2014 (11) TMI 761 - AT - Income Tax

Additions u/s 69A - Principles of natural justice Opportunity of being heard provided to assessee or not - Service of notice - Held that - The Tax Authorities have noticed cash deposits in the HDFC Bank Account, Crawford Market Branch, Mumbai and when asked about the nature and source of acquisition of the cash it was stated that he was maintaining two separate accounts, one in ICICI Bank and the other in HDFC Bank, and he had taken unsecured loans which were utilised exclusively for development of new business - The amount available in HDFC Bank was withdrawn from time to time and advanced to other parties and upon repayment the same was redeposited - one would withdraw from bank only when the cash already lying with him is not sufficient to meet his needs on that day or conversely a person would not deposit only a small amount of the cash-in-hand available with him in the bank a/c leaving large amounts as cash in hand even though the same was not required to be used - the claim of the assessee that he had given temporary loans to his friends and relatives and these loans, on being repaid, were redeposited in the bank account is not tenable and is merely a self serving statement and the confirmations filed by the assessee are merely self serving documents when seen in the context of the facts and circumstances of the case assessee was not in physical possession of the cash with him which has been withdrawn by him on earlier dates - the bank account was not disclosed in the return of income. Assessee has made only vague submissions without specifically bringing any material to rebut the discrepancies - the source of cash deposited in the bank account maintained with HDFC Bank on various dates is held to be unexplained - no material was placed to contradict the findings of the CIT(A) thus, CIT(A) was justified in holding that the assessee did not prove the cash deposits in the bank account and correctly brought to tax the amount deposited u/s 69A the order of the CIT(A) is upheld Decided against assessee.

Summary

Issues:
Challenging additions made under section 69A of the Act due to lack of opportunity to be heard and failure to appreciate source of deposits.

Analysis:
The appeals challenged orders by CIT(A)-24, Mumbai for assessment years 2007-08 and 2008-09 regarding cash deposits in HDFC Bank Account. Despite notices, the assessee did not appear, leading to ex-parte disposal. The Tax Authorities found discrepancies in the cash deposits and rejected the assessee's explanations. The CIT(A) extensively analyzed the issue, considering the surrounding circumstances and the Apex Court's decision in Smt. Sumati Dayal case. The CIT(A) concluded that the assessee's vague submissions lacked material evidence to rebut discrepancies noted by the AO and sustained the orders.

For AY 2007-08, the CIT(A) detailed the abnormal pattern of cash withdrawals and deposits, questioning the justification for maintaining huge cash in hand without corresponding expenditures or investments. The confirmations from alleged loan recipients were deemed self-serving and lacked specific details. Citing legal precedents, the CIT(A) held that circumstantial evidence can be considered in tax proceedings. The CIT(A) upheld the addition under section 69A, deeming the cash deposits unexplained and the income of the assessee for that financial year.

As no material was presented to challenge the CIT(A)'s findings, the Tribunal affirmed the decision, stating that the assessee failed to prove the source of cash deposits and correctly taxed the amount under section 69A. Consequently, the appeals by the assessee were dismissed, upholding the orders passed by the CIT(A).

In conclusion, the Tribunal upheld the CIT(A)'s decision, emphasizing the importance of substantiating claims with concrete evidence in tax proceedings. The judgment highlights the significance of providing detailed and verifiable explanations to support financial transactions and income sources to avoid adverse tax implications.