2021 (11) TMI 314 - AT - Income Tax

Appellate tribunal deletes addition under section 69C, emphasizes Assessing Officer's duty to justify evidence rejection.

The appellate tribunal ruled in favor of the assessee, deleting the addition of Rs. 17,21,255 under section 69C of the Income Tax Act for the Assessment ... Addition u/s 69C - Unexplained purchase of shares - HELD THAT:- CIT(A) has invoked provisions of section 145(3) of the Act. We note that assessing officer has not discussed any of these documents and evidences in the assessment order. AO has not made any adverse finding in any of these documents, even though all the details were furnished by the assessee before him. AO ought to have examined all these details and refuted/rejected them, with a cogent adverse findings and discernable line of reasoning, in order to arrive at a conclusion. On the contrary, the assessing officer has just brushed aside these evidences and documents, submitted by assessee, without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Hence we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made, is deleted. Hence these two grounds of the assessee are allowed. Issues:1. Addition of Rs. 17,21,255 under section 69C of the Income Tax Act.2. Confirmation of the addition by the Commissioner of Income Tax (Appeals) and subsequent appeal.Issue 1: Addition of Rs. 17,21,255 under section 69C of the Income Tax Act:The appeal pertains to the Assessment Year 2014-15 and concerns the addition of Rs. 17,21,255 as unexplained expenditure under section 69C of the Income Tax Act. The Assessing Officer observed discrepancies in the details of share transactions submitted by the assessee during the assessment proceedings. The assessee, engaged in trading of shares and securities, had shown stock of shares in the audited accounts but failed to provide complete details of share transactions. Consequently, the Assessing Officer added the amount as unexplained expenditure. The Commissioner of Income Tax (Appeals) upheld this addition despite the assessee's submissions. The appellant contended that the audit reports and documents submitted adequately explained the transactions, highlighting the availability of different demat accounts at various points. The appellate tribunal noted that the Assessing Officer did not invoke section 145(3) of the Act and failed to provide a reasoned rejection of the evidence presented by the assessee. Consequently, the tribunal deleted the addition of Rs. 17,21,255, emphasizing that when an assessee provides substantial evidence, it cannot be disregarded without proper justification.Issue 2: Confirmation of the addition by the Commissioner of Income Tax (Appeals) and subsequent appeal:The appellant challenged the confirmation of the addition by the Commissioner of Income Tax (Appeals) before the tribunal. The tribunal carefully examined the submissions, documents, and findings of the lower authorities. It noted that the Assessing Officer did not engage with the evidence provided by the assessee and failed to offer any adverse findings on the documents submitted. The tribunal highlighted the importance of providing a cogent reasoning for rejecting evidence when an assessee presents comprehensive documentation. As the Assessing Officer did not provide a valid reason for disregarding the evidence, the tribunal allowed the appeal and deleted the addition of Rs. 17,21,255. The tribunal emphasized that the Assessing Officer's failure to address the evidence submitted by the assessee led to the deletion of the addition.In conclusion, the appellate tribunal ruled in favor of the assessee, allowing the appeal and deleting the addition of Rs. 17,21,255. The tribunal emphasized the necessity for the Assessing Officer to engage with the evidence presented by the assessee and provide a reasoned rejection if necessary, highlighting that substantial evidence cannot be dismissed based on assumptions.