2015 (8) TMI 320 - AT - Income Tax

Unexplained cash deposits - CIT(A) deleted the addition - Held that - On perusal of the assessee s ICICI Bank statement of the relevant period reveals that he has made all payments to the contractor by account payee cheques by utilizing the funds deposited in his account by his brother. Thus, there is a complete and clear nexus between the payments made by the assessee to the contractor on the one hand; and the payments received by the assessee from his brother on the other in the present case. The necessity of the funds in the present case, has also been proved beyond any doubt. The identity of his brother, Shri Hari Om Singhal is also, beyond any doubt, since he himself is a tax payer. The ld CIT(A) notes that genuineness of the arrangement cannot be reasonably questioned, as the same is between 2 real brothers, who belong to the same family. The ld CIT(A) appreciates the desire of the elder brother to help his younger brother, particularly, when the funds were needed for a genuine purpose, so according to him it cannot be reasonably questioned. We find that Ld. CTI(A) relied on the ratio of cases Anand Ram Raitani Vs.CIT (1996 (8) TMI 95 - GAUHATI High Court) and CIT, Poona Vs. Bhai Chand H. Gandhi (Born) 1982 (2) TMI 28 - BOMBAY High Court for concluding that since books of accounts are not maintained by the assessee, there is no legal scope to invoke provisions of Section 68 and as such, addition made on such premise was rightly deleted. In the background of the aforesaid discussions, we do not find any legal infirmity in the order passed by the Ld. CIT(A). In our view, the same does not need any interference on our part, hence, we uphold the same. - Decided against revenue.

Summary

Issues involved: Appeal against deletion of addition of unexplained cash deposits by the CIT(A) for assessment year 2009-10.

Analysis:

Issue 1: Deletion of addition of Rs. 21,52,800/- on account of unexplained cash deposits by CIT(A).

The Revenue appealed against the CIT(A)'s decision to delete the addition of Rs. 21,52,800/- as unexplained cash deposits. The AO had treated this amount as unexplained cash credit under section 68 of the Income Tax Act. The assessee, an employee of a company, had deposited this cash with ICICI Bank in Hyderabad. Despite multiple opportunities, the assessee failed to provide evidence to explain the source of the deposit. The AO completed the assessment under section 144 of the Act, treating the cash deposit as unexplained.

Issue 2: Arguments presented by the Revenue and the assessee.

The Revenue contended that the assessee did not declare any income from business or profession in the return, and the cash deposits were unexplained. The Revenue sought to reverse the CIT(A)'s decision and uphold the AO's order. On the other hand, the assessee, through his counsel, defended the CIT(A)'s decision and requested no interference.

Issue 3: Assessee's explanation and evidence presented before CIT(A).

The assessee explained that he belonged to a transporter family and owned two trucks. Due to his busy schedule as an employee, he entrusted the management of his trucks to his elder brother, who deposited funds into the assessee's bank account from truck receipts to help with timely payments for a godown construction project. The assessee provided sworn affidavits, cash flow sheets of trucks, contract details, and other supporting documents to substantiate his claim.

Issue 4: CIT(A)'s analysis and decision.

The CIT(A) considered the peculiarities of the road transport business, where cash transactions are common due to operational expenses. The CIT(A) reviewed the documents submitted by the assessee, including bank statements and affidavits, to establish a clear nexus between the funds deposited by the brother and payments made by the assessee for the construction project. Relying on legal precedents, the CIT(A) concluded that since the assessee did not maintain books of accounts, invoking section 68 was not justified, and the addition was rightly deleted.

Issue 5: Tribunal's decision and conclusion.

After hearing both parties and examining the records, the Tribunal upheld the CIT(A)'s decision to delete the addition of unexplained cash deposits. The Tribunal agreed with the CIT(A)'s analysis, finding no legal infirmity in the order. The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition of unexplained cash deposits based on the assessee's explanations and supporting evidence.