2015 (8) TMI 971 - AT - Income Tax

Unexplained deposits in the bank account - CIT(A) deleted addition - Held that - In the present case it is noticed that the AO in his remand report had stated that the withdrawals and deposits were verifiable from the bank statements of the assessee. He had not made any adverse comments to the submissions of the assessee and the ld. CIT(A) after verifying from the various bank accounts came to the conclusion that the explanation given by the assessee during the appeal proceedings that the cash deposits were sourced out of withdrawals made from the bank account was correct. The said findings of the ld. CIT(A) has not been rebutted by bringing any adverse material on record. Therefore, we do not see any valid ground to interfere with the findings of the ld. CIT(A), accordingly, do not see any merit on this issue of the departmental appeal. - Decided in favour of assessee. Unexplained sources of the investment for the purchase of NSC - CIT(A) deleted addition - Held that - CIT(A) rightly deleted the impugned addition because the amount received on maturity of the old NSC was deposited in the bank and the investment was also made by withdrawing the same from the bank account. In the present case, the ld. CIT(A) after verification from the bank accounts found merit in the submissions of the assessee and deleted the impugned addition. We, therefore, do not see any infirmity in the order of the ld. CIT(A) on this issue.- Decided in favour of assessee.

Summary

Issues:
1. Deletion of addition of Rs. 31,42,000 on account of unexplained cash credit in the bank account.
2. Deletion of addition of Rs. 1,70,000 for unexplained source of investment in NSC.

Analysis:

1. Issue 1 - Deletion of addition of Rs. 31,42,000:
The department appealed against the deletion of the addition of Rs. 31,42,000 made by the AO on account of unexplained cash credit in the bank account. The AO received information about cash deposits and asked the assessee to explain the source of investment. The assessee claimed the cash deposits were from withdrawals from other accounts, but the AO was not satisfied. The ld. CIT(A) requested the AO to verify the submissions. The AO confirmed the withdrawals and deposits but raised concerns about the time gap between them. The ld. CIT(A) deleted the addition after verifying the explanations and bank statements, noting that most deposits were sourced from withdrawals. The department contended that the explanations were insufficient, but the Tribunal upheld the ld. CIT(A)'s decision, stating no adverse material was presented to challenge the findings.

2. Issue 2 - Deletion of addition of Rs. 1,70,000:
The second issue pertained to the deletion of the addition of Rs. 1,70,000 by the AO due to unexplained sources of investment in NSC. The assessee explained that the investment was from the maturity of old NSCs, which were credited to the bank account. The ld. CIT(A) found the explanation satisfactory and deleted the addition. The department argued that the date of maturity was not explained, making the source unverifiable. However, the Tribunal upheld the ld. CIT(A)'s decision, stating that the investment was made from the amount deposited in the bank after the maturity of old NSCs. The Tribunal found no fault in the ld. CIT(A)'s order on this issue.

In conclusion, the Tribunal dismissed the department's appeal, upholding the ld. CIT(A)'s decisions on both issues. The explanations provided by the assessee were deemed satisfactory, and no adverse material was presented to challenge the findings, leading to the dismissal of the appeal.