2013 (11) TMI 267 - AT - Income Tax

Addition on account of investment in M/S SVMDM Addition on account of unexplained investment u/s 69 of the Income Tax Act - Department has not adduced any evidence for utilisation of the monies withdrawn for any other purpose or has not disproved the cash flow statement given by the assessee, except making general statement that money withdrawn was utilised for other purposes. The department has not specifically counted the cash flow statement filed by the assessee and accepted by the CIT(A) Held that - Assessee s income was increased by a sum of Rs. 11 lakhs for the assessment years 2002-2003 and 2003-2004 and the assessee has shown the withdrawal of the same. Further, the facts regarding addition of Rs.11 lakhs made for the earlier years and the fact that the assessee had shown as having withdrawn the amount, has not been disputed by the Revenue. Addition made in the earlier years will be available for investment in the current year. The department has not produced any proof regarding utilisation of that amount for any other purpose. Hence, amounts added for the earlier years and shown as having been withdrawn in the books should be considered as being available for investment in the current year Decided against the Revenue.

Issues involved:
1. Addition of unexplained investment by the Assessing Officer.
2. Telescoping of withdrawn amounts for subsequent investments.
3. Disputed additions and deletions based on cash flow statements.
4. Disagreement between the Revenue and CIT(A) on source of investments.
5. Appeal against CIT(A) orders for different assessment years.

Issue 1: Addition of unexplained investment
In the case of ITA.No.1342/Hyd/2008 for the assessment year 2004-2005, the Revenue appealed against the deletion of Rs. 10 lakhs added by the Assessing Officer as unexplained investment in Gayatri Trading Company. The CIT(A) observed that the money withdrawn from the company became part of the cash flow statement, explaining the source of deposit in Gayatri Trading Company. The CIT(A) concluded that the source of investment was explained, and hence, the addition made by the Assessing Officer was deleted. The Tribunal upheld the CIT(A)'s decision, stating that the withdrawal from the company was available for making the deposit, leading to the dismissal of the Revenue's appeal.

Issue 2: Telescoping of withdrawn amounts for subsequent investments
In a similar appeal, ITA.No.1343/Hyd/2008, the Revenue challenged the addition of Rs.13,28,333/- as undisclosed investment made by the assessee in SVMDM. The CIT(A) held that the cash flow statement provided by the assessee explained the source of deposit in SVMDM, as the money withdrawn from Gayatri Trading Company was utilized for this investment. The Tribunal noted that the department failed to disprove the cash flow statement or show alternative utilization of the withdrawn funds, leading to the dismissal of the Revenue's appeal.

Issue 3: Disputed additions and deletions based on cash flow statements
In ITA.No.1344/Hyd/2008 for the assessment year 2004-05, the Assessing Officer added a sum of Rs.6,24,479/- as unexplained income in SVMDM. The CIT(A) accepted the argument that the income offered for earlier years, which was withdrawn, could be considered available for investment in the current year. The Tribunal upheld the CIT(A)'s decision, emphasizing that the Revenue failed to provide evidence of alternative utilization of the withdrawn amount, resulting in the dismissal of the Revenue's appeal.

Issue 4: Disagreement between the Revenue and CIT(A) on source of investments
Throughout the judgments, there was a consistent disagreement between the Revenue and the CIT(A) regarding the source of investments made by the assessee. The CIT(A) consistently relied on the cash flow statements provided by the assessee to explain the sources of deposits and investments, leading to the deletion of additions made by the Assessing Officer. The Tribunal upheld the CIT(A)'s decisions, emphasizing the lack of evidence provided by the Revenue to counter the explanations given by the assessee.

Issue 5: Appeal against CIT(A) orders for different assessment years
The appeals covered different assessment years and involved similar disputes regarding unexplained investments and the utilization of withdrawn amounts for subsequent investments. In each case, the CIT(A) decisions were based on the explanations provided by the assessee through cash flow statements, which the Revenue failed to disprove. The Tribunal upheld the CIT(A) orders, resulting in the dismissal of the Revenue's appeals for all the cases.

This detailed analysis showcases the consistent reliance on cash flow statements, the lack of evidence provided by the Revenue to counter the explanations given by the assessee, and the subsequent dismissal of the Revenue's appeals by the Tribunal in each case.

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