2012 (10) TMI 1099 - AT - Income Tax

Additions towards unexplained cash in hand - The cash book produced to explain cash balance also shows negative balance on certain dates which itself make it unreliable - The so-called withdrawals made in odd amounts through the current account and capital account on the same date also do not inspire confidence in the submissions of the assessee - assessee has failed to prove the source of cash deposit - additions confirmed - Decided against the assessee.

Summary

Issues involved: Appeal by revenue and cross objection by assessee regarding addition of cash repayment to income as undisclosed income for Assessment Year 2007-08.

Analysis:
1. The assessee, engaged in transport business, made cash repayments towards a loan without providing a satisfactory explanation to the Assessing Officer, resulting in the addition of the cash repayment to the income as undisclosed income. The CIT (A) partially granted relief but highlighted discrepancies in the cash flow and balance sheet, questioning the source of cash deposits and withdrawals. The appellant's explanations during the appellate proceedings were deemed as afterthoughts and not supported by evidence from the audited accounts.

2. The revenue's appeal was found to have a tax effect less than the permissible limit for filing an appeal before the Tribunal, leading to the dismissal of the revenue's appeal due to non-maintainability. The Instruction No. 3/2011 barred the revenue from filing an appeal in cases where the tax effect is less than the specified threshold, unless falling under exceptional circumstances, which was not the case here.

3. The assessee's cross objection challenged the sustenance of the addition of cash amount by claiming oversight of the balance sheet and past tax records. However, the Tribunal upheld the addition as the assessee failed to provide a credible explanation for the source of the cash in hand, despite discrepancies in the cash flow statements and unreliable cash book entries. The Tribunal concluded that the explanations offered by the assessee were inconsistent and lacked supporting evidence, leading to the dismissal of the cross objection.

4. Ultimately, both the revenue's appeal and the assessee's cross objection were dismissed, affirming the addition of cash repayment to the income as undisclosed income for the Assessment Year 2007-08. The Tribunal found no merit in the arguments presented by either party, resulting in the dismissal of both appeals.