Mere Suspicion Not Enough for Income Tax Dept to make Additions to Taxpayer's Income: ITAT [Read Order]

The Surat bench of the Income Tax Appellate Tribunal (ITAT) has ruled that mere suspicion is not enough for the Income Tax Department (ITD) to make additions to a taxpayer's income.

The ITAT's decision came in a case where the ITD had made an addition of Rs. 13,57,110/- to the income of an assessee on the basis of suspicion that the cash deposits made by the assessee were unaccounted income.

The assesse, Jitendra Nemichand Gupta is an individual who is engaged in the railway ticket booking business. During the demonetization period, the assessee put a large amount of cash into his bank account.

The Assessing Officer felt that the cash deposit was unidentified income and added Rs. 13,57,110/- to the assessment. The assessee contested the addition before the CIT(A), who supported the Assessing Officer's decision. The assessee subsequently filed an appeal with the Tribunal.

The assessee argued that the cash deposit was part of the revenues from his railway ticket booking company.The assesses gave information on his clients and the tickets they had booked. The assessee also submitted an Economic Times press release indicating that booking of train tickets was permitted using old currency notes.

The Assessing Officer contended that the cash deposit constituted unaccounted income and pointed that the assessee had not enquired about the source of the cash deposit and further claimed that the Economic Times press release did not clearly state that reserving train tickets with old currency notes through sub-brokers was permitted.

In the case of Anantpur Kalpana vs ITO, ITAT had held that where the Assessing Officer made an addition under Section 68 on account of cash deposited by assessee in its two bank accounts post demonetization, since said cash deposit was towards assessee’s sale proceeds which was already offered to tax by assessee and admitted by revenue as revenue receipt, impugned addition made under section 68, resulting in double taxation, were liable to be deleted.

The Tribunal found that the assessee had been booking railway tickets for a long time before demonetization, provided client details, and used old currency notes. The Assessing Officer did not investigate the cash deposit source, and the assessee met their burden of proof, stating the addition was not sustainable.

A Single Member Bench Shri Pawan Singh (Judicial Member) allowed the appeal of the assessee and deleted the addition made by the Assessing Officer and found that the assessee had met his burden of proof and that the addition made by the Assessing Officer was not sustainable.

Suggested Image: Railway Ticket Bussiness/ ITAT Surat

Suggested Keywords: Demonetization, enquiry, Prima facie, Deleted, Additions, Burden of Proof, Railway Ticket, Unaccounted Income, Old Currency notes

To Read the full text of the Order CLICK HERE

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