2015 (9) TMI 487 - AT - Income Tax

Additions of unexplained cash deposits - Held that - The assessee had deposited ₹ 4 lakhs on 18.09.2009. A sum of ₹ 3,90,000/- is stated to have been returned by her husband. The CIT(Appeals) does not reject veracity of this plea. It is further seen that the assessee had deposits a sum of ₹ 2 lakhs as on 20.10.2009 over and above the aforesaid sum of ₹ 4 lakhs. Remaining amounts are corresponding deposits and withdrawals instances. The assessee claims to be earning a monthly milk book income of ₹ 20,000/-. She failed to substantiate it in the course of assessment. The Assessing Officer does not reject this plea altogether. But only cites lack of sufficient material. It is also an undisputed fact that the CIT(Appeals) s findings do not specifically deal with that of Assessing Officer s conclusion. In these circumstances, we feel that interest of justice would be met in case this peak credit of ₹ 6 lakhs is further modified to ₹ 3 lakhs only. More so, when the lower appellate order accepts genuineness of ₹ 4 lakhs deposited on 18.09.2009 leaving behind a sum of ₹ 2 lakhs only. We reiterate that peak credit in this case is 6,27,500/-. These peculiar circumstance result in modification of this addition to ₹ 3 lakhs only. The assessee s ground partly succeeds. Unexplained fixed deposit of ₹ 3 lakhs made in Tamilnad Mercantile Bank made in cash - Held that - The assessee submits that neither of the authority below has summoned her maternal grand father. This procedural plea is not supported by any material. Once the Assessing Officer had examined all of her pleas at length in assessment order, it was incumbent on the assessee to have prayed for necessary remand report in the lower appellate proceedings or to take sufficient measures for proving authenticity of her claim. This was never done. In these circumstances, we observe that this procedural plea deserves to be rejected in the absence of sufficient material on record. It is also not her case that of the lower authority has not complied with principles of natural justice and denied sufficient opportunity of hearing. Therefore, the assessee s corresponding ground fails. Third addition of interest income of 4,052/- on said fixed deposits is also decided against her. - Decided against assessee.

Summary

Issues:
1. Unexplained cash deposits
2. Unexplained fixed deposits
3. Unaccounted interest income
4. Poor drawings addition

Unexplained Cash Deposits:
The appeal for assessment year 2010-11 involved the Commissioner of Income Tax (Appeals)- I, Coimbatore's order, partially upholding additions of unexplained cash deposits, unexplained fixed deposits, unaccounted interest income, and poor drawings under Section 143(3) of the Income-tax Act, 1961. The Assessing Officer noted significant cash deposits in various banks without corresponding entries, leading to additions totaling Rs. 25.50 lakhs. The CIT(Appeals) adopted the peak credit formula, restricting the addition to Rs. 6 lakhs, considering explanations provided by the assessee regarding the source of deposits. The ITAT Chennai, after thorough examination, modified the addition to Rs. 3 lakhs, based on the peak credit observed in the bank account statement, partially allowing the assessee's appeal on this ground.

Unexplained Fixed Deposits:
Regarding unexplained fixed deposits of Rs. 3 lakhs, the Assessing Officer rejected the explanation provided by the assessee, attributing the deposit to her maternal grandfather, as unsupported and not genuine. The CIT(Appeals) upheld this finding, emphasizing the lack of evidence to substantiate the claim. The ITAT Chennai, after considering the arguments presented, dismissed the procedural plea made by the assessee for summoning her grandfather, as no material supported the request. The tribunal concluded that the assessee failed to provide sufficient proof of the source of the fixed deposit, leading to the sustained addition of Rs. 3 lakhs under section 69 of the Act.

Unaccounted Interest Income:
The unaccounted interest income of Rs. 4,052 arising from the fixed deposits was also a subject of dispute. The Assessing Officer's decision on this matter was maintained by the CIT(Appeals), as the assessee could not establish the authenticity of the claim regarding the source of the interest income. The ITAT Chennai, after analyzing the case, decided against the assessee on this issue as well, as no new evidence or arguments were presented to refute the previous findings.

Poor Drawings Addition:
The unexplained/poor drawings addition of Rs. 36,000 was not pressed by the assessee during the proceedings, and the Revenue did not oppose this contention. Consequently, this issue was not further deliberated upon in the judgment.

In conclusion, the ITAT Chennai partially allowed the assessee's appeal, modifying the additions related to unexplained cash deposits and unexplained fixed deposits while upholding the decision on unaccounted interest income. The tribunal emphasized the importance of providing substantial evidence to support claims and the necessity of complying with procedural requirements to establish the legitimacy of financial transactions.