By TIOL News Service

MUMBAI, SEPT 25, 2018: THE Issue is - Whether mere production of PAN numbers & bank statement is sufficient enough to discharge the burden on taxpayer to escape the realms of Section 68. NO IS THE VERDICT.

Facts of the case:

During the year under consideration, the assessee's return showed total loss of Rs.77,01,919/- and the same was processed determining the total income at Rs.1,02,16,950/-. During the course of proceedings, the six entities from whom the assessee had borrowed sums without security, were selected for scrutiny. Though the AO had issued notices to these entities u/s 133(6), he found that there were no reply, or the notices were returned unserved and only one party confirmed the loan of Rs.5,00,000/-. In these circumstances, the AO doubted the transactions and added back Rs.1,45,00,000/- to the total income of assessee u/s 68. On appeal, the assessment so framed by AO stood confirmed by both the CIT(A) as well as the ITAT.

High Court held that,

++ it is seen that the Tribunal has extensively referred to the entities and the details in relation thereto provided by the assessee, and thereby concurred with the FAA that the burden on assessee has not been discharged by it. The assessee cannot simply provide some details such as PAN Number, business address, the account which was maintained and a Bank Statement, or a Company's Master Data maintained by the Registrar of Companies. The assessee is obliged to explain the surrounding circumstances and the backdrop in which the transactions took place;

++ in the case of five entities, the Tribunal referred to these details and concluded that the assessee has failed to discharge the burden. More so, three out of the five assessees could not be served and the rest did not either give a reply, or gave a reply which was not at all satisfactory. The reasons assigned under challenge do not suffer from such legal infirmity or perversity. They are concurrent findings of fact based on appreciation and appraisal of the evidence before the authorities. Therefore, there are no errors of law apparent on the face of the record, particularly in understanding the ambit and scope of Section 68.

(See 2018-TIOL-1983-HC-MUM-IT)