2021 (7) TMI 886 - AT - Income Tax

Tribunal invalidates assessment order, emphasizes credible evidence, burden of proof in tax cases

The Tribunal invalidated the assessment order due to incorrect information, directing the deletion of the addition of Rs. 13,00,000/- based on cash ... Unexplained cash deposits in bank accounts - assessee claimed to be received cash gift from his father - HELD THAT:- The true transaction supported with the evidences cannot be denied in absence of any other contrary evidences on record. Assessing Officer could not revert facts of date of cash deposits on 27.07.2013 in the bank account which was supported by the sale agreement dated 25.07.2013, bank statement of the assessee and also by the affidavit of his father and statements of his father. The lower authorities have not stated that these documents are after thought and after the date of deposits. The assessee has furnished various evidences as two sale agreements dated 25.06.2013 and 25.07.2013 respectively, affidavit, statements of father recorded by the AO. All these cannot be said self-serving evidences and the AO nowhere found any contradiction in these evidences. Thus, here the assessee has not only proved source of cash deposit but also source of source. When the donor had been examined by the Assessing Officer himself admittedly who had given the money to the assessee which not disproved by the authority. The Assessing officer has not found any contradiction in the affidavits, statements and agreements etc. The assessee has also proved, identity (not denied by the AO), genuineness which the ld. AO not disputed, Capacity has also been proved by the assessee by filling various material evidences as above and has not been doubted as he did not speak a single word on the capacity of the donor. The persons fully explained the sources of gift given by him with the material evidences We are of the view that the assessee has proved the source of source of deposit in his savings bank account, therefore, we direct the A.O. to delete the addition made qua this issue. - Decided in favour of assessee. Issues Involved:1. Validity of the assessment order under sections 143(3) and 147 of the Income Tax Act, 1961.2. Legitimacy of the addition of Rs. 13,00,000/- on account of cash deposits.3. Appropriateness of charging interest under sections 234A, 234B, and 234C of the Income Tax Act, 1961.Detailed Analysis:1. Validity of the Assessment Order under Sections 143(3) and 147:The assessee challenged the assessment order dated 19/12/2017, arguing it was invalid and barred by limitation. The assessment was initiated under section 147 based on information that the assessee had deposited Rs. 26,00,000/- in cash during the financial year 2013-14. The assessee contended that the actual deposit was only Rs. 13,00,000/-, not Rs. 26,00,000/-. The Tribunal noted that the reopening of the case was based on incorrect information, as the deposit was indeed Rs. 13,00,000/-. Citing the case of *Vijay Harish Chandra Patel vs. ITO 400 ITR 167 (Guj.) (2018)*, the Tribunal concluded that reopening based on incorrect facts is invalid, rendering the proceedings void ab initio.2. Legitimacy of the Addition of Rs. 13,00,000/- on Account of Cash Deposits:The primary issue was whether the cash deposit of Rs. 13,00,000/- was justified. The assessee claimed the amount was a gift from his father, who sold agricultural land. The Assessing Officer (AO) questioned the credibility of the sale and the gift, especially since the sale deed mentioned a lower amount (Rs. 4,85,651/-) than the claimed sale proceeds (Rs. 20,00,000/-). The AO made the addition citing lack of credible evidence.The Tribunal examined the evidence:- Affidavit from the father confirming the gift.- Sale agreements dated 25.06.2013 and 25.07.2013, showing the sale of land.- Bank statement showing the deposit.- Examination of the father by the AO, where he confirmed the gift and sale proceeds.The Tribunal observed that the AO did not find any contradiction in these documents and noted that the non-appearance of the purchaser (Sh. Kailash Chand Saini) did not invalidate the transaction. The Tribunal emphasized that suspicion cannot replace evidence and cited several cases, including *Mehta Pareek & Co. 30 ITR 181 (SC)*, *CIT vs. INTEZAR ALI 372 ITR 0651 (All)*, and *Labhchand Bohra V/s ITO (2008) 8 DTR 44 (Raj.)*, to support the legitimacy of the evidence provided by the assessee. Consequently, the Tribunal directed the AO to delete the addition of Rs. 13,00,000/-.3. Appropriateness of Charging Interest under Sections 234A, 234B, and 234C:Given the deletion of the addition of Rs. 13,00,000/-, the Tribunal found no basis for charging interest under sections 234A, 234B, and 234C. As a result, this ground was rendered moot.Conclusion:The Tribunal allowed the appeal, invalidating the assessment order based on incorrect information and directing the deletion of the Rs. 13,00,000/- addition. Consequently, the interest charged under sections 234A, 234B, and 234C was also dismissed. The judgment emphasized the importance of credible evidence over suspicion and upheld the legal principles governing the burden of proof in tax matters.