In a recent ruling by the Delhi High Court, the judgment favored the assessee in a tax dispute case related to unexplained expenditures. The case involved the Assessing Officer adding a substantial sum to the total income of the assessee, which was contested as undisclosed income. The court’s decision offers significant insights into the burden of proof in cases of alleged concealed purchases. Read on to learn more about this significant legal development.
Facts
- The Assessing Officer added a sum of ₹70,10,37,475/- to the total income as unexplained expenditure under Section 69C of the Act.
- This addition was made as the assessee failed to provide satisfactory explanation or evidence for the said expenditure.
- The amount added was considered unexplained and treated as undisclosed income.
Analysis
- The Assessing Officer heavily relied on data provided by CBIC without details of specific imports or purchases made by the assessee.
- The Assessing Officer failed to reconcile the data received from CBIC with the assessee’s records or provide specific information on alleged concealed purchases.
- Assessee submitted details of purchases amounting to Rs. 151,41,55,705, but the AO claimed purchases of Rs. 2,21,51,93,180 based solely on CBIC data.
- The Assessing Officer initiated penalty proceedings under Section 271AAC(1) for concealment of income without concrete evidence of concealed purchases.
- Assessee’s contention that it had no opportunity to effectively respond to the allegations due to lack of specific import details was valid.
- The onus of proving concealed purchases cannot be shifted to the assessee without proper reconciliation or a certificate from the Customs department.
- The Assessing Officer did not identify specific entries that should have been made in the Books of Accounts regarding alleged concealed purchases.
- The assessee claimed to have not made any purchases other than those disclosed.
- Without detailed information on the alleged undisclosed purchases, the assessee cannot effectively refute the allegation.
- Faulting the assessee for not meeting its burden of proof in these circumstances is considered erroneous.
Decision
- Assessing Officer must provide necessary opportunity to assessee before making any addition on account of unexplained expenditure
- Details of expenditure must be apprised to the assessee for explanation
- The case is remanded to the Assessing Officer for a fresh decision in accordance with the law
- The petition has been allowed with the above conditions
- The pending application has been disposed of
Case Title: BAUSCH AND LOMB INDIA PRIVATE LIMITED Vs. ASSESSMENT UNIT, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI (2024:DHC:3719-DB)
Case Number: W.P.(C)-5768/2024
