2018 (9) TMI 1884 - AT - Income Tax

Unexplained cash deposits - undisclosed income of the assessee - CIT(A) relied upon the judgement of Mahesh B. Shah vs. CIT 1998 (12) TMI 62 - KERALA HIGH COURT and Ramesh Chandra Co. vs. CIT 1987 (1) TMI 39 - BOMBAY HIGH COURT wherein it was held that once the appellant has agreed for some addition before the Ld. AO, then the appellant does not have any right to prefer any appeal before higher forum against agreed addition unless he proves that the addition was made under threat or coercion. In the instant case, since no such statement towards agreement for addition by the assessee was under any threat or coercion is on record, the Ld. CIT(A) dismissed the same. HELD THAT - Considering the submissions made by the Ld. AR and the judgement passed by the Coordinate Bench in assessee s own case for the AYs 2011-12 2012-13 in similar set of facts, we respectfully following the same, modify the Ld. CIT(A) s order and direct the AO to treat 50% of cash deposited as undisclosed income of the assessee. - Decided partly in favour of assessee

Summary

Issues:
Challenge to addition of concealed income in bank account and interest levied under section 234B of the Income Tax Act.

Detailed Analysis:
1. The appellant challenged the addition of ?5,49,900 in the bank account as concealed income, disputing the observation that the appellant had agreed to the addition. The appellant also contested the interest imposed under section 234B. The case originated from the assessment for the year 2013-14, where the appellant declared total income of ?3,56,490. However, scrutiny revealed substantial cash deposits in the bank account, with a peak amount of ?5,49,900. The appellant later offered this amount for taxation as unexplained income. The Assessing Officer added this amount to the total income, leading to the appeal before the Commissioner of Income Tax (Appeals) and subsequently to the ITAT.

2. The appellant's representative argued that the deposits made by the appellant were ?7,02,700 with withdrawals of ?3,07,600. Referring to a previous assessment year, it was contended that the peak credit of ?5,49,900 should be treated as explained income from the addition made in the earlier year. The department's representative relied on the lower authorities' orders.

3. The ITAT considered the contentions of both parties and reviewed the relevant facts and materials. The Commissioner of Income Tax (Appeals) had dismissed the appeal, citing precedents where an appellant agreeing to an addition before the Assessing Officer cannot challenge it later unless coercion or threat is proven. Since no such coercion was evident in this case, the appeal was dismissed. The appellant cited a judgment from a Coordinate Bench in a previous year's case, where 50% of cash deposits were treated as undisclosed income. Following this precedent, the ITAT directed the Assessing Officer to treat 50% of the cash deposited as undisclosed income in the present case.

4. Consequently, the ITAT partially allowed the appeal of the assessee, modifying the Commissioner of Income Tax (Appeals) order and directing the treatment of 50% of the cash deposited as undisclosed income. The judgment was pronounced in open court on 17/09/2018.