2015 (3) TMI 101 - HC - Income Tax

Unexplained cash deposits in the assessee s bank account - ITAT deleted the addition - Held that - the amount lying in the respective account as per the assessee was in fiduciary capacity to be utilized for buying policy of the respective vehicle. No evidence has come on record that the amount has ever been utilized by the assessee for her own purpose and there was positive evidence that all the amount from time to time was transferred to the account of ICICI Lombard General Insurance Company Limited. Under the circumstances, the explanations were found to be satisfactory by the CIT (Appeals) as well as by the Tribunal which is the ultimate fact finding authority. We do not find that any substantial questions of law would arise for consideration as sought to be canvased. - Decided in favour of assessee.

Summary

Issues:
1. Whether the order of the ITAT is perverse in dismissing the Revenue's appeal and deleting the addition made by the AO on account of unexplained cash deposits in the assessee's bank account?

Analysis:
The case involved an appeal by the revenue challenging the deletion of income added by the Assessing Officer (AO) due to unexplained cash deposits in the assessee's bank account. The AO found a substantial cash deposit in the assessee's bank account, which the assessee claimed was received as an insurance agent for purchasing insurance policies for Hero Honda Two Wheeler Motorcycle. The AO, deeming the explanation insufficient, added the amount to the assessee's income. However, the CIT (Appeals) and the Tribunal found that the amount was fully utilized for purchasing the insurance policy and not for personal use, leading to the deletion of the addition. The Tribunal specifically noted that the deposits were insurance premiums collected from bike owners and transferred to the insurance company's account, with the assessee maintaining a separate account for commission. The Tribunal upheld the CIT (Appeals) findings, stating that the revenue failed to provide any material to challenge the explanation given by the assessee.

The High Court, upon review, concurred with the lower authorities' findings. It noted that the amount in the account was held in a fiduciary capacity for purchasing insurance policies, with no evidence of personal use by the assessee. The Court emphasized that both the CIT (Appeals) and the Tribunal, as the ultimate fact-finding authority, found the explanations satisfactory. Consequently, the Court found no substantial legal questions for consideration and dismissed the appeal as meritless. The judgment highlights the importance of providing satisfactory explanations for financial transactions and the role of appellate authorities in assessing the credibility of such explanations.