2014 (1) TMI 1358 - AT - Income Tax

Unexplained cash credit - Held that - The assessee has opened a bank account and deposited the money received from third person - The assessee failed to explain on what account the money has been received by her - The assessee also failed to sustantiate her claim that the amount was received from third person - Assessee should establish nexus between the receipt of money by Smt. Baddam Kalavathy and passing the same to the assessee - The issue has been restored for fresh adjudication.

Summary

Issues:
1. Addition of Rs. 60 lakhs towards unexplained cash deposit.
2. Confirmation of the addition by the CIT(A).
3. Appeal against the order of the CIT(A).

Analysis:
1. The appeal was against the CIT(A)'s decision to uphold the addition of Rs. 60 lakhs as unexplained cash deposit by the Assessing Officer (AO). The appellant, a working Director in a company, had three bank accounts. The AO found unexplained cash deposits in one of the accounts, which were not considered in the assessment of another individual, leading to the addition in the appellant's income.

2. The CIT(A) confirmed the addition, noting the lack of details regarding the source of the cash deposits and the failure to substantiate the claim that the funds belonged to another individual whose income had been offered for taxation. The CIT(A) emphasized the need for evidence to support the appellant's claim and concluded that the unexplained cash deposit remained unexplained, hence taxable in the appellant's hands.

3. The appellate tribunal reviewed the case and observed that the appellant had received the amount in question from another individual, who had declared it as additional income. The tribunal emphasized the importance of establishing a clear nexus between the source of the funds and their transfer to the appellant. The tribunal directed the appellant to provide necessary evidence to substantiate the claim and ensure no false entries or explanations were given. Consequently, the tribunal remitted the issue back to the AO for fresh consideration, allowing the appeal for statistical purposes.

This detailed analysis outlines the progression of the case, highlighting the key arguments, decisions, and directions provided by the authorities involved in the legal judgment.