2013 (12) TMI 123 - AT - Income Tax

Cash deposit in bank account - Held that - The assessee failed to produce the books of account nor give any explanation vis-a-vis the source of cash deposits in the bank account. In the absence of any explanation or any evidence being produced by the assessee, The onus cast upon the assessee was not discharged - The assessee failed to give the list of such persons who had advanced the said cash to the assessee - The assessee even failed to bring on record any evidence to prove its stand that it was the amount received from such persons who were his clients - The assessee failed to file any confirmation in respect of the said cash credits nor any of the persons were produced for examination before the Assessing Officer, though specific direction in this regard was given by the Assessing Officer within the course of recording of statement of the assessee, during assessment proceedings - Decided against assessee.

Issues Involved:
1. Reopening of the case and issuance of notice under Section 148 of the Income Tax Act, 1961.
2. Assessment of income at Rs. 3.49 crores and Rs. 3.97 crores against the returned income.
3. Applicability of Section 68 of the Income Tax Act for cash deposits in bank accounts.
4. Consideration of the appellant's role as a sub-broker and the nature of income.
5. Assessment of cash deposits in the bank as the appellant's income twice.
6. Consideration of the statement recorded during the survey.
7. Assessment of the appellant's financial capacity to deposit huge cash.
8. Reference to similar cases and judgments, specifically the case of Shri B K Jain.
9. Justification of assessing all cash deposits without considering the peak figure of bank deposits.

Detailed Analysis:

1. Reopening of the Case and Issuance of Notice under Section 148:
The appellant contended that the CIT(A) erred in not addressing the issue of reopening the case by the Assessing Officer and issuing notice under Section 148 of the Income Tax Act, 1961. However, the appellant's representative did not press this issue during the hearing, leading to its dismissal as not pressed.

2. Assessment of Income at Rs. 3.49 Crores and Rs. 3.97 Crores Against Returned Income:
The appellant challenged the assessment of income at Rs. 3.49 crores and Rs. 3.97 crores against the returned income of Rs. 1.51 lakhs and Rs. 1.05 lakhs respectively. The Tribunal upheld the CIT(A)'s decision, confirming the addition made by the Assessing Officer based on cash deposits in the appellant's bank accounts.

3. Applicability of Section 68 of the Income Tax Act for Cash Deposits:
The Tribunal found that the provisions of Section 68 were correctly invoked by the Assessing Officer. The appellant failed to provide satisfactory explanations or evidence regarding the nature and source of the cash deposits. The Tribunal noted that the appellant did not discharge the onus of proving the identity, creditworthiness, and genuineness of the cash transactions, leading to the addition being upheld.

4. Consideration of the Appellant's Role as a Sub-Broker:
The appellant argued that the income should be assessed based on their role as a sub-broker and trading in commodities on behalf of clients. However, the Tribunal found that the appellant's explanation was insufficient, and the cash deposits were rightly treated as unexplained income under Section 68.

5. Assessment of Cash Deposits in the Bank as Appellant's Income Twice:
The appellant contended that the cash deposits were assessed as income twice. The Tribunal rejected this argument, finding that the appellant did not provide adequate evidence to substantiate the claim that the deposits were not their income.

6. Consideration of the Statement Recorded During the Survey:
The appellant argued that the Assessing Officer did not consider the statement recorded during the survey, where it was stated that the appellant was engaged in giving accommodation entries and should only be assessed for commission. The Tribunal found that this argument was not raised adequately during the assessment proceedings and thus could not be considered at this stage.

7. Assessment of the Appellant's Financial Capacity to Deposit Huge Cash:
The appellant claimed that they did not have the financial capacity to deposit such large amounts of cash. The Tribunal found that the appellant failed to provide evidence to support this claim, leading to the addition being upheld.

8. Reference to Similar Cases and Judgments:
The appellant referred to the case of Shri B K Jain, where under similar circumstances, only commission was assessed. The Tribunal found that the facts of the present case were different and upheld the addition made by the Assessing Officer.

9. Justification of Assessing All Cash Deposits Without Considering the Peak Figure:
The appellant argued that the Assessing Officer should have considered the peak figure of bank deposits rather than assessing all cash deposits. The Tribunal rejected this argument, finding that the peak credit theory was not applicable as the appellant failed to explain the source of cash deposits.

Conclusion:
The Tribunal upheld the CIT(A)'s decision, confirming the addition made by the Assessing Officer under Section 68 of the Income Tax Act. The appeals were dismissed, and the assessment of income at Rs. 3.49 crores and Rs. 3.97 crores was confirmed. The Tribunal also dismissed the issue of reopening the case and issuing notice under Section 148 as not pressed.

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