Facts of the Case

The assessee, Shri Shiv Ram Pandey, was assessed under Section 143(3) of the Income-tax Act. During the assessment proceedings, the Assessing Officer made additions treating certain credits as unexplained under Section 68. The assessee challenged the additions before the CIT(A), who granted relief by deleting the additions after considering the material on record. Aggrieved by the relief granted, the Revenue filed an appeal before the Income Tax Appellate Tribunal.

Issues Involved

  1. Whether the deletion of addition under Section 68 by the CIT(A) was justified.
  2. Whether the assessee had satisfactorily explained the nature and source of the credits.
  3. Whether the Revenue had sufficient grounds to interfere with the appellate order.

Petitioner’s (Revenue’s) Arguments

  • The Revenue contended that the CIT(A) erred in deleting the addition.
  • It was argued that the assessee failed to adequately prove the nature and source of the credits.
  • The order of the Assessing Officer should have been sustained.

Respondent’s (Assessee’s) Arguments

  • The assessee submitted that complete details regarding the credits had been furnished.
  • Identity of the creditors, their creditworthiness, and genuineness of transactions were established.
  • The CIT(A) had correctly appreciated the evidence and granted relief.
  • The Revenue’s appeal lacked merit.

 Court Order / Findings (ITAT Allahabad)

The Tribunal observed that once the assessee furnishes sufficient evidence establishing identity of the creditors, their financial capacity, and genuineness of the transactions, the burden shifts to the Revenue. In the present case, the CIT(A) had examined the material and recorded findings in favour of the assessee.

The Revenue failed to bring any contrary evidence to rebut these findings. Accordingly, the Tribunal upheld the order of the CIT(A) and dismissed the Revenue’s appeal.

Important Clarification

The Tribunal reiterated that additions under Section 68 cannot be sustained merely on suspicion. Where the assessee discharges the initial burden with credible evidence, the Revenue must bring material on record to justify the addition.

Link to download the order –https://itat.gov.in/public/files/upload/1604491589-ITA%20371%20Shri%20Shiv%20Ram%20Pandey.pdf

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