In the case ITA No. 5580/DEL/2019, the appellant Gurcharan Singh from New Delhi challenged the reopening of his assessment for the assessment year 2010-11 by the ACIT, Circle-47(1), New Delhi. The case was filed on 26th June 2019, and the final tribunal order was pronounced on 30th August 2023.
The reopening of the assessment was based on large cash transactions identified in the appellant’s bank accounts. The appellant argued that these transactions were linked to sales made to M/s Varun Impex and M/s Meet Exports. However, the appellant failed to provide confirmations from these parties.
The appellant raised multiple grounds, challenging the validity and legality of the reopening of the assessment under Sections 147 and 148 of the Income Tax Act. Key points included:
The tribunal noted that the assessee had received cash amounts from M/s Varun Impex and M/s Meet Exports, claiming these were against sales proceeds. However, during the assessment proceedings, the assessee failed to produce these parties or their books of accounts to prove the genuineness of the transactions.
Despite multiple opportunities, the appellant could not substantiate his claims. The inspector’s inquiries revealed that the said entities either did not exist at the given addresses or could not be traced. The tribunal upheld the addition made by the AO on account of unexplained credits/cash received, amounting to Rs. 24,06,661/- from M/s Varun Impex and Rs. 2,16,14,618/- from M/s Meet Exports.
The tribunal referred to various legal provisions and judicial precedents to support its decision. It cited Section 68 of the Income Tax Act, which allows the AO to add unexplained credits to the assessee’s income if the assessee fails to satisfactorily explain the nature and source of the credits. Additionally, the tribunal drew from the Indian Evidence Act, 1872, Section 114(g), which infers that evidence not produced would be unfavorable to the person withholding it.
Key cases referenced included:
The tribunal dismissed the appeal of Gurcharan Singh for both assessment years 2009-10 and 2010-11, upholding the findings of the CIT(A) and the AO. The assessee’s failure to produce sufficient evidence to substantiate his claims led to the dismissal of his appeals.
The final judgment reaffirms the importance of providing adequate evidence and documentation to support claims made during assessment proceedings. It also highlights the AO’s authority under Section 68 to add unexplained credits to the assessee’s income if satisfactory explanations are not provided.
Order pronounced in open court on 30th August 2023.
Members of the Tribunal:
Accountant Member: Narendra Kumar Billaiya
Judicial Member: Kul Bharat
Gurcharan Singh vs ACIT, Circle-47(1), New Delhi: Reopening Assessment for AY 2010-11
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