2014 (12) TMI 797 - AT - Income Tax

Various cash credits - Onus discharged by assessee or not CIT(A) appreciated the complete facts and various papers like confirmation etc. in his proper perception or not Held that - Regarding deposit on sale of gold ornaments of the mother of the assessee, Smt. Bhavridevi Agarwal, the assessee was able to file copy of the sale bills issued by Samarth Marketing, jewelers, Ahmedabad, and these evidences could not be controverted by the Revenue the mother of the assessee, Smt. Bhavridevi Agarwal is an aged lady and extent of gold ornaments claimed to have been sold by her could not be said to be excessive - the credit entry of ₹ 7 lakhs on sale of gold ornaments belonging to the mother of assessee, Smt. Bhavridevi Agarwal has been explained. Regarding credit entries on receipt of loans from various persons Held that - They are all close relatives of the assessee and have filed confirmation along with their copy of return and also their PANs. before the AO and the CIT(A) - no case of addition on account of receipt of loans from these three persons could be made out by the Revenue, and the addition is deleted - credit entry of ₹ 10,000/- claimed to have been on account of amount received from Shri Pavan Singhal also stands explained, as confirmation from the creditor along with his complete address and PAN card copy was filed before the AO and the CIT(A) - none of the persons are income tax assessee, and no corroborative evidence in support of the case of the assessee was filed by the assessee - the addition made to the extent of ₹ 55,000/- is upheld Decided partly in favour of assessee. Validity of reopening of assessment u/s 147 - Unexplained deposit cash credit has already been added in the name of Shri Sunil kumar Agrawal or not - Held that - There was no mistake in the order of the CIT(A) in holding that section 68 applies to the case of Shri Sunil kumar Agrawal since the bank account in which the credit entries were found belonged to him and moreover, the amount of cash credit has already been added in the name of Shri Sunil kumar Agrawal, and it could not be added in the hands of the assessee - merely on the basis of some statement given by Shri Sunilkumar Agrawal, it could not be said that Shri Sunilkumar Agrawal was absolved of the responsibility of explaining the source of credit entries in his bank account - no other evidence could be produced by the department to suggest that the amount in the bank account of Shri Sunilkumar Agrawal belongs to the assessee thus, the order of the CIT(A) is upheld in cancelling the order of reassessment made Decided against revenue.

Issues Involved:
1. Addition of unexplained cash credits.
2. Validity of assessment proceedings under section 143(3) due to non-service of notice under section 143(2).
3. Validity of reassessment proceedings under section 147.
4. Protective and substantive addition of cash credits.

Detailed Analysis:

1. Addition of Unexplained Cash Credits:
The primary issue was whether the assessee had adequately explained cash credits amounting to Rs. 16,75,000. The assessee provided evidence, including return of income, PAN card, and confirmation letters from creditors. Specific amounts were explained as follows:
- Rs. 7 lakhs from the sale of gold ornaments by the assessee's mother, supported by sale bills and confirmation from the jeweler.
- Rs. 4 lakhs as a loan from the assessee's brother, with confirmation and PAN details provided.
- Rs. 3 lakhs from various individuals, with confirmations and addresses provided, but no summons were issued by the AO.
- Rs. 2.5 lakhs from Vinod Agarwal, with confirmation and PAN details provided.
- Rs. 25,000 claimed as personal savings.

The Tribunal found the explanations for Rs. 7 lakhs, Rs. 4 lakhs, Rs. 2.5 lakhs, and Rs. 25,000 reasonable and supported by evidence, thus deleting these additions. However, Rs. 55,000 from three creditors could not be substantiated, leading to a partial confirmation of the addition. An unexplained amount of Rs. 61,000 was also confirmed, making a total sustained addition of Rs. 1,16,000.

2. Validity of Assessment Proceedings under Section 143(3):
The assessee contended that the notice under section 143(2) was never served, rendering the assessment proceedings invalid. The Tribunal did not adjudicate this issue, considering it academic, as substantial relief was already provided on merits.

3. Validity of Reassessment Proceedings under Section 147:
The Revenue challenged the CIT(A)'s decision that the reassessment proceedings were invalid. The Tribunal upheld the CIT(A)'s decision, noting that the cash credits were found in the bank account of another assessee (Shri Sunilkumar Agrawal) and had already been added to his income. The Tribunal confirmed that the reassessment in the case of Shri Rajkumar Agrawal was not justified, as the credits did not belong to him.

4. Protective and Substantive Addition of Cash Credits:
The Tribunal addressed the issue of protective versus substantive addition. The addition of Rs. 16.75 lakhs was made substantively in the hands of Shri Sunilkumar Agrawal and only protectively in the hands of Shri Rajkumar Agrawal. The Tribunal found no basis for adding the same amount in the hands of Shri Rajkumar Agrawal, given the substantive addition in the correct assessee's account.

Conclusion:
The appeal of the assessee (Shri Sunilkumar Agrawal) was partly allowed, reducing the addition from Rs. 16.75 lakhs to Rs. 1,16,000. The appeal of the Revenue (Shri Rajkumar Agrawal) was dismissed, upholding the CIT(A)'s decision to cancel the reassessment. The Cross Objection by the assessee was also dismissed.

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