INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 68Inspector report not communicated to assessee--AO made addition for loan taken by assessee from creditors through a/c payee cheques. Assessee argued that initial onus was discharged as loan confirmation certificates and their PAN no. were produced before assessing officer and further argued that assessing officer acted illegally in disbelieving the transactions merely on the basis of the alleged report given by the Income Tax Inspector who enquired into the matter although the copy of such report was neither handed voer to assessee nor did the assessing officer ask for any explanation from the assessee on such report. Held: Equity and Justice demand that the full text of the information given by the Inspector to assessing officer which was the basis of the conclusion of the assessment should be made known to assessee before the same was used against him so that the genuineness of the said information could be rebutted by assessee or at least, assessee could get an opportunity to. explain the said information. Held: It is now a settled law that while considering the question whether the alleged loan taken by the assessee was a genuine transaction, the initial onus is always upon the assessee and if no explanation is given or the explanation given by the assessee is not satisfactory, the assessing officer can disbelieve the alleged transaction of loan. But the law is equally settled that if the initial burden is discharged by the assessee by producing sufficient materials in support of the loan transaction, the onus shifts upon the assessing officer and after verification, he can call for further explanation from the assessee and in the process, the onus may again shift from the assessing officer to assessee. In the case the assessee by producing the loan-confirmation certificates signed by the creditors, disclosing their permanent account numbers and address and further indicating that the loan was taken by account payee cheques, no doubt, prima facie, discharged the initial burden and those materials disclosed by the assessee prompted the assessing officer to enquire through the Inspector to verify the statements. On the basis of the report submitted by such Inspector, the assessing officer could not straightway arrive at the conclusion that the transactions were not genuine without giving further opportunity to the assessee to explain the alleged information disclosed by the Inspector to the AO.

Income Tax Act, 1961 Section 68

IN THE CALCUTTA HIGH COURT

BHASKAR BHATTACHARYA & SAMBUDDHA CTIAKRABARTI, J J.

S.K. Bothra & Sons (Huf) v. Income Tax Officer

IT Appeal No. 175 of 2003

A.Y. 1997-98

2 August, 2011

Appellant by : J.P. Khaitan, section Bhowmick & R, Bharadwaj,

Respondent by : M.P. Agarwal

Bhaskar Bhattacharya, J.

This appeal under section 260A of the Income Tax Act ('Act') is at the instance of an assessee and is directed against order dt. 26-2-2003 passed by the Tribunal, 'B' Bench, Kolkata in ITA No. 293/Kol/2002 for the assessment year 1997-98 dismissing the appeal filed by the assessee.

Being dissatisfied, the assessee has come up with the present appeal.

2. The facts leading to filing of this appeal may be summed up thus :

(a) The appellant is an HUF: and is an assessee under the Act. For the assessment year 1997-98, after the assessment under section 143(3) of the Act was initiated, the assessing officer issued summons under section 131 of the Act to Sri K. K. Pant and Sri Asharam Mohata the alleged creditors of the assessee. Sri Pant expired before issue of notice. Sri Mohata produced relevant documents alongwith a forwarding tetter dt, 15-1-2000 confirming the genuineness of the loan.