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2011 (2) TMI 145 - HC - Income TaxAddition - Unexplained cash credit - Withdrawal of cash from business - The Tribunal held that since there were withdrawals made by the assessee on 10.3.1995 and the assessee did not possess cash amounting to Rs.1,64,000/- on the date of the search, i.e., 11.8.1995 therefore, cash deposit of Rs.1,00,000/- on 10.4.1996 was undisclosed income of the assessee. - Held that - assessee was unable to justify withdrawal made by the assessee on 10.3.1995 in case any part of the amount of Rs.1,64,000/- received on 9.1.1995 on account of cancellation of sale deed was available with him. Therefore, the explanation of the assessee that the entry of Rs.1,00,000/- on 10.4.1996 was on account of reintroduction of the said amount had rightly not been accepted. - Decided against the assessee
Issues:
1. Appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal. 2. Addition of unexplained cash amount in the assessment year 1997-98. 3. Disallowance of car and telephone expenses. 4. Challenge to the Tribunal's decision regarding undisclosed income. Analysis: Issue 1: Appeal under Section 260A of the Income Tax Act, 1961 The appeal was filed by the assessee under Section 260A of the Income Tax Act against the order passed by the Income Tax Appellate Tribunal, Chandigarh Bench. The substantial questions of law raised by the assessee pertained to the perversity of the Tribunal's order, lack of material support, and reliance on conjectures and surmises. Issue 2: Addition of Unexplained Cash Amount The Assessing Officer made additions to the assessee's income, including an unexplained cash amount of Rs. 1,00,000. The CIT(A) sustained this addition, leading to the appeal before the Tribunal. The Tribunal found that the cash deposit of Rs. 1,00,000 on 10.4.1996 was undisclosed income as the assessee did not possess the cash amounting to Rs. 1,64,000 on the date of the search. The Tribunal's decision was based on the lack of justification for withdrawals made by the assessee when the cash from the cancellation of the sale deed was allegedly available. Issue 3: Disallowance of Car and Telephone Expenses The Tribunal also upheld the disallowance of car expenses for personal use and telephone expenses. The assessee contested these disallowances, arguing that the withdrawals made during the relevant period did not affect the availability of cash from the cancellation of the sale deed. However, the authorities found no merit in the contentions raised by the assessee and upheld the additions made. Issue 4: Challenge to Tribunal's Decision on Undisclosed Income The Tribunal's decision regarding the undisclosed income was challenged by the assessee, claiming that the cash deposit of Rs. 1,00,000 was part of the amount received from the cancellation of the sale deed. However, the Tribunal found inconsistencies in the assessee's explanations and upheld the addition as undisclosed income. The Court agreed with the Tribunal's findings, stating that the assessee failed to establish the source of the deposited amount, leading to the dismissal of the appeal. In conclusion, the Court dismissed the appeal, upholding the Tribunal's decision on the addition of unexplained cash amount and the disallowance of certain expenses. The judgment emphasized the importance of providing clear and consistent explanations for financial transactions to avoid allegations of undisclosed income.
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