2015 (10) TMI 239 - AT - Income Tax

Unexplained cash credits u/s.68 - unexplained deposits in assessee s savings bank account - CIT(A) deleted the addition - Held that - From the order of the Ld. CIT (A), it appears that though the facts submitted by the assessee are acceptable, the source of bank deposit that was initially available in the bank account of the assessee has not been established. No doubt it is apparent that the assessee had withdrawn the money from his bank account and paid to Shri C.Subramnia Gounder for purchase of land and since the sales has not materialized the amount was refunded and re-deposited in the bank, however the source of the bank deposit available initially with the assessee has not been established. Unless the source of bank deposit initially available with the assessee is found to be genuine, it cannot be held that the assessee had accounted money in his bank account which was utilized for payment of advance for purchase of land and subsequently returned since the sale has not materialized. Therefore, in the interest of justice we hereby remit the matter back to the file of the Ld. Assessing Officer for denovo consideration. - Decided in favour of revenue for statistical purposes

Summary

Issues:
- Condonation of delay in filing appeal by Revenue
- Treatment of unexplained cash credits under section 68 of the Act
- Consideration of advance payment discrepancy
- Assessment of source of bank deposits

Condonation of Delay in Filing Appeal:
The Revenue filed an appeal with a delay of six days, attributing it to the unavailability of assessment records. The Appellate Tribunal, after reviewing an affidavit from the Revenue, condoned the delay, allowing the appeal to proceed despite the delay.

Treatment of Unexplained Cash Credits:
The core issue revolved around the deletion of unexplained cash credits amounting to Rs. 25,53,000 in the assessee's savings bank account under section 68 of the Act. The Assessing Officer added this sum as unexplained cash deposited in the account, rejecting the explanation provided by the assessee. However, the CIT (A) allowed the appeal, considering the detailed submissions and evidence provided by the assessee, including a sale agreement and bank statements, leading to the deletion of the addition.

Consideration of Advance Payment Discrepancy:
Another crucial aspect was the variance in the advance payment amount claimed by the assessee and the one stated in the sale agreement. The CIT (A) acknowledged the advance payment discrepancy and the subsequent refund, emphasizing the need for proper verification by the Assessing Officer before drawing conclusions. The Tribunal highlighted the importance of establishing the authenticity of payments and directed a reevaluation of the matter.

Assessment of Source of Bank Deposits:
While the Tribunal found the explanations and submissions of the assessee acceptable regarding the cash flow and transactions with Shri C.Subramnia Gounder, it emphasized the necessity of establishing the initial source of bank deposits. Despite acknowledging the flow of funds for land purchase and subsequent refund, the Tribunal remitted the matter back to the Assessing Officer for a fresh assessment to verify the authenticity of the initial bank deposits.

In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes, emphasizing the importance of establishing the source of initial bank deposits before drawing conclusions on the transactions involving unexplained cash credits and advance payments. The judgment highlighted the significance of thorough verification and documentation in assessing financial transactions for tax purposes.