2014 (11) TMI 1133 - AT - Income Tax

Addition of entire cash deposits as unexplained investment. - Held that - We noted that there are cash withdrawals to the extent of ₹ 1,35,000/- on 2.4.2008 and 29.3.2008. Therefore, to that extent we allow relief to the Assessee. The balance withdrawal and the salary relate to the earlier years. No evidence was placed before us that salary received by the Assessee was not consumed during those years and the Assessee was having the cash in hand. Therefore, we cannot accept the explanation of the Assessee as the explanation given by the Assessee is not plausible one. We also noted that the Assessee has claimed a sum of ₹ 50,000/- being the source of cash deposited received by him as interest from M/s. Shree Genji Electricals but not such evidence was brought to our knowledge. In view of provisions of Sec. 269SS and 269T M/s. Shree Genji Electricals cannot make cash payment to the Assessee. We, therefore, allow relief to the Assessee of ₹ 1,35,000/- out of the addition sustained by CIT(A) of ₹ 19,57,370/-. - Decided partly in favour of assessee Unexplained cash credit - addition made by the AO on the basis of the statement recorded u/s 131 - Held that - As noted that there was opening balance of ₹ 32,254/- also in the account of M/s. Shree Genji Electricals. Thus, the total credit as on 31.3.2009 in the books of M/s. Shree Genji Electricals in the account of the Assessee was only ₹ 21,66,331/-. There is no evidence except the statement recorded u/s 131 that the Assessee has deposited sum of ₹ 25 lacs with M/s. Shree Genji Electricals. In fact, we noted that the Assessee has deposited only a sum of ₹ 19,10,000/- which is also reconciled from the bank account of the Assessee. There is no corroborative evidence to hold that the Assessee has deposited more than ₹ 19,10,000/- with M/s. Shree Genji Electricals. We accordingly delete the addition of ₹ 5,90,000/-. - Decided in favour of assessee

Summary

Issues:
1. Addition of unexplained investment of Rs. 25,00,000 under section 69 and unexplained money of Rs. 30,63,127 under section 69A for A.Y. 2009-10.
2. CIT(A)'s confirmation of Rs. 19,57,370 as unexplained investment and Rs. 5,90,000 as baseless addition.

Analysis:
1. The Assessee's return showed an income of Rs. 3,39,080, including income from other sources and interest income. The assessment raised the income to Rs. 59,02,207 by adding Rs. 25,00,000 as unexplained investment and Rs. 30,63,127 as unexplained money. The Assessee deposited Rs. 25 lacs with a company and earned interest. The AO treated this as deemed income under section 69. CIT(A) confirmed the addition of Rs. 19,57,370 as the Assessee's cash deposit to the company. For the Rs. 30,63,127 addition, CIT(A) analyzed bank transactions and confirmed Rs. 20,75,104. The Assessee appealed against the additions.

2. The Tribunal reviewed the bank account details, noting cash deposits of Rs. 19,57,370 and cheque deposits of Rs. 12,30,577. The Assessee explained the source of cash deposits partially, citing withdrawals and earnings from previous years. The Tribunal allowed relief for withdrawals but found the explanation for the remaining balance inadequate. The Assessee claimed Rs. 50,000 as interest received, but lacked evidence. The Tribunal partially allowed relief of Rs. 1,35,000 from the Rs. 19,57,370 addition.

3. Regarding the Rs. 5,90,000 addition, the Assessee failed to prove the source of the deposit with the company. The AO based this addition on a statement under section 131. The Tribunal found no evidence supporting the Assessee's deposit of Rs. 25 lacs, concluding that only Rs. 19,10,000 was deposited, as verified from bank records. Thus, the Tribunal deleted the Rs. 5,90,000 addition.

4. The Tribunal partially allowed the Assessee's appeal, deleting the Rs. 5,90,000 addition while partially allowing relief of Rs. 1,35,000 from the Rs. 19,57,370 addition. The decision was pronounced on 28/11/2014.