2012 (12) TMI 1076 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition on account of income from undisclosed sources.
2. Failure to discharge onus by producing documentary evidence.
3. Reliance on cash flow statement without supporting documentary evidence.
4. Whether the CIT(A) should have upheld the AO's order.

Summary:

Issue 1: Deletion of Addition on Account of Income from Undisclosed Sources
The assessee's appeals arose from the order dated 22.4.2010 for AY 2001-02 and separate orders dated 23.4.2010 for AYs 2002-03 to 2005-06 by CIT(A)-Jamnagar. The AO made an addition of Rs. 12,64,938/- to the assessee's total income, citing deposits in the bank accounts of the assessee and his family members as income from undisclosed sources. The CIT(A) deleted this addition, explaining that the deposits were from agricultural income, advances received back, and unsecured loans, supported by revenue records and confirmations from respective parties.

Issue 2: Failure to Discharge Onus by Producing Documentary Evidence
The AO argued that the assessee failed to provide documentary evidence to explain the deposits totaling Rs. 15,40,938/- in his bank account. The assessee claimed the deposits were from agricultural income and recovery of old loans but did not maintain books of account due to illiteracy. The CIT(A) found the explanation satisfactory, supported by revenue records and detailed tabulation of deposits.

Issue 3: Reliance on Cash Flow Statement Without Supporting Documentary Evidence
The AO contended that the cash flow statement submitted by the assessee's AR was baseless and unsupported by documentary evidence. However, the CIT(A) accepted the cash flow statement, noting that the AO did not comment on its correctness in the remand report. The CIT(A) concluded that the deposits were fully explained by agricultural income, advances received back, and unsecured loans.

Issue 4: Whether the CIT(A) Should Have Upheld the AO's Order
The AO argued that the CIT(A) should have upheld the AO's order, as the assessee did not maintain books of account and the explanation provided was unreliable. The CIT(A) disagreed, finding the explanation satisfactory and supported by evidence. The Tribunal upheld the CIT(A)'s decision, noting that the AO did not bring any adverse material to dispute the explanation provided by the assessee.

Conclusion:
The Tribunal found no merit in the Revenue's appeals for AY 2001-02 and, by parity of reasons, for AYs 2002-03 to 2005-06. The deletion of additions by the CIT(A) was justified, and the appeals by the Revenue were dismissed.