2018 (4) TMI 1548 - AT - Income Tax

Unaccounted cash payment - addition u/s 69C - Held that - Deposits of various dates in the bank accounts of Senior Builder Ltd. also tally with the paper retrieved from the hard disk of the assessee. The bank account of Senior Builder Ltd. maintained with Bank of Baroda also is a disclosed account and not a concealed account. We agree with the finding given by the ld. CIT(A) that it would be difficult to say that the amounts duly transacted through banking channels by Senior Builder Ltd could be unexplained. Despite receiving detailed reply including reconciliation of the payments made by the assessee group and despite having the copies of bank account of Senior Builder matching with the entries on page no.5, the Assessing Officer never cross-checked the same with Vijay Dixit group. The interest calculated by the Assessing Officer at the rate of 3.3334% per month has also no basis. The various factual findings given by CIT(A) could not be controverted by the DR. AO has accepted the cheque payments and pay orders mentioned on the papers retrieved from the hard disk but has conveniently ignored the explanation of the assessee regarding the cash payment although the cash payments were reflected in the bank account of Senior Builder Ltd. When Senior Builders Ltd. is an assessee and the bank account is not an undisclosed one, therefore, all those cash deposits made in the bank account could not have been from the assessee. - Decided in favour of assessee

Summary

Issues Involved:
1. Unexplained payments to Vijay Dixit group.
2. Unexplained interest on advances.
3. Addition of bank overdraft as unexplained investment.
4. Reconciliation of payments and interest calculations.
5. Validity of evidence and presumption under section 132(4A).

Detailed Analysis:

1. Unexplained Payments to Vijay Dixit Group:
The Assessing Officer (AO) identified payments totaling ?23,70,10,708/- made to the Vijay Dixit group, including ?3,11,10,600/- in cash, which were deemed unexplained. The assessee contended that these transactions were related to Vijay Dixit and his group, not the assessee. The CIT(A) found that the transactions listed on page 5 of the seized documents pertained to Vijay Dixit’s group and not the assessee. The CIT(A) noted that many entries on page 5 were payments to individuals related to Vijay Dixit, such as employees and business associates, and cash deposits in the bank account of Senior Builders Ltd., which were duly reflected in their bank statements.

2. Unexplained Interest on Advances:
The AO calculated interest on the alleged unexplained advances at a rate of 3.3334% per month, resulting in an addition of ?1,60,97,818/-. The assessee argued that the interest figure was incorrect and not supported by evidence. The CIT(A) agreed that the AO’s interest calculation was based on an exorbitant and unrealistic rate of 40% per annum, which was not substantiated by tangible evidence. The CIT(A) found that the interest income already accounted for by the assessee was ?1,42,75,159/-, and no further addition was warranted.

3. Addition of Bank Overdraft as Unexplained Investment:
The AO added ?85,00,489/- as an unexplained investment, representing a bank overdraft of Senior Builders Ltd. The assessee clarified that Senior Builders Ltd. was an independent entity with no connection to the assessee. The CIT(A) concurred, noting that a bank overdraft could not be treated as unaccounted income in the assessee’s hands and that the AO’s approach lacked merit.

4. Reconciliation of Payments and Interest Calculations:
The assessee provided a detailed reconciliation of payments made to the Vijay Dixit group, showing a total payment of ?15,04,02,451/-, which included interest. The CIT(A) observed that the AO did not adequately address the reconciliation provided by the assessee. The CIT(A) found that the payments recorded on page 5 of the seized documents included transactions such as cash deposits in the bank account of Senior Builders Ltd., which could not be attributed to the assessee.

5. Validity of Evidence and Presumption under Section 132(4A):
The AO relied on the presumption under section 132(4A) that documents found during a search are presumed to belong to the assessee. However, the CIT(A) emphasized that this presumption is rebuttable and that the assessee had provided sufficient evidence to rebut the presumption. The CIT(A) noted that the AO failed to cross-check the entries with the Vijay Dixit group or verify the bank accounts of Senior Builders Ltd., which reflected the transactions in question.

Conclusion:
The CIT(A) deleted the additions made by the AO, concluding that the transactions recorded in the seized documents pertained to the Vijay Dixit group and not the assessee. The CIT(A) found that the AO’s calculations of unexplained payments and interest were not substantiated by evidence and that the bank overdraft could not be treated as unexplained investment. The Tribunal upheld the CIT(A)’s order, dismissing the Revenue’s appeal.