed to properly consider the explanations and documents submitted.
  • The assessee submitted that additions were made on assumptions without adequate inquiry.

Respondent’s Arguments (Department’s Contentions)

  • The Revenue contended that the assessee failed to substantiate the source of the amounts with credible documentary evidence.
  • It was argued that explanations were either incomplete, inconsistent, or unsupported.
  • The Department maintained that the statutory burden of proof was not discharged, justifying the additions.

Court Order / Findings (ITAT Decision)

The Tribunal examined the factual matrix, documentary evidence, and reasoning adopted by the lower authorities. It reiterated that the initial onus to explain the source of credits or investments lies upon the assessee. Where the explanation is not supported by reliable evidence or fails to establish genuineness, identity, and capacity (where relevant), the Assessing Officer is justified in treating the amounts as unexplained income.

The Tribunal accordingly upheld or modified the additions based on the adequacy of material on record, emphasizing that tax liability must be determined on substantiated facts rather than unverified assertions.

Important Clarification

  • Sections 68 and 69 impose a strict evidentiary burden on the assessee.
  • Documentary support is essential to establish the genuineness of credits or investments.
  • Mere explanations without corroboration are insufficient to avoid addition.
  • Each case depends on its specific facts and quality of evidence produced.

Link to download the order - https://itat.gov.in/public/files/upload/1610622442-ITA%2024_rajkumarbajpai.pdf

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