2013 (5) TMI 784 - AT - Income Tax

Unexplained cash credits - Deposit made in bank accounts - proceeds from sale of gold or not - Held that - the assessees have not produced any evidence to prove that these ancestral gold was gifted to the assessees by the parents/in-laws. - assessees also did not produce any details for sale of gold or wealth-tax returns filed in normal course to establish that they were in possession of the gold and only such gold was sold by them. In the absence of any such evidence produced by the assessees, it is hard to believe that the assessees are in possession of ancestral gold and sale consideration of such gold was used for making deposits into their bank accounts. It is also a fact that the parents of the assessee K. R. S. Suresh and who are also mother-in-law and father-in-law of Smt. Ranjani Suresh have not filed their wealth-tax returns and they are not assessed to wealthtax. It is the observation of the Assessing Officer that these assessees have made several cash credits of small amounts appearing in bank accounts claimed to be out of gold sale as these assessees are not in gold business. - wealth-tax returns filed on December 8, 2011 just before the completion of assessments on December 22, 2011 suggest that there is no other reason for filing these returns except for explaining the source for deposits into bank account. Therefore, in the facts and circumstances of these cases, we uphold the additions made by the Assessing Officer towards unexplained cash credits as they were not proved with sources for such deposits by the assessees. - Decided against assessee.

Summary

Issues:
Appeal against addition of unexplained cash credits by Assessing Officer upheld by Commissioner of Income-tax (Appeals).

Analysis:
The case involved two appeals by assessees against orders of the Commissioner of Income-tax (Appeals) for the assessment year 2009-10, challenging the addition made by the Assessing Officer towards unexplained cash credits. The assessees, husband, and wife, were commission agents who filed returns admitting income but faced substantial additions by the Assessing Officer. The assessees claimed that they received ancestral gold jewelry from their parents/in-laws, sold it, and deposited the proceeds into their bank accounts. The counsel for the assessees argued that the source of deposits was the sale proceeds of ancestral gold jewelry, supported by wealth-tax returns for previous years showing details of gold received and capital gains from its sale.

The Departmental representative contended that the assessees failed to provide evidence of receiving gold as a gift from their parents/in-laws or details of the sale transactions. The representative also questioned the timing of wealth-tax returns, filed just before assessment completion, suggesting an attempt to create evidence for the source of cash deposits. The Assessing Officer observed multiple small cash credits in the bank accounts, mainly used for credit card payments and EMIs, with larger amounts immediately debited for demand drafts or pay orders, casting doubt on the assessees' explanations.

After considering submissions and evidence, the Tribunal upheld the additions made by the Assessing Officer, agreeing that the assessees failed to prove the sources of the cash deposits adequately. The Tribunal noted inconsistencies in the assessees' claims, lack of concrete evidence regarding the sale of ancestral gold, and the suspicious nature of cash transactions in the bank accounts. Consequently, the Tribunal dismissed both appeals, affirming the Commissioner of Income-tax (Appeals) orders.

In conclusion, the Tribunal found the explanations provided by the assessees insufficient to justify the cash credits in their bank accounts as proceeds from the sale of ancestral gold jewelry. The lack of concrete evidence, timing of wealth-tax returns, and nature of cash transactions raised doubts about the legitimacy of the sources claimed by the assessees, leading to the dismissal of their appeals.