No Additions solely on AIR information basis when the assessee denied reported transactions as the onus /burden shifted upon the AO – ITAT

Addition cannot be made solely on the basis of AIR information especially when the assessee denies the reported transactions and the onus/burden shifted upon the AO to rebut the accounts/contentions of the assessee – ITAT

ABCAUS Case Law Citation:
963 2016 (06) ITAT
Assessment Year: 2010-11
Date/Month of Judgment/Order: June 2016

Brief Facts of the Case:
The assessee was aggrieved by the order of CIT(A) confirming the addition of Rs.7,69,708/- on account of mismatch between the AIR information and the details submitted by the assessee relating to the credit card payments paid to American Express Banking Corporation (AEBC).

As per the AIR information, the assessee had paid a sum of Rs.9,92,813/- to AEBC, during the year under consideration, out of which only payments amounting to Rs.2,23,105/- were reflected in the books of accounts. The Assessing Officer (AO) therefore added the difference of the same amounting to Rs.7,69,708/- into the income of the assessee treating the same as unexplained expenditure.

Before CIT(A), the assessee submitted that the AIR information was incorrect as the assessee had not incurred the expenditure as detailed in the AIR information. He further submitted that a request was made to the AO to provide the full details of transactions with regard to payments to AEBC. However the AO had not provided the same. However CIT(A) held that the onus to explain the expenditure was upon the assessee. 

Contentions of the Assessee:
The assessee preferred appeal before the Tribunal and contended that the addition cannot be made solely on the basis of AIR information especially when, the assessee denies any such receipt; that the burden to prove such receipts is on the AO as the assessee cannot be asked to prove the negative. Reliance was placed upon the decision of the Tribunal in the case of DCIT vs. Shree G. Selvakumar,  M/s. Arati Raman vs. DCIT and  M/s. A.F. Ferguson and Company vs. JCIT.

Observations by ITAT
The Tribunal the observed that the assessee had already given the details of the transactions as per the bank accounts to the AO. Under such circumstances the burden shifted upon the AO to rebut the details/accounts submitted by the assessee. When the assessee had specifically asked for the details of the AIR information so that he may specifically admit or deny the transactions, then under such circumstances the AO was supposed to contradict/rebut the accounts of the assessee regarding the specific transactions not shown by the assessee in his accounts.

Held:

The order of CIT(A) was set aside and the matter remanded to the file of the AO with a direction to provide full details to the assessee regarding the transactions of expenditure as per the AIR information and then to give opportunity to the assessee to rebut the said information. The AO was also  directed to make inquiries regarding the authenticity of the AIR information from the concerned bank.