2015 (2) TMI 497 - AT - Income Tax

Undisclosed cash credit u/s 68 - peak credit balance of both the bank accounts - addition of 26, 38, 754/- made by the AO the ld. CIT(A) has sustained the addition to the tune of 13, 68, 828/- - Held that - The assessee has to explain the deposits made in odd figures failing which the same is liable to be assessed to tax. From the summary of cash transactions we ourselves worked out the deposits made in the round figures of 2000/- and above for the period started from 01.8.2007 to 25.3.2008 i.e. the period starting from first major withdrawal.The cash withdrawals made by the assessee from 13.6.2007 to 25.3.2008 works out to about 14, 00, 000/-. On comparison of both the amounts and in the absence of any other material we are of the view that the assessee should out of cash withdrawals of about 14, 00, 000/- have utilized a sum of 11, 18, 000/- only for making re-deposits in the banks account. However our computation referred above needs to be verified by both the parties. In our view the Assessee may be given set off of aggregate amount of deposits made at a sum of 2, 000/- and above during the period mentioned above against the cash deposit of 26, 38, 404/-. The AO is directed to verify the above said computation along with the assessee and give set off of the amount as arrived at by both if the above said figure of 11, 18, 000/- is found to be erroneous. Since the remaining amounts of deposits after giving such set off remain unexplained we sustain the same. Accordingly we modify the order of ld. CIT(A) and direct the AO to sustain the addition of balance amount after giving set off of the deposit of 11, 18, 000/- or such other sum that may be arrived at by the AO. - Decided partly in favour of asessee. Unaccounted share transactions - CIT(A) deleted the addition 30, 72, 971/- as against 45, 58, 634/- - Held that - d CIT(A) has noticed that the assessee has realized a sum of profit of 2, 72, 425/- out of share trading. Accordingly the ld. CIT(A) has directed the AO to assess above amount as Short Term Capital Gain . In addition to the above the Assessee has also received a sum of 2101/- from the share broker as interest and reward amount. The Ld CIT(A) has directed that the same to be assessed. Though we notice that the ld. CIT(A) has taken a conscious decision after analyzing the share transactions carried out by the Assessee and we notice that the revenue could not find any defect with the said analysis made by the ld. CIT(A). - Decided against revenue.

Summary

Issues:
Assessment of deposits in bank accounts
Addition related to share transactions

Assessment of deposits in bank accounts:
The appeal involved assessing deposits made by the assessee in bank accounts, with the AO treating them as income under section 68 of the Income Tax Act, 1961. The assessee failed to explain the source of deposits, leading to the AO's assessment. The CIT(A) upheld a portion of the addition, considering the peak cash balance as unaccounted income. The ITAT analyzed the deposits made by the assessee, distinguishing between round and odd figure deposits. The ITAT found the explanation valid for round figure deposits but not for odd figure deposits. They computed the deposits made in round figures and directed the AO to verify the calculation. The ITAT allowed set off for deposits above a certain amount against the cash deposit total, sustaining the remaining unexplained amounts.

Addition related to share transactions:
Regarding the addition related to share transactions, the AO treated a significant amount as unexplained investment. The CIT(A) analyzed the transactions and directed the AO to assess specific amounts as short-term capital gain. The ITAT noted the CIT(A)'s detailed analysis and upheld their decision, finding no reason to interfere. The ITAT partly allowed the revenue's appeal, affirming the CIT(A)'s order on the share transaction issue.

This judgment highlights the importance of substantiating sources of income and investments to avoid additions under the Income Tax Act. The ITAT's detailed analysis and consideration of explanations provided by the assessee and previous assessments demonstrate a thorough review process in tax matters.