2014 (1) TMI 860 - AT - Income Tax

Addition made u/s 68 of the Act - Unexplained deposits in bank Held that - The assessee has given the details of efforts taken by her to obtain a confirmation letter from the purchaser of the property - The son of the purchaser has confirmed the payment details - The particulars of the purchaser including his Permanent Account number were furnished to the Assessing officer - no effort was taken from the side of the AO to examine the veracity of the claim made by the assessee - The assessee, being the seller, cannot be expected to have control over the purchaser of the property after the completion of the sale transaction - Thus, the assessee has done all that she could do - there is no reason to suspect the claim of receipt of sale consideration at Rs.33.50 lakhs - the assessee has discharged the primary onus placed upon her under section 68 of the Act - the order of CIT(A) set aside and the assessing officer is directed to adopt the sale consideration as Rs.33.50 lakhs Decided in favour of Assessee.

Summary

Issues involved:
Challenge to addition of Rs.31.50 lakhs under section 68 of the Act for unexplained cash credit from bank deposits.

Detailed Analysis:

1. Background and Facts: The appeal challenges the decision confirming the addition of Rs.31.50 lakhs made by the Assessing Officer under section 68 of the Act for deposits found in the bank accounts of the assessee, a teacher by profession.

2. Assessee's Claim: The assessee claimed to have sold a property for Rs. 33,50,000, despite the sale deed mentioning Rs. 7,50,000 as the sale consideration. The assessee provided e-mail correspondences with the son of the purchaser detailing payments made, but the purchaser refused to provide a confirmation letter.

3. Revenue's Argument: The Revenue argued that the burden to prove the receipt of Rs. 33,50,000 lies with the assessee, who failed to produce a confirmation letter from the purchaser, thus failing to discharge the burden of proof.

4. Tribunal's Analysis: The Tribunal analyzed the property's purchase price, size, location, and the efforts made by the assessee to obtain confirmation from the purchaser. It noted the increase in land prices over the years and the difficulty in obtaining a confirmation letter due to the purchaser's apprehensions.

5. Legal Precedent: The Tribunal referred to a Supreme Court case where the burden of proof was on the assessee to prove cash credits. In that case, the court emphasized the Revenue's responsibility to examine the source of income of alleged creditors before adding cash credits to the total income.

6. Decision: The Tribunal found that the assessee had taken reasonable steps to prove the receipt of Rs. 33,50,000 through e-mail correspondences and an affidavit. It noted the lack of effort by the Assessing Officer to verify the claim with the purchaser. Therefore, the Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to consider the sale consideration as Rs. 33,50,000.

7. Conclusion: The appeal filed by the assessee was allowed, and the Tribunal pronounced the decision on 20-06-2013, emphasizing that the assessee had fulfilled the burden of proof required under section 68 of the Act regarding the unexplained cash credit.