2018 (10) TMI 1716 - AT - Income Tax

Unexplained cash credit - HELD THAT - All that the assessee has submitted is that the lenders have categorically confirmed the fact of giving loans, and, for that reason, these credits should be held to be genuine. As regards the alleged gift and accumulated past savings learned counsel has mainly placed reliance on the contentions before the authorities below and reiterated the same.None of these submissions make much sense. As regards the alleged gift and alleged borrowings from friends and relatives see no reasons to deviate from the well reasoned findings of the CIT(A) which have remained uncontroverted. Approve the same. However, as regards the claim as accumulated savings and agricultural income, it is of the view that since the assessee was having some agricultural income, an amount of ₹ 5,00,000/- can at best be treated as explained. To this extent, uphold the plea of the assessee. Uphold the part addition to the extent to the extent of ₹ 13,26,730/- and delete the addition to the extent of ₹ 5,00,000/-. - Decided partly in favour of assessee partly.

Summary

Issues Involved:
1. Mechanical approval for reopening of assessment.
2. Addition of ?18,26,730/- as unexplained cash credit.
3. Agricultural income claim.
4. Gift from relative.
5. Loans received from friends and relatives.

Detailed Analysis:

1. Mechanical Approval for Reopening of Assessment:
The appellant raised a preliminary objection regarding the mechanical approval granted by the Commissioner for reopening the assessment. The approval was given on the same day as the reopening proposal with a simple observation, "Yes, I am satisfied." The appellant relied on the judgment in the case of German Remedies Ltd Vs. DCIT [(2006) 287 ITR 494 (Bom)]. However, the Tribunal did not uphold this objection, stating that the mere fact that approval was granted on the same day does not imply it was mechanical. The Tribunal found no merit in the appellant's reliance on the cited judicial precedent and rejected the objection.

2. Addition of ?18,26,730/- as Unexplained Cash Credit:
The Assessing Officer (AO) added ?18,26,730/- as unexplained cash credits based on cash deposits identified in the appellant's bank account. The appellant failed to comply with the AO's requests for information. The CIT(A) upheld this addition, noting that the appellant did not provide sufficient evidence to substantiate the sources of the cash deposits. The Tribunal also found no compelling arguments to overturn the CIT(A)'s findings.

3. Agricultural Income Claim:
The appellant claimed that a portion of the unexplained cash credits was from agricultural income. However, the AO and CIT(A) found this claim unsubstantiated. The appellant did not produce necessary evidence, such as agricultural expenditure details, to support the claim. The CIT(A) noted that the appellant's family landholding was not sufficient to generate the claimed income. The Tribunal agreed with the CIT(A) but allowed an amount of ?5,00,000/- to be considered as explained due to some agricultural income being plausible.

4. Gift from Relative:
The appellant claimed to have received a gift of ?4,00,000/- from his son, who allegedly earned this amount from agricultural income. The AO and CIT(A) found this claim dubious as the son did not have agricultural land in his name, and no proper gift deed was executed. The Tribunal upheld the CIT(A)'s findings, rejecting the gift claim as unsubstantiated.

5. Loans Received from Friends and Relatives:
The appellant claimed to have received loans amounting to ?1,53,100/- from friends and relatives. The AO recorded statements from these individuals but found that they did not provide necessary documentation to substantiate the loans. The CIT(A) upheld the AO's findings, noting that the loans were given in cash and the lenders were not financially capable of providing such amounts. The Tribunal found no reason to deviate from the CIT(A)'s well-reasoned findings and upheld the rejection of the loan claims.

Conclusion:
The Tribunal upheld the addition of ?13,26,730/- as unexplained cash credits and deleted the addition of ?5,00,000/-, considering it as explained agricultural income. The appeal was partly allowed in these terms. The order was pronounced in the open Court on 15th October 2018.