2015 (11) TMI 485 - AT - Income Tax

Undisclosed bank deposits - Held that - As far as the bank statement of M/s Rattan Diesels in HDFC bank contained it is find that the said bank account is in the name of M/s Rattan Diesels. It is true that the said bank account does not contain the name of proprietor but that does not imply that merely because the name starts with M/s , therefore, it could be a partnership concern s account. This observation of ld. CIT(A) is purely on conjecture. He failed to notice that the instrument number in the bank a/c of M/s Rattan Diesels tallied with the instrument number in the bank account of assessee with Federal Bank. The dates, amounts, cheque numbers, name of parties, all tally and, therefore, there was no reason to doubt the genuineness of these transactions. The assessee has filed the ledger account of assessee in the books of Rattan Diesels which clearly show that it is an old loan given by assessee to Rattan Diesels on which interest was regularly earned by assessee. Further, the AO has assessed the interest income received from Rattan Diesels in the hands of assessee and, therefore, the genuineness of the deposits in the accounts of assessee as refund of loan could not be doubted. Similarly, in respect of Nishant Bansal, all the details are tallying in respect of bank a/c of Nishant Bansal with the bank a/c of assessee including instrument number. However, wherein bank a/c of Nishant Bansal is contained, it is not coming out very clearly from the said statement as to which bank it relates to though at the bottom it is referred to as kotak . Therefore, for this limited purpose, verification by AO is required.

Summary

Issues:
Assessment of unexplained credits in the bank account.

Analysis:
The appeal was filed against the order dated 19-01-2015, concerning the assessment year 2009-10. The assessee's income was questioned due to high volume cheques deposited in the bank account. The AO made an addition of Rs. 5,50,000 as unexplained credits. The assessee explained the source of these credits as payments received from M/s Rattan Diesels and subsequent transactions with individuals. However, the CIT(A) did not accept the explanation, raising concerns about the credibility of the transactions and the lack of supporting documents. The CIT(A) noted discrepancies in the documents submitted and raised doubts about the genuineness of the loan transactions. The CIT(A) also highlighted the assessee's avoidance of scrutiny by delaying the submission of relevant evidence.

During the proceedings, the assessee's counsel presented detailed evidence to support the transactions, including bank statements and account details. The counsel demonstrated the flow of funds between the assessee, Rattan Diesels, and the individuals involved. The counsel argued that the transactions were genuine and fully explained through the provided documents. The counsel refuted the CIT(A)'s observations and emphasized the legitimacy of the transactions based on the matching details in various accounts and documents.

After considering the submissions and examining the evidence, the tribunal found merit in the assessee's arguments. The tribunal observed that the bank statements and transaction details aligned across different accounts, indicating the genuineness of the transactions. The tribunal noted that interest income from Rattan Diesels had been assessed, supporting the credibility of the loan transactions. Regarding the refund of the loan from Nishant Bansal, further verification was deemed necessary due to unclear details in the bank statement. Consequently, the tribunal set aside the addition related to the loan from Rattan Diesels and directed the AO to verify specific details concerning the loan refund from Nishant Bansal before making a decision.

In conclusion, the tribunal allowed the assessee's appeal, emphasizing the importance of verifying specific details before making additions to the assessed income. The tribunal's decision highlighted the significance of providing comprehensive evidence to support transactions and the need for thorough verification by the assessing officer to ensure fair assessments.