The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that deeming provision cannot be applied mechanically, ignoring the facts of the case and surrounding circumstances.
The aforesaid observation was made by the Delhi ITAT, when an appeal was preferred before it by the appellant M/s. Godwin Construction Pvt. Ltd, against the order dated 30.03.2015, of the Commissioner of Income Tax (Appeals)-Meerut, relating to the Assessment Year 2011-12.
The questions involved in the assessee’s appeal being as to whether the confirmation of addition of Rs.51,39,000/- u/s 68, the penalty section of the Income Tax Act, 1961, is totally unlawful and unwarranted, as no unexplained cash credit is found recorded in the books of account of the appellant for the year under reference and therefore section 68 , could not be invoked and for that reason , and also as to whether the confirmation of addition of Rs.66,31,000/- in the hands of the appellant ,as unaccounted money ,is totally unfounded and unsupported by any entry in the books of account or any other cogent material on record or any unexplained asset found or seized , the facts of the case where that the assessee was a company, in whose case the AO had noted that a search operation was carried out at the premises of the assessee and at its site office, on 09.09.2010.
Subsequently, after the examination of the documents seized, a notice u/s 142(1)A of the Income Tax Act was issued to the assessee on 23.02.2012, calling for the return of income, in response to which, the assessee had filed the return of income for the A.Y. 2011-12, declaring income at Rs.24,27,270/-. Thereafter, the case was taken up for scrutiny and consequently the assessment was framed on 31.03.2013 u/s 143(3), determining the total income at Rs.2,72,74,270/-.
Aggrieved by the order of AO, the assessee had carried the matter before CIT(A), who vide the order dated 30.03.2015 in Appeal No.192/13-14, granted partial relief to the assessee. And it is being unsatisfied by the order of CIT(A), that the assessee has preferred the instant appeal before the Delhi ITAT.
With Shri Sandeep Sapra, C.A, the A.R for the assessee submitting that it is a settled law that the presumption, howsoever strong cannot substitute evidence, and that the Punjab and Haryana High Court has in the case of CIT vs. Ram Narain Goel, held that suspicion however strong cannot take the place of evidence or proof, he therefore reiterated that since the addition has been made only on the basis of suspicion, the addition made by AO and upheld by CIT(A), thus deserves to be deleted.
However, Shri R. K. Gupta (CIT), the DR, on the other hand took the ITAT through the order of the lower authorities ,strongly supported the same.
Hearing the opposing contentions of either sides and perusing the materials available on record, the Bench consisting of Astha Chandra, the Judicial Member, along with Anil Chaturvedi, the Accountant Member held:
“The deeming provision cannot be applied mechanically ignoring the facts of the case and the surrounding circumstances. Considering the totality of the aforesaid facts, we are of the view that in the present case, no addition of the impugned amounts is called for. We, therefore, direct the deletion of the additions made by AO and upheld by CIT(A)”.
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