The Income Tax Appellate Tribunal Delhi Bench “SMC” dealt with an appeal filed by Shaleen Prasad against the decision of the Commissioner of Income Tax (Appeals)-35, New Delhi for the assessment year 2007-08. The case centered around the issue of alleged capitation fees paid to Santosh Medical College.
Shaleen Prasad, the appellant, was accused of failing to substantiate the source of a significant cash payment alleged to be capitation fees to Santosh Medical College. The primary contention was whether the burden of proof rested on Prasad to show that no such fees were paid or if the Income Tax Department was required to provide conclusive evidence of such payment.
The tribunal heard arguments regarding the responsibility to establish the existence of the capitation fees. Prasad’s legal team argued that the Income Tax Officer (ITO) and subsequent appellate authorities relied on uncorroborated evidence and denied Prasad the opportunity for cross-examination, which they claimed violated principles of natural justice and contemporary jurisprudence.
The tribunal’s decision to dismiss the addition of Rs.32,50,000 as unexplained income highlights significant aspects of procedural fairness in tax assessments. The judgment underscores the importance of allowing taxpayers the opportunity to cross-examine evidence used against them and ensuring that such evidence is presented transparently and fairly.
The ITA No. 1620/DEL/2020 case is a pivotal example of the challenges taxpayers face when contesting assessments based on indirect evidence. The tribunal’s approach to handling evidence and the burden of proof could influence future cases involving similar disputes over alleged undeclared payments.
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