This case involves a dispute where the Income Tax Officer (ITO) challenged the order of the CIT(A) which had deleted an addition of INR 2,00,00,000 made to Gammon Constructions Pvt Ltd’s income for the assessment year 2011-12. The addition was initially made by the Assessing Officer (AO) based on an alleged undisclosed payment for land purchase.
The assessment was reopened based on information suggesting that Gammon Constructions had entered into an agreement to purchase land and made a significant cash payment which was not accounted for in the company’s books. The company contested these allegations, stating the agreement was fabricated and no such transaction took place.
The AO argued that the company failed to provide satisfactory evidence to disprove the cash transaction. However, the CIT(A) reversed the AO’s decision, stating the burden of proof incorrectly rested on the taxpayer to prove non-occurrence of the transaction.
The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)’s decision, noting that the evidence provided was insufficient and the document used for making the addition was a mere photocopy and unsigned. The Tribunal criticized the AO’s approach of shifting the burden of proof to the assessee.
This decision highlights the importance of the burden of proof in tax proceedings and reaffirms that it lies with the authorities to establish the occurrence of a transaction. This case serves as a significant precedent for matters where the authenticity of transactions is questioned.
Detailed Analysis of ITA 1264/DEL/2020: ITO vs. Gammon Constructions on Disputed Land Investment
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