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2017 Supreme(Raj) 2737
RAJASTHAN HIGH COURT
K.S. Jhaveri, Virendra Kumar Mathur, JJ.
Commissioner Of Income Tax - Appellant
Versus
Ranjeet Singh Yadav - Respondent
Income Tax Appeal Nos. 145, 146, 147, 148 and 149 of 2012
Decided On : 30-05-2017
Mr. Anil Mehta, for Appellants; Mr. Raj Kumar Yadav, for Respondents
The assessee is not required to shift the burden of proof to the department in a case under section 69 of the Income Tax Act, 1961, and the department must discharge its initial burden of proving that the investment is unexplained.
Headnote:
INCOME TAX - SECTION 69 - ADDITIONAL EVIDENCE - BURDEN OF PROOF - REAL ESTATE BUSINESS - INVESTMENT IN LAND - EXPLANATION OF SOURCE OF FUNDS - DIARIES - CASH FLOW STATEMENT - MODUS OPERANDI OF BUSINESS - HUMAN PROBABILITIES - ASSET THEORY - DELETION OF ADDITIONS - FACTUAL MATRIX - NO PERVERSITY - APPEALS DISMISSED.
Fact of the Case:
The assessee, a real estate developer, was found to have invested in land without recording it in the books of accounts. The Assessing Officer (AO) added the unexplained investment to the assessee's income under section 69 of the Income Tax Act, 1961. The assessee appealed to the Commissioner of Income Tax (Appeals) (CIT(A)), who upheld the AO's order. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT).
Finding of the Court:
The ITAT allowed the assessee's appeal and deleted the additions made by the AO and CIT(A). The ITAT held that the assessee had produced additional evidence, including diaries and a cash flow statement, which explained the source of the investment in land. The ITAT also held that the assessee was not required to shift the burden of proof to the department and that the department had not discharged its initial burden of proving that the investment was unexplained.
Issues: (i) Whether the ITAT was justified in deleting the additions under section 69 of the Act on the basis of new evidence not placed on record before the original and first appellate authority? (ii) Whether the ITAT was right in setting aside the addition made under section 69 by shifting the burden on the department inspite of the fact that incriminating documents, statements under section 131 were enough to justify unexplained investment and further no satisfactory answer were furnished by the respondents? (iii) Whether the order passed by Tribunal is perverse and violative of principles of natural justice as passed on the basis of new evidences which were after thought and not placed on record before original authority and the first appellate authority?
Ratio Decidendi: The ITAT was justified in deleting the additions made by the AO and CIT(A) because the assessee had produced additional evidence, including diaries and a cash flow statement, which explained the source of the investment in land. The ITAT also held that the assessee was not required to shift the burden of proof to the department and that the department had not discharged its initial burden of proving that the investment was unexplained.
Final Decision: The appeals were dismissed.
JUDGMENT
K.S. Jhaveri, J. - In all these appeals identical questions of law and facts are involved and as they relate to the same assessee, they are heard together and decided by this common judgment.
2. By way of these appeals, the appellant has assailed the judgment and order of the Tribunal whereby Tribunal after considering the additional evidence which was produced by the assessee under Rule 29 has allowed the appeal of the assessee and dismissed the appeal of the department.
3. This court while admitting the appeals on 3.12.2012 (145/2012, 146/2012, 147/2012, 148/2012 & 149/2012) framed following common substantial questions of law:-
"(i) Whether on the facts and circumstances of the case the tribunal was justified and right in law in deleting the additions under section 69 of the Act on the basis of new evidences not placed on record before the original and first appellate authority makes the orders perverse and contrary to Rule 29 of the Appellate Tribunal Rules, 1963?
(ii) Whether, in the facts and circumstances of the case Tribunal was right in setting aside the addition made under section 69 by shifting the burden on the department inspite of the fact that incriminating documents, statements under section 131 were enough to justify unexplained investment and further no satisfactory answer were furnished by the respondents?
(iii) Whether, the order passed by Tribunal is perverse and violative of principles of natural justice as passed on the basis of new evidences which were after thought and not placed on record before original authority and the first appellate authority?
4. We have heard counsel for the parties.
5. Rule 29 of the Appellate Tribunal Rules, 1963 provides as under:-
"29. Production of additional evidence before the Tribunal.- The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. "
6. It is true that party cannot be claimed as a matter of right. However, tribunal has followed the procedure under Rule 29 in entertaining additional evidence though nothing is produced on record. The additional evidence produced by the assessee has been objected by the representative of the department. In that view of the matter, we find no error committed by the tribunal in entertaining additional evidence under Rule 29 of the Rules.
6.1 In that view of the matter, the first issue is answered in favour of the assessee and against the department.
7. Regarding second issue, counsel for the appellant has taken us to the order of the Tribunal which reads as under:
"In this case also the initial burden to explain the nature and source of the investment in land not recorded in the books of assessee, lies on the assessee. But as explained above he has failed to discharge this initial burden and therefore the unexplained investment has been rightly added by the CIT(A) under section 69.
In his submissions, the assessee has also claimed that the advances received from prospective plot owners are reflected in the diaries seized during the search operations. It may be noted that during the assessment and first appeal proceedings the assessee made this general statement only but never explained which entries in the diaries were related to which payments for land. The assessee has furnished the copies of such diaries in the paper book at pg. 38 to 185. From these diaries, it can bee seen that many of the pages are blank. On some
