A.F. Ferguson & Co. Vs JCIT (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai allowed the assessee’s appeals for Assessment Years 2008-09 and 2009-10, holding that additions made solely on the basis of Annual Information Report (AIR) information were not sustainable.
For Assessment Year 2008-09, the Assessing Officer observed that the AIR reflected professional receipts of Rs. 34,49,43,172, which required reconciliation with the books of account. Although the assessee reconciled a major portion of the receipts, an amount of Rs. 2,32,75,363 remained unreconciled. The Assessing Officer treated this as concealed income and added it to the total income. During appellate proceedings, the assessee reconciled a further Rs. 74,41,057, but the Commissioner (Appeals) confirmed the balance addition of Rs. 1,58,34,306. The assessee contended that all professional fees were received through banking channels, duly recorded in the books, and that the professional receipts disclosed in the profit and loss account amounted to Rs. 50,36,03,971, which exceeded the AIR figure of Rs. 40,02,84,680. The assessee also submitted that the AIR did not contain complete details of the parties, making complete reconciliation impossible.
The Tribunal noted that the Revenue did not dispute that the AIR lacked complete party details and that the assessee had reconciled most of the receipts. It further observed that the professional receipts declared by the assessee exceeded the receipts reflected in the AIR information. The Tribunal held that an addition made solely on the basis of AIR information, particularly when complete party details were unavailable and no evidence existed to show receipt of income beyond what was disclosed, could not be sustained. It also observed that if the assessee denied receipt of income from a particular source, it was for the Assessing Officer to establish such receipt and the assessee could not be expected to prove a negative. Accordingly, the Tribunal deleted the addition.
