2015 (4) TMI 1054 - HC - Income Tax

Addition u/s 68 - Addition on undisclosed income - Held that - It is no part of the duty of the Assessing Officer to make investigation for the purpose of collecting evidence in support of the case made out by the assessee. It is the bounden duty of the assessee to prove his case. If he has adduced prima facie evidence in support of his case it will be for the Assessing Officer to adduce evidence to disprove the facts proved prima facie by the assessee. If the Assessing Officer fails to discharge his onus the prima facie evidence adduced by the assessee may in some cases become conclusive. But if the assessee does not adduce any evidence it is no part of the duty of the Assessing Officer to start investigation and/or to collect evidence in support of the case of the assessee. It is to be pointed out that the assessee in this case did not disclose the identity of the persons to whom the payment was made. The assessee could have asked the Assessing Officer to issue summons to the so called middlemen under Section 131 and/or 133(6) of the Income Tax Act. The assessee could have done it because he knew the person to whom the payment was made. It was not therefore possible for the Assessing Officer even if he wanted to to undertake any such enquiry. For the aforesaid reasons the submissions advanced by Mr. Sen are rejected. The judgment rendered by the learned Tribunal considering the admitted facts and circumstances of the case cannot but be said to have expressed a possible view and therefore the question has to be answered in the negative. The addition of a sum of Rs. 9 lacs as an undisclosed income is correct in law. - Decided against assessee

Summary

Issues:
Challenge to judgment and order dated 7th October, 2004 regarding block assessment for the period between 1st April, 1989 and 20th January, 2000.

Detailed Analysis:

1. Facts and Circumstances:
- The appeal challenged a judgment and order related to block assessment for a specific period.
- During a search and seizure, it was found that the assessee had made payments to various persons but did not disclose the particulars.
- The assessee failed to produce books of accounts and provided an explanation involving possession of old silver utensils and gold jewelry.
- The explanation offered was not substantiated by evidence, and the Assessing Officer treated the sum of Rs. 9 lacs as undisclosed income for the block period.

2. Legal Question:
- The main legal question raised was whether the Tribunal was correct in confirming the addition of Rs. 9 lacs as undisclosed income, considering the facts and circumstances of the case.
- The appellant argued that the Assessing Officer should have conducted further investigation before treating the amount as undisclosed income.

3. Role of Assessing Officer:
- The court clarified that while the Assessing Officer acts as both an adjudicator and an investigator, the duty of investigation is to ensure that the assessee's income is properly assessed.
- It is the assessee's responsibility to prove their case, and if prima facie evidence is provided, the burden shifts to the Assessing Officer to disprove it.
- In this case, the assessee did not disclose the identities of the recipients of the payments, making it impossible for the Assessing Officer to conduct further inquiries.

4. Decision and Rationale:
- The court rejected the argument that the Assessing Officer should have conducted additional investigation, emphasizing that it is the assessee's duty to prove their case.
- As the assessee failed to provide evidence or disclose crucial information, the addition of Rs. 9 lacs as undisclosed income was deemed correct.
- The Tribunal's judgment was considered reasonable based on the admitted facts and circumstances of the case, leading to the dismissal of the appeal and the parties bearing their own costs.

In conclusion, the court upheld the addition of Rs. 9 lacs as undisclosed income during the block assessment period, emphasizing the assessee's obligation to substantiate their claims and the Assessing Officer's role in assessing income based on the evidence presented.