2016 (1) TMI 489 - AT - Income Tax

Addition u/s 68 - cash credit - Held that - Assessee claimed that sum of amount has been received from her son and daughter - the assessee has produced prima facie evidence about the source of amount - The AO, except disbelieving the version of the assessee, failed to bring any evidence contrary to the one submitted by the assessee. Thus, the addition to this extent, source proved, would be deleted. The assessee has explained the sources. There is a rotation of the amounts. Some of the amounts deposited by the assessee duly tallied with the amounts available in the cash book on that date. In other words, the assessee has withdrawn sufficient amounts from the bank account, which was entered into in the cash book, and after withdrawing the amount from the bank, the amount was again re-deposited. The claim of the assessee is that her personal cash book has been ignored and the same amount has been accounted twice in the bank account. The ld.AO has not given any plausible reasoning for rejecting this explanation. From the perusal of the bank statement, it is discernible that some of the cash was withdrawn and re-deposited within very short period. Therefore, in our opinion, the alleged surplus cash accumulated in the cash book out of the withdrawals from the bank is to be considered as source of re-deposit. - Decided in favour of assessee in part.

Issues Involved:
1. Confirmation of addition of Rs. 53,88,401/- under section 68 of the Income Tax Act.
2. Explanation of the source of deposits in the assessee's bank account.
3. Validity of the family partition arrangement as a source of Rs. 20 lakhs.
4. Verification of receipts from the sale of jewelry amounting to Rs. 16,53,000/-.
5. Verification of amounts received from son/daughter totaling Rs. 9,25,000/-.
6. Explanation of surplus cash deposits of Rs. 2,20,000/- and bank interest.

Detailed Analysis:

1. Confirmation of Addition of Rs. 53,88,401/- under Section 68:
The primary issue revolves around the addition of Rs. 53,88,401/- made by the Assessing Officer (AO) under section 68 of the Income Tax Act, which was confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee contested this addition, claiming that the sources of the deposits were duly explained.

2. Explanation of the Source of Deposits:
The AO identified that the assessee had deposited a total of Rs. 61,40,980/- in her Bank of Baroda account, which included Rs. 33,23,500/- in cash. The assessee provided an explanation for these deposits, which included receipts from family partition, sale of jewelry, amounts received from family members, and surplus cash in hand.

3. Validity of Family Partition Arrangement:
The assessee claimed that Rs. 20 lakhs were received from a family partition arrangement. The agreement dated 26.3.2007 was presented as evidence. However, the AO and CIT(A) did not accept this explanation, citing the lack of proof of partition as required under section 171 of the Income Tax Act. The Tribunal noted that the assessee failed to provide any balance sheet or asset details of the Hindu Undivided Family (HUF) and concluded that the agreement alone was insufficient to prove the receipt of Rs. 20 lakhs. Thus, the addition of Rs. 20 lakhs was confirmed.

4. Verification of Receipts from Sale of Jewelry:
The assessee explained that Rs. 16,53,000/- was received from the sale of jewelry to three parties: Neel Gems, Kaushal Diamond, and Sonal Gems. The assessee provided confirmations, profit and loss accounts, balance sheets, and income tax returns of these parties. The Tribunal observed that the AO did not cross-verify these documents or issue notices to the parties involved. Since the primary onus was discharged by the assessee, and no contrary evidence was brought by the AO, the Tribunal accepted the explanation and deleted the addition of Rs. 16,53,000/-.

5. Verification of Amounts Received from Son/Daughter:
The assessee claimed that Rs. 9,25,000/- was received from her son and daughter. Bank statements were provided to support this claim. The Tribunal noted that the AO did not bring any evidence to disprove the assessee's claim and merely disbelieved it without further inquiry. Consequently, the Tribunal accepted the explanation and deleted the addition of Rs. 9,25,000/-.

6. Explanation of Surplus Cash Deposits and Bank Interest:
The assessee explained that Rs. 2,20,000/- was surplus cash in hand deposited in the bank, supported by her cash book and bank statements. The Tribunal found that there were instances of cash withdrawals and re-deposits, which were recorded in the cash book. The AO did not provide any reasoning for rejecting this explanation. Therefore, the Tribunal accepted the explanation and deleted the addition related to surplus cash deposits.

Conclusion:
The Tribunal allowed the appeal of the assessee partly. Out of the total addition of Rs. 53,88,401/-, the addition of Rs. 20,00,000/- was confirmed, and the rest was deleted. The appeal was thus partly allowed, providing relief to the assessee for the remaining amount. The order was pronounced on 3rd November 2015 at Ahmedabad.

← Previous Next →