2015 (5) TMI 576 - AT - Income Tax

Unaccounted cash deposit in the bank account - CIT(A) deleted the addition - Held that - The dates of withdrawal from the companies cash book matches with the dates of equivalent deposited in ICICI bank account of the assessee. A finding has also been recorded to the effect that the amount withdrawn in the company s cash books has been duly considered in the ledger account of the assessee in the books of company. The CIT(A) has also recorded a finding to the effect that the expenditure incurred by assessee on various trips expenses, diesel and oil of the trucks has duly been considered in the ledger accounts of the assessee in the book of the company and also such expenses has been claimed by the company by the deduction in its P & L account. Thus, there was a clear nexus between withdrawal made from cash book of the company and its deposit in the ICICI bank account of the assessee. The finding recorded by the CIT(A) is as per material on record and the same has not been controverted by the ld. DR by bringing any positive material on record - Decided against revenue. Unexplained investment in shares of the company M/s Sona Transport - CIT(A) deleted the addition - Held that - From the record, we found that the company M/s Sona Transport Pvt. Ltd was promoted by his father Shri Pal Singh Saini and after the death of his father in the year 2000, all the 26,113 shares of the company held by father and father's HUF were transferred in the name of the assessee on 1st April, 2000 i.e. 8 years back. The register of the shares maintained by the company along with board resolution dated 1-4-2000 also indicating transfer of shares in the name of son. Thus, the shares received by the assessee from his father eight years back on father s death cannot be said to be undisclosed investment on assessee. Since the shares were received as inheritance and no value was paid for the same, it was not shown in the balance sheet of the assessee filed during the course of assessment proceedings. Since there was no investment by the assessee in the shares of the company either during the year or in earlier year, there is no infirmity in the order of CIT(A) for deleting the addition - Decided against revenue.

Summary

Issues Involved:
1. Addition of Rs. 20,60,300/- as income from undisclosed sources.
2. Addition of Rs. 26,11,350/- as unexplained investment in shares.

Detailed Analysis:

1. Addition of Rs. 20,60,300/- as Income from Undisclosed Sources:

The primary issue revolves around the addition of Rs. 20,60,300/- made by the Assessing Officer (AO) as income from undisclosed sources. The assessee, a Director in M/s Sona Transport Pvt. Ltd., had deposited cash in various bank accounts, including Rs. 20,60,300/- in ICICI Bank. The AO did not accept the explanation provided by the assessee that the cash deposits were sourced from withdrawals made from M/s Sona Transport Pvt. Ltd. for trip expenses of drivers, facilitated through debit cards issued to truck operators. The AO's rationale was based on the fact that the assessee had already admitted other cash deposits as income from unexplained sources and had not disclosed the ICICI Bank account in the return of income.

The CIT(A) deleted the addition, observing that the assessee had acted as an escrow or agent for making payments to drivers on behalf of the company. The CIT(A) verified the cash book of the company and the bank statement of ICICI Bank, finding that the dates of withdrawals from the company's cash book matched the dates of deposits in the ICICI Bank account. The CIT(A) also noted that the expenses incurred by the assessee through the ICICI Bank account were duly recorded in the company's books and claimed as deductions in its Profit & Loss account. The CIT(A) concluded that the AO had made the addition based on mere suspicion without verifying the entries from the company's books.

The appellate tribunal upheld the CIT(A)'s decision, confirming that the findings were based on material evidence and that the AO had not provided any positive material to counter the assessee's explanation. Therefore, the addition of Rs. 20,60,300/- was not justified and was rightly deleted by the CIT(A).

2. Addition of Rs. 26,11,350/- as Unexplained Investment in Shares:

The second issue concerns the addition of Rs. 26,11,350/- made by the AO as unexplained investment in shares of M/s Sona Transport Pvt. Ltd. The AO noted that the assessee owned 26,113 shares valued at Rs. 26,11,350/- as on 31/3/2009, which were not reflected in the balance sheet filed during the assessment proceedings. The assessee explained that these shares were inherited from his father after his death and were not a fresh investment.

The CIT(A) deleted the addition, noting that the shares were originally held by the assessee's father and were transferred to the assessee on 1.4.2000, as evidenced by share certificates and the company's share register. The CIT(A) found that the company had not issued any fresh shares since FY 98-99, and the total number of shares remained the same, indicating that the shares were indeed inherited. The AO had not provided any evidence to suggest that the assessee had made any payment for acquiring these shares during the year. The CIT(A) concluded that the shares were inherited without any fresh investment, and hence, the balance sheet could be prepared without reflecting these shares.

The appellate tribunal upheld the CIT(A)'s decision, confirming that the shares were inherited in the year 2000 and that there was no fresh investment by the assessee. Therefore, the addition of Rs. 26,11,350/- as unexplained investment was not justified and was rightly deleted by the CIT(A).

Conclusion:

The appellate tribunal dismissed the revenue's appeal, affirming the CIT(A)'s orders to delete both the additions made by the AO. The tribunal found that the CIT(A)'s findings were based on material evidence and that the AO had not provided sufficient grounds to justify the additions. The order was pronounced in the open court on 10/04/2015.