The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) in Yaganti Sunkar v. ITO examined whether an assessee could challenge an addition made on estimated business income when substantial bank credits remained unsupported by reliable documentary evidence. The Tribunal ultimately upheld the assessment after finding that the assessee failed to establish the genuineness of the claimed business transactions or rebut the findings of the lower authorities.
The case arose from reassessment proceedings for Assessment Year 2016-17 after the Income Tax Department detected substantial cash deposits and other credits in the assessee’s bank account. The Assessing Officer treated the aggregate bank credits as business turnover and estimated income at 8%, resulting in an addition of ₹30,59,530. The Commissioner of Income Tax (Appeals) confirmed the addition, and the matter reached the ITAT.
The assessee contended that he acted merely as a commission agent supplying poultry feed and that the bank deposits represented sale proceeds collected from poultry farmers. However, the Tribunal noted that the assessee failed to produce audited books of account, agreements with suppliers, evidence regarding commission arrangements, or reliable documentary proof supporting the claimed business model. The handwritten receipts produced were found to be unverifiable as they lacked essential particulars such as serial numbers and identification of the persons making payments.
The Tribunal also observed that despite opportunities before both the Commissioner (Appeals) and the ITAT, the assessee failed to furnish additional evidence or appear during the appellate hearing. Since the factual findings recorded by the Assessing Officer and affirmed by the Commissioner (Appeals) remained unrebutted, the Tribunal found no reason to interfere with the concurrent findings. Accordingly, the addition of ₹30,59,530 was sustained and the appeal was dismissed.
Why This Judgment is Important
This decision reiterates that where an assessee claims that substantial bank credits represent business receipts or pass-through collections, the burden lies on the assessee to substantiate the explanation with credible documentary evidence. Mere assertions, handwritten receipts, or incomplete records are insufficient to displace the findings of the tax authorities. The ruling also highlights that failure to actively prosecute an appeal or produce supporting evidence may result in confirmation of additions made during reassessment proceedings.