2012 (8) TMI 1116 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the following Issues:
1. Confirmation of additions made by the Assessing Officer.
2. Treatment of evidences supporting the genuineness of cash credit.
3. Justification for additions based on unexplained cash deposits.
4. Permission to modify grounds of appeal.

Confirmation of Additions:
The appellant contested the additions of Rs. 7,90,000 made by the Assessing Officer, which were confirmed by the CIT(A) Faridabad. The appellant argued that the cash deposit in the bank was from legitimate sources related to trading activities. However, the Assessing Officer treated the cash deposit as unexplained income from undisclosed sources due to the absence of produced books of account during assessment proceedings.

Treatment of Evidences:
During the appellate proceedings, the appellant submitted books of account and a cash book up to the date of the cash deposit. The Assessing Officer raised concerns about the lack of proof for cash sales and a significant withdrawal from the bank. The appellant provided explanations and evidence to support the legitimacy of the cash balance and transactions, including cash memos, vouchers, and sales tax returns.

Justification for Additions:
The Assessing Officer's remand report highlighted discrepancies in the appellant's books of account and questioned the legitimacy of the cash deposit. The appellant refuted these claims by presenting detailed evidence of cash transactions, withdrawals, and deposits, demonstrating the availability of sufficient cash balance to support the deposit amount. The Tribunal found that the appellant had adequately explained the sources of income and cash transactions, leading to the deletion of the addition of Rs. 7,90,000 as undisclosed income.

Permission to Modify Grounds:
The appellant requested permission to modify the grounds of appeal at any time before the hearing. The Tribunal, after considering the arguments and evidence presented by both parties, allowed the appeal and ruled in favor of the appellant, concluding that the additions made by the Assessing Officer were unjustified based on the provided documentation.

*Decision:* The Tribunal allowed the appeal, pronouncing the decision in open court on 31st August 2012.