2015 (1) TMI 959 - AT - Income Tax

Unaccounted cash credit - Held that - In the present case it is noticed that the assessee received the deposits from 62 persons in cash, those persons were produced before the AO and their statements were recorded wherein they confirmed the deposits with the assessee. The depositors also explained the source of their deposits which was the agricultural income and the income from salary or profession/business etc. The AO however did not accept the explanation of the assessee and also doubted the confirmation by presuming that the persons having the land holding of 2 to 3 acres each were not in a position to advance the deposits of less than ₹ 20,000/-. . In the instant case, it was explained that the assessee was dealing in Petroleum Products and the persons who were mainly agriculturists deposited the amount in cash to ensure the regular supplies of the Petroleum Products like diesel etc. which was required for the purpose of harvesting and sowing, the said explanation of the assessee was not rebutted at any stage. It, therefore, appears that the impugned addition has been made merely on the basis of surmises and conjecture. Therefore, the deposits in question were genuine and the addition made by the AO and confirmed by the ld. CIT(A) was not justified, we, therefore, delete the same. - Decided in favour of assessee. Additional income from Tanker not shown - Held that - In the present case it is an admitted fact that the assessee maintained separate books of accounts for the tanker which were not rejected by invoking the provisions of section 145(3) of the Act. The AO disallowed 50% of the total expenses without any basis and the ld. CIT(A) also worked out the expenses on the basis of consumption of diesel but ignored other expenses like salary to the driver & the cleaner, repairs & maintenance, depreciation etc. In the present case the assessee received the reimbursement of the expenses on the basis of certain parameters fixed by the Petroleum Company those parameters were not doubted. The assessee received the transportation charges of ₹ 18,82,516/- claimed the expenses at ₹ 16,86,875/- which were much less than the reimbursement made by the Petroleum Company, the assessee after claiming depreciation of ₹ 1,52,275/- had shown the income from tanker at ₹ 43,867/- which was more than ₹ 42,000/- i.e. the income to be shown u/s 44AE of the Act, on that score also the disallowance sustained by the ld. CIT(A) was not justified. Thus order passed by the ld. CIT(A) on this issue and the addition of ₹ 3,60,199/- sustained by the ld. CIT(A) is deleted. - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition of Rs. 10,74,600/- on account of cash credits.
2. Addition of Rs. 3,60,199/- as additional income from Tanker not shown.

Issue-wise Detailed Analysis:

1. Addition of Rs. 10,74,600/- on account of cash credits:

The assessee filed a return of income declaring Rs. 79,365/-, which was processed and later selected for scrutiny. During assessment, the assessee furnished affidavits of cash creditors and produced 9 of them for recording statements. The AO noticed unsecured loans amounting to Rs. 17,18,198/- from 62 new and 20 old creditors, with each loan being less than Rs. 20,000/-. The AO doubted the creditworthiness and genuineness of these transactions, considering the creditors as people of no means and not assessed to tax. Consequently, Rs. 10,74,600/- was added as income from undisclosed sources, relying on various case laws.

The assessee contested this addition before the CIT(A), arguing that all necessary proofs, including affidavits, identity proofs, and sources of income, were provided. The CIT(A), however, upheld the addition, noting that the creditors were of small means and lacked the capacity to lend such amounts, and the transactions were not genuine due to the lack of interest and repayment evidence.

Upon appeal, the Tribunal observed that the assessee produced the depositors before the AO, who confirmed their deposits and sources of income. The Tribunal noted that the AO's doubts were based on surmises and conjectures, not on concrete evidence. The Tribunal emphasized that the assessee's explanation about the deposits being for ensuring regular supplies of petroleum products was not rebutted. Therefore, the Tribunal concluded that the addition was not justified and deleted it.

2. Addition of Rs. 3,60,199/- as additional income from Tanker not shown:

The assessee, running a petrol pump, used a tanker for transporting petroleum products and received Rs. 18,82,516/- as transportation charges from BPCL. The AO disallowed 50% of the diesel expenses claimed (Rs. 16,86,275/-), resulting in an addition of Rs. 8,43,138/-, reasoning that the expenses were on the higher side.

The CIT(A) partially sustained the addition, estimating the diesel consumption cost at Rs. 12,35,456/- based on an average consumption of 2.5 km per liter, thus sustaining an excess consumption addition of Rs. 3,60,199/-.

The assessee appealed, arguing that the expenses were fully vouched and accounted for, and the income shown was higher than what was assessable under Section 44AE. The Tribunal noted that the assessee maintained separate books of accounts for the tanker, which were not rejected under Section 145(3). The Tribunal found that the AO's disallowance was without basis and the CIT(A) ignored other expenses like salary, repairs, and depreciation. The Tribunal concluded that the disallowance was not justified, especially since the income shown was more than the deemed income under Section 44AE. Consequently, the Tribunal deleted the addition of Rs. 3,60,199/-.

Conclusion:

The Tribunal allowed the appeal of the assessee, deleting both additions of Rs. 10,74,600/- and Rs. 3,60,199/-. The judgment emphasized the necessity of concrete evidence over surmises and conjectures in making additions to income.