2015 (11) TMI 1201 - AT - Income Tax

Unexplained investment - Held that - As now the Ld. AR has produced the statement of the FD A/c for our consideration and request to delete the addition confirmed by the A.O. Therefore, in the interest of justice and fair play, we are inclined to give one more opportunity to the assessee for justification of the source of investment in KVPs to the AO. We also disregard the contention of the assessee to limit the finding of investment in KVPs to extent of ₹ 80,000/-. In our opinion, the assessee should not be deprived from the benefit given in the law and should not unnecessary be penalized. Hence we restore this ground of appeal to the AO to adjudicate afresh as per law. - Decided in favour of assessee for the statistical purpose. Treating the deposit as income from undisclosed source - Held that - A careful analysis to the order of the AO reveals that the AO has recorded the cash deposit entries as business receipt. At the same time the AO treats the entire cash deposit as income without considering any further expenses whatsoever. Here we are of the view that the business receipt can be treated income only after deducting the relevant expenses in relation to business receipt. Besides it is important to note that all the cash was deposited in the business bank of the assessee and the same was duly disclosed in the balance sheet. On this basis we are inclined to apply the effective rate of income on the undisclosed receipts of the assessee. Hence we allow this ground of appeal to the file of AO with the direction to adjudicate this ground afresh as per law. - Decided in favour of assessee for the statistical purpose. Addition as unexplained money - Held that - Assessee prayed not to treat the entire sum of ₹ 2,98,520/- to the income of assessee and offered to apply the gross profit rate on the sum deposited with the banks. However, the assessee could not explain the source of money deposited in the bank. It was also found that the same bank account was also not disclosed in the income of return. Therefore, in the absence of any documentary evidence from the side of assessee we are of the view that the addition made by AO and confirmed by Ld. CIT(A) has been correctly done. Therefore we do not interfere into the orders of Authorities below - Decided against assessee. Disallowance of agricultural income - Held that - A careful analysis of the Ld. AR submission clearly shows that the assessee has been showing the income from agricultural activities in the return of income for the last many years. The balance sheet also contains the inherited agriculture land. The assessee also pleaded that the agricultural income shown and claimed exemption from the tax is not from broiler business and the AO has wrongly treated the same from broiler business. The relevant detail of agricultural business has not been provided. However in the interest of justice and fair play, we are inclined to give one more opportunity to the assessee to justify his claim before the lower authorities. Hence, this ground of appeal is restored to the file of the AO for fresh adjudication as per law - Decided in favour of assessee for the statistical purpose.

Summary

Issues Involved:
1. Unexplained investment in Kisan Vikas Patra (KVP).
2. Unexplained cash deposits in overdraft account.
3. Unexplained deposits in other bank accounts.
4. Denial of exemption for agricultural income.

Analysis of Judgment:

1. Unexplained Investment in Kisan Vikas Patra (KVP):
The first issue concerns the addition of Rs. 1,15,000/- as unexplained investment in KVPs. The assessee claimed that Rs. 80,000/- was from the maturity of a recurring deposit and Rs. 35,000/- was from another recurring deposit. The CIT(A) sought a remand report from the AO, who stated that the assessee did not produce relevant documents to support the claim. The Tribunal noted that the assessee provided a passbook showing the withdrawal of Rs. 81,115/- and argued that Rs. 80,000/- was invested in KVPs. However, for the Rs. 35,000/-, the assessee introduced new evidence which was not previously submitted. The Tribunal decided to give the assessee another opportunity to justify the source of the investment and restored this ground to the AO for fresh adjudication.

2. Unexplained Cash Deposits in Overdraft Account:
The second issue pertains to the addition of Rs. 19,58,770/- as income from an undisclosed source. The assessee declared a turnover of Rs. 6,42,359/- but had bank deposits totaling Rs. 21,51,420/-. The assessee initially claimed that the excess amount belonged to his daughter, then later claimed it belonged to his wife. The AO and CIT(A) rejected these claims due to lack of supporting evidence. The Tribunal observed that the AO treated the entire cash deposit as income without considering business expenses. The Tribunal directed the AO to apply an effective rate of income on the undisclosed receipts and adjudicate afresh.

3. Unexplained Deposits in Other Bank Accounts:
The third issue involves an addition of Rs. 2,98,520/- as unexplained money. The AO found undisclosed bank accounts and added the peak credit balance to the assessee's income, which the CIT(A) upheld. The Tribunal noted that the assessee failed to explain the source of these deposits and did not disclose the bank accounts in the income tax return. Therefore, the Tribunal did not interfere with the orders of the lower authorities and dismissed this ground of appeal.

4. Denial of Exemption for Agricultural Income:
The final issue concerns the disallowance of Rs. 25,000/- claimed as agricultural income. The AO added this amount to the total income, stating it was from broiler business, not agriculture. The CIT(A) upheld this decision. The Tribunal noted that the assessee had shown agricultural income in previous years and provided evidence of inherited agricultural land. The Tribunal decided to give the assessee another opportunity to justify the claim and restored this ground to the AO for fresh adjudication.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes, providing the assessee another opportunity to justify the sources of investment in KVPs and the claim of agricultural income, while upholding the additions related to unexplained bank deposits.