2019 (8) TMI 1636 - AT - Income Tax

Unexplained cash deposits - appellant claims that these are deposits made from withdrawals of a firm called Aerolax Agro which is possessing agricultural lands and earning agricultural income - HELD THAT - CIT(A) has held that only an Agriculturist can own agricultural land and a firm cannot own one - income earned from prosecuting agricultural activities can be held to be Agricultural Income only in the hands of the owner of the land and is business income in the hands of a non agriculturist. CIT(A) has further held that since land in question is shown to be possessed by the firm, it is clear that assessee is not the owner and those lands are situated in the State of Karnataka. Under these facts, it was held by ld. CIT(A) that explanation of assessee regarding source of cash is not accepted and we find no infirmity in this finding of ld. CIT(A) Unexplained expenditure - HELD THAT - A categorical finding is given by ld. CIT(A) that the assessee had not been able to demonstrate that these expenses stands explained and therefore, he confirmed the addition. We find no infirmity in the order of ld. CIT(A) on this issue also. Undisclosed professional receipts - HELD THAT - The appellant has not been able to explain the same satisfactorily. The appellant claims that the sum of ₹ 4,80,000/- offered to tax as Business Income is nothing but this professional income offered to tax on an estimated basis @8% of the gross receipts of ₹ 60,00,000/-. This is contrary to fact since, in its computation of income, Profit of ₹ 4,80,000/- is shown as Profit as per P L a/c and after adding a sum of ₹ 90,000/- towards 'Any income not included in P L a/c any expenses not allowable' an amount of ₹ 5,70,000/- was offered to tax. This clearly shows that the same is not on an estimate basis. The appellant's claim made now that ₹ 4,80,000 is estimated @ 8% of ₹ 60,00,000/- is thus an after thought. Therefore, in view of these facts, addition made by the AO is hereby confirmed. - Decided against assessee.

Summary

Issues:
1. Addition of unexplained cash deposits
2. Addition of unexplained expenses
3. Addition of undisclosed professional receipts
4. Addition of unexplained investment in Commodity/Security Exchange

Analysis:
1. The appeal involved challenging the addition of ?24,32,500 as unexplained cash deposits. The appellant claimed these deposits were made from withdrawals of a firm owning agricultural lands. However, the CIT(A) held that only an Agriculturist can own agricultural land as per Karnataka High Court rulings, and since the land was shown to be possessed by the firm, the explanation of the source of cash was not accepted. The Tribunal found no fault in this decision.

2. The second issue concerned the addition of ?28,71,972 as unexplained expenses. The CIT(A) concluded that the appellant failed to demonstrate that these expenses were explained adequately. As a result, the addition was confirmed, and the Tribunal found no reason to interfere with this decision.

3. The third issue revolved around the addition of ?54.30 lakhs as undisclosed professional receipts. The CIT(A) noted that the appellant could not satisfactorily explain these receipts. The appellant's claim that a portion was offered as business income on an estimated basis was found to be inconsistent with the actual figures presented. Consequently, the addition was upheld, and the Tribunal declined to intervene in this matter.

4. The fourth issue pertained to the addition of ?1,99,80,919 as an unexplained investment in Commodity/Security Exchange based on AIR information. The appellant provided contract notes and account copies but failed to compile them adequately or reconcile with the AIR information. The Tribunal observed discrepancies in the appellant's submissions, indicating an attempt to conceal rather than reveal information. Therefore, the addition was confirmed, and the Tribunal saw no grounds to disturb this decision.

In conclusion, the Tribunal dismissed the appeal filed by the assessee after considering the arguments and findings related to each issue raised. The decision was based on the analysis and conclusions drawn by the CIT(A) in each instance, finding no justification to overturn those decisions.