2017 (10) TMI 1391 - AT - Income Tax

Unexplained deposits in the bank account - deemed deposits in the bank account end income of assessee - addition u/s 69 - Held that - Assessment order that more than 10 opportunities have been given to the assessee for joining the assessment proceedings however the assessee did not co-operate in the assessment proceedings and finding no option the Assessing Officer was considered to complete the assessment u/s 144 of the I.T. Act on the basis of information and material available on record. As the assessee has failed to offer any explanation in respect of cash deposit of 31, 15, 000/- in his saving account No.4512 maintained by him with the Allahabad Bank Fazilka on 06.01.2009 therefore the value of the deposit of 31, 15, 000/- was treated as income of the assessee for the year under consideration u/s 69. Even otherwise Sec.69A further clarifies about the unexplained money and crux of that Section reflects that the money and value of the billion jewellery or other valuable article if assessee offers no explanation about the nature and source of acquisition or the explanation offered by him is not in the opinion of the Assessing Officer satisfactory then the same may be deemed to be the income of the assessee for such financial year. Referring to alternative plea of the assessee that one of the friend namely Sh. Sukhdev Singh of the assessee has sold his agricultural land for an amount of 16, 30, 000/- which was given by him to the assessee for safe keeping in his bank account on 06.01.2009 and the same was returned on 20.01.2009 does not sounds to be satisfactory explanation the explanation offered by the assessee suffers from serious discrepancies and improbabilities because from the statement of Sh. Sukhdev Singh itself shows that the land was sold on 25th June 2008 however the consideration amount alleged to be given only on 6th January 2009 and there is a gap of approximately seven months and even otherwise Sh. Shukhdev Singh was neither the owner of the property nor entitled to retain the money therefore giving to the assessee after seven months of the sale does not in any case seems to be probable. Hence on the aforesaid consideration and analayzation we are of the considered opinion that the assessee had failed to offer satisfactory explanation about the nature and source of investment in the form of deposit in bank account which would entail deemed to be the income of the assessee for such financial year under consideration. - Decided against assessee

Summary

Issues:
- Addition of cash deposits in the bank account under section 69 of the Income Tax Act, 1961
- Applicability of provisions of Sec.69 in the case
- Explanation provided by the assessee regarding the source of cash deposits

Analysis:

Issue 1: Addition of cash deposits in the bank account under section 69 of the Income Tax Act, 1961

The appellant's case involved the addition of cash deposits in the bank account under section 69 of the Income Tax Act, 1961. The Assessing Officer added the amount of &8377; 31,15,000/- to the appellant's income due to unexplained cash deposits in the bank account, resulting in a tax demand of &8377; 13,02,770/-. The CIT(A) partly allowed the appeal by deleting a portion of the addition but confirmed &8377; 15,47,000/- as an addition. The appellant challenged this order, arguing that the provisions of Sec.69 were not applicable to the case as no books of accounts were maintained. However, the Tribunal upheld the addition, emphasizing the lack of cooperation from the appellant in providing explanations for the cash deposits.

Issue 2: Applicability of provisions of Sec.69 in the case

The appellant contended that Sec.69 did not apply to the case as they were not maintaining any books of accounts. The Tribunal analyzed Sec.69, highlighting that it does not mandate the maintenance of books of accounts for its application. The section deems investments made outside the recorded books of accounts as income if the assessee fails to provide a satisfactory explanation. The Tribunal dismissed the appellant's argument, emphasizing that the lack of cooperation and satisfactory explanations led to the deemed income addition under Sec.69.

Issue 3: Explanation provided by the assessee regarding the source of cash deposits

The appellant provided an alternative explanation regarding the source of cash deposits, stating that a friend had given them money for safekeeping after selling agricultural land. However, the Tribunal found discrepancies and improbabilities in this explanation. The friend's statement contradicted the appellant's claims, raising suspicions about the source of the funds. The Tribunal concluded that the appellant failed to provide a satisfactory explanation for the cash deposits, leading to the dismissal of the appeal.

In conclusion, the Tribunal upheld the addition of cash deposits under section 69 of the Income Tax Act, 1961, emphasizing the importance of providing satisfactory explanations and cooperation during assessment proceedings. The appellant's alternative explanations were found to be lacking credibility, resulting in the dismissal of the appeal.