Addition based on judicial precedence unsustainable without addressing factual inadequacies – ITAT

Addition based on judicial precedence in other cases unsustainable without first addressing the factual inadequacy of assessee’s explanation – ITAT

 Addition based on judicial precedence

ABCAUS Case Law Citation:
ABCAUS 2112 (2017) (11) ITAT

The Challenge/Grievance:
The appellant assessee had challenged the correctness of the order passed by CIT(A) confirming the additions on account of unexplained deposits.

 Brief Facts of the Case:
The assessee company, during the relevant year, had received unsecured loans from its directors. The company was required to establish the identity, creditworthiness and genuineness of the transaction. The assessee in response thereto admittedly filed copies of the bank statement, copy of income tax returns and confirmations of the creditors. However the Assessing Officer (AO) made an addition of Rs. 2.50 lakhs holding that the amounts were not explained.

The addition was sustained by the CIT-Appeals.

Before the Tribunal, the assessee submitted that the explanation advanced had not been rebutted or negatively commented upon by the Assessing Officer who mechanically made the addition. It was contended that the onus caste upon the assessee stood discharged.

It was argued that the action of the AO in placing reliance on various decisions in different cases without rebutting the evidence submitted was an incorrect approach.

Observations made by the Tribunal:
The ITAT opined that once the assessee had given the copies of bank statements, copies of income tax returns and also filed confirmations of the creditors wherein no defect had been pointed out by the tax authorities, the addition relying upon judicial precedence in different cases without first addressing the factual inadequacy of assessee’s explanation cannot be sustained.

Decision/ Conclusion/Held:
The addition was directed to be deleted. 

Addition based on judicial precedence

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