ITAT Deletes Additions Made Solely on Basis of Third-Party Information, Grants Relief to Assessee
The Tribunal held that suspicion, no matter how strong, cannot take place of legal proof
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has deleted additions made solely on third-party information without independent verification by the Assessing Officer, finding it unsustainable in the eyes of law. Priyanka Sandeep Runwal, an individual assessee, approached the Tribunal when an assessment had been reopened by the Investigation Wing alleging...
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has deleted additions made solely on third-party information without independent verification by the Assessing Officer, finding it unsustainable in the eyes of law.
Priyanka Sandeep Runwal, an individual assessee, approached the Tribunal when an assessment had been reopened by the Investigation Wing alleging unexplained transactions.
Under the reassessment proceedings, the Assessing Officer relied entirely on external information to make additions without carrying out any independent enquiry or verification of facts. The Assessing Officer proceeded to make additions despite the assessee’s attempt to furnish explanations and documentary evidence in support of the transactions.
The Commissioner of Income Tax (Appeals) upheld the action of the Assessing Officer, leading the assessee to approach the Tribunal. Before the ITAT, the assessee contended that the additions were made purely on suspicion and presumption.
The Tribunal, comprising Anikesh Banerjee (Judicial Member) and Om Prakash Kant (Accountant Member), observed that while information from the Investigation Wing can form the basis for reopening an assessment, the Assessing Officer is duty-bound to independently examine the material on record and conduct necessary verification.
Handle GST Notices with Confidence and Clarity, Click here
The Tribunal further noted that the assessee had discharged its onus by producing relevant documentary evidence, and once such onus was discharged, the burden shifted to the Assessing Officer. In the absence of any such independent enquiry, the additions were held to be unsustainable.
Relying upon the Supreme Court precedent in Andaman Timber Industries v. CCE, the Tribunal deleted the additions made in the reassessment proceedings and allowed the appeal filed by the assessee.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
