2007 (6) TMI 310 - AT - Income Tax

Summary

Issues:
1. Addition of Rs. 15 lakhs as undisclosed income.

Analysis:
1. The Department made an addition of Rs. 15 lakhs as undisclosed income based on a cash loan transaction reflected in a seized computer CD during a search operation. The Assessing Officer observed that the assessee had taken the loan in cash and utilized it for business purposes, as repayment was reflected in bank statements without corresponding evidence of repayment to the lender. Consequently, the Assessing Officer treated the amount as undisclosed income for the financial year 1998-99.

2. The CIT(A) reviewed the case and found no basis for the addition of undisclosed income. The CIT(A) noted that the cash amount was available with the assessee for repayment, and considering the circumstances, deleted the addition made by the Assessing Officer. The Department appealed to the Tribunal challenging the CIT(A)'s decision.

3. During the appeal, the Departmental Representative argued that the CIT(A) erred in deleting the addition, emphasizing that there was no evidence to support the availability of the amount for repayment. It was contended that the loan amount was utilized for business purposes and could not be presumed available for repayment. In contrast, the assessee's counsel supported the CIT(A)'s decision, asserting that the amount was indeed available for repayment, and without evidence of repayment from undisclosed income, no addition should be made.

4. The Tribunal analyzed the orders of the Assessing Officer and CIT(A) along with the submissions. The Tribunal upheld the CIT(A)'s decision, noting that if the loan amount was received in cash, it could be presumed available for repayment. The Tribunal emphasized that the Assessing Officer wrongly concluded that the repayment came from undisclosed sources, highlighting that the repayment likely came from the same cash received as a loan.

5. The Tribunal concluded that if the amount was taken as a loan, it should be presumed available for repayment. As there was no evidence of actual cash receipt and the repayment was likely made from the same cash, no addition on account of undisclosed income was justified. Therefore, the Tribunal confirmed the CIT(A)'s decision and dismissed the Department's appeal.