2014 (5) TMI 188 - AT - Income Tax

Deletion made u/s 68 of the Act Cash credits - Materials brought by AO not appreciated Held that - The CIT(A)has given a clear cut finding that a sum was not deposited out of accumulated agriculture income of the father of the assessee - mere mentioning of wrong section while making addition is not decisive of the issue - there is no basis for the observation of the CIT(A) that the amount belonged to father of the assessee, and therefore, the AO should not have made any addition in the hands of the assessee - there is no material brought on record either by the Revenue or by the assessee to prove that the amount deposited in the joint bank account in fact belongs to which one of the joint account holder - there is no evidence in support of the case of the Revenue or the assessee, but on preponderance of probability, the issue could be decided as regard the quantum adding of the assessee is concerned - since the assessee has failed to prove the source of cash deposited of Rs.14,52,000/- in the joint bank account of three individuals, the addition to one-third of the cash deposit is restricted Decided partly in favour of Revenue.

Summary

Issues:
1. Addition of Rs.14,52,000 under section 68 of the Income Tax Act for the assessment year 2007-2008.

Analysis:

The appeal by the Revenue challenged the order of the CIT(A) regarding the addition of Rs.14,52,000 under section 68 of the Income Tax Act for the assessment year 2007-2008. The Revenue contended that the CIT(A) erred in law and on facts by deleting the addition without proper appreciation of the case facts and evidence presented by the Assessing Officer (AO). The Revenue argued that the CIT(A) contradicted himself by first stating that the explanation provided by the appellant regarding the ownership of the funds was not substantiated, and later concluding that there was no evidence to prove the bank account belonged to the appellant.

During the proceedings, the learned DR supported the AO's order, emphasizing that the cash deposited in the joint bank account of the appellant and his parents was made by the appellant's father. The counsel for the assessee opposed this argument, relying on the CIT(A)'s findings that the cash deposits belonged to the father, and thus, no action should be taken against the assessee under section 68 of the Act.

Upon careful consideration of the submissions and evidence, the Tribunal found that the addition was based on information from the Annual Information Return (AIR) indicating a cash deposit of Rs.14,52,000 in a joint bank account. The CIT(A) had concluded that the amount did not come from the father's agricultural income. The Tribunal noted that there was no conclusive evidence to determine the actual owner of the deposited amount. Despite the lack of evidence from both parties, the Tribunal decided, based on the preponderance of probability, to restrict the addition to one-third of the deposit, amounting to Rs.4,84,000, as the appellant failed to prove the source of the entire deposit.

Ultimately, the Tribunal partly allowed the Revenue's appeal, reducing the addition to Rs.4,84,000, one-third of the initial amount, as the appellant could not establish the ownership of the entire deposited sum.