2015 (2) TMI 530 - AT - Income Tax

Unexplained cash deposits in bank account - CIT(A) allowed part claim - Held that - Considering order of the learned CIT(A), who had analysed the cash deposited in the bank account and withdrawal made on various dates in the both the accounts i.e. in Axix Bank and Malviya Urban Cooperative Bank, Jaipur, there is no material on record from either side to controvert the finding of the learned CIT(A), therefore, we uphold the order of the learned CIT(A). - Decided partly in favour of assessee. Ad hoc disallowances @ 20% out of expenses - Held that - The learned CIT(A) had examined all the aspects of expenses claimed by the assessee with evidence and books of account. The appellant had not controverted the finding give by the Assessing Officer before the learned CIT(A). Therefore, we also uphold the order of the learned CIT(A) who had confirmed the addition by observing that the assessee had been provided sufficient opportunity to produce the books of account before the Assessing Officer but he failed to produce the same and had not established the genuineness of the expenses. - Decided against assessee.

Summary

Issues:
1. Addition of unexplained cash deposits in bank account
2. Disallowance of expenses on ad hoc basis
3. Confirmation of unexplained credits in bank account
4. Addition of unexplained cash credit
5. Confirmation of ad hoc disallowances on expenses

Issue 1: Addition of unexplained cash deposits in bank account
The Assessing Officer added unexplained cash deposits of Rs. 13,50,000 to the declared income of the assessee due to failure to explain cash withdrawals and utilization. The CIT(A) partially allowed the appeal, confirming Rs. 13,15,000 as cash deposited and Rs. 64,770 as opening cash in hand. The ITAT upheld the CIT(A)'s decision, dismissing the revenue's appeal and the assessee's cross-objections related to this issue.

Issue 2: Disallowance of expenses on ad hoc basis
The Assessing Officer disallowed expenses claimed by the assessee at Rs. 2,14,650 on an ad hoc basis of 20% due to lack of supporting documents. The CIT(A) upheld this disallowance, stating that the assessee failed to produce books of account or establish the genuineness of expenses. The ITAT affirmed the CIT(A)'s decision, dismissing the assessee's cross-objection on this ground.

Issue 3: Confirmation of unexplained credits in bank account
The Assessing Officer treated Rs. 27,29,770 as unexplained credits in the bank account, adding it to the declared income. The CIT(A) confirmed additions of Rs. 13,15,000 for cash deposited and Rs. 64,770 for opening cash in hand. The ITAT upheld the CIT(A)'s decision, dismissing both the revenue's appeal and the assessee's cross-objections on these grounds.

Issue 4: Addition of unexplained cash credit
The Assessing Officer added Rs. 12,02,500 as unexplained cash credit under Section 68 of the Income Tax Act, as the assessee failed to provide details despite repeated opportunities. The CIT(A) confirmed this addition after considering evidence and lack of proof of genuineness. The ITAT upheld the CIT(A)'s decision, dismissing the assessee's cross-objections related to this addition.

Issue 5: Confirmation of ad hoc disallowances on expenses
The Assessing Officer disallowed expenses claimed by the assessee on an ad hoc basis of 20% due to lack of supporting documents. The CIT(A) upheld this disallowance, citing non-production of books of account and failure to establish expense genuineness. The ITAT affirmed the CIT(A)'s decision, dismissing the assessee's cross-objection on this ground.

In conclusion, the ITAT upheld the CIT(A)'s decisions on all issues, dismissing both the revenue's appeal and the assessee's cross-objections. The assessee's failure to provide adequate explanations and evidence led to the confirmation of various additions and disallowances by the tax authorities.