2018 (4) TMI 1695 - AT - Income Tax

Addition of unexplained fixed deposit - cheque received on sale of the property - HELD THAT - There can be no two opinion that the sum credited in assessee s bank account on 20.02.2014 was the cheque received on sale of the property. Irrespective of the fact whether assessee as a power of attorney holder was entitled to such sum it cannot be controverted that the fixed deposit made by the assessee on 17.03.2014 thus stood explained. Fixed deposit was placed by the assessee from the very same bank account through a transfer debit. It might be true that the power of attorney was registered on 03.12.2012 and assessee had no good source to explain the payment of 45, 00, 000/- to Ms.S. Ishwariah.Source of such payment would be relevant only for previous year ending 31.03.2013 viz assessment year 2013-2014. As far as assessment year 2014-15 is concerned assessee had well explained source for making fixed deposit of 35, 00, 000/-. The addition stands deleted. Grounds 2 3 are allowed. Unexplained cash credit - HELD THAT - Bank account Shri. Bhuma Ramakrishna Reddy with ICICI was not an NRI account. Assessee had failed to file any confirmation from Shri. Bhuma Ramakrishna Reddy. Assessee also could not give any details on the whereabouts of Shri. Bhuma Ramakrishna Reddy. In such circumstances we are of the opinion that the addition was rightly made by the ld. Assessing Officer and confirmed by ld. Commissioner of Income Tax (Appeals). - Decided against assessee.

Summary

Issues:
1. Addition of unexplained fixed deposit of ?35,00,000
2. Treatment of ?25,06,000 as unexplained cash credit

Issue 1: Addition of unexplained fixed deposit of ?35,00,000
The assessee, a salaried employee, disclosed an income of ?2,06,500 but during assessment proceedings, it was found that the assessee had made a fixed deposit of ?35,00,000. The Assessing Officer rejected the explanation provided by the assessee for the source of the deposit, leading to the addition of ?35,00,000. The Commissioner of Income Tax (Appeals) upheld this addition, stating that the assessee failed to provide a credible source for the sum claimed to have been paid for purchasing the property which was sold. However, the Authorized Representative argued that the deposit was made from the proceeds of the property sale, as evidenced by the sale deed and bank statements. The Tribunal found that the sum credited in the assessee's bank account was from the property sale, and the fixed deposit was explained from the same source. Hence, the addition was deleted for the assessment year 2014-15.

Issue 2: Treatment of ?25,06,000 as unexplained cash credit
The Assessing Officer treated ?25,06,000 as an unexplained cash credit in the assessee's bank account. The assessee claimed that the amount was transferred by a Non-Resident relative, Shri. Bhuma Ramakrishna Reddy, residing abroad. The Commissioner of Income Tax (Appeals) rejected this explanation as the assessee failed to provide details about Shri. Bhuma Ramakrishna Reddy's whereabouts or his income source. The Authorized Representative argued that Shri. Bhuma Ramakrishna Reddy was closely related to the assessee and the amount was transferred from his bank account. However, the Tribunal upheld the lower authorities' decision, stating that the assessee did not provide sufficient evidence or details regarding the source of the cash credit. Therefore, the addition of ?25,06,000 was deemed justified and the grounds were dismissed.

In conclusion, the Tribunal partly allowed the appeal of the assessee by deleting the addition of the unexplained fixed deposit of ?35,00,000 but upheld the treatment of ?25,06,000 as an unexplained cash credit. The order was pronounced on April 9, 2018, at Chennai.