2018 (9) TMI 2093 - AT - Income Tax

Unaccounted income - AIR information revealed that the assessee has had bank account with Yes bank Ltd. in which total deposits were seen including cash deposits - HELD THAT - We find that the assessee is a salaried person and deriving salary from Kalyani Multilink Pvt. Ltd. The deposits appearing in the bank account under consideration has not been disclosed - pattern of deposits in bank account would show that these are there are some transaction in which cheque has been issued. There are debit entries in this bank account. The assessee has claimed that this bank account pertained to her business in trading. Ongoing through bank statement and facts of the case we observe that there are frequent transaction of cash as well as cheques. On careful consideration of facts we are of the view that entire deposits in bank account cannot be considered for addition. Since the bank account is reflecting deposits as well as withdrawals hence there is every likely that bank account has been used for unrecorded business transactions as claimed by the assessee. Therefore it would be in the interest of justice that only profit eliminate @ 5% is considered for tax of total deposits - Therefore the AO is directed to consider net profit @ 5% of total deposits which worked out to Rs. 91, 600. Accordingly this addition of Rs. 14, 76, 614 is restricted to Rs. 91, 600. This ground is therefore partly allowed. Unexplained cash credit u/s 68 - HELD THAT - We find that the assessee has filed confirmation bank statement and copy of return of income of her husband but the bank statement of her husband shows that there is cash deposits of Rs. 2 Lakh before issue of cheques to the assessee. Further the total income shown by her husband is only Rs. 98, 000. Hence the depositor has no capacity to advance such amount of loan. Therefore the addition so made needs to be confirmed in the case of Umesh Krishnani 2013 (8) TMI 79 - GUJARAT HIGH COURT - Hence we do not have any reason to differ with decision of Ld. CIT (A) therefore same upheld. Accordingly this grounds of appeal is therefore dismissed.

Summary

Issues:
1. Addition of alleged unaccounted income.
2. Disallowance of various expenses.
3. Addition of alleged unexplained cash credit under section 68 of the Act.

Issue 1: Addition of Alleged Unaccounted Income:
The appeal was against the addition of Rs. 14,76,614 on account of alleged unaccounted income for the Assessment Year 2008-09. The Assessee argued that the bank deposits were related to business trading not reflected in her books of accounts. The CIT (A) held that the deposits were unexplained as the appellant failed to provide evidence linking the transactions to her business. The Tribunal observed that the bank account showed transactions of cash and cheques, indicating unrecorded business activities. It directed the AO to consider 5% net profit on total deposits of Rs. 18,32,079, limiting the addition to Rs. 91,600, partially allowing this ground of appeal.

Issue 2: Disallowance of Various Expenses:
Ground no. 2 regarding the disallowance of expenses amounting to Rs. 18,078 was not pressed by the Assessee's counsel during the hearing, leading to its dismissal as not pressed.

Issue 3: Addition of Alleged Unexplained Cash Credit:
The addition of Rs. 2,00,000 on account of alleged unexplained cash credit under section 68 of the Act was challenged. The loan received by the Assessee from her husband was questioned by the AO due to discrepancies in the husband's income and capacity to provide the loan. The CIT (A) upheld the addition, stating that the Assessee failed to prove the creditworthiness despite providing documents. The Tribunal concurred with the CIT (A), citing the husband's inadequate income to justify the loan, and dismissed the ground of appeal, upholding the addition.

In conclusion, the Tribunal partially allowed the appeal concerning the addition of unaccounted income while dismissing the appeal related to unexplained cash credit. The disallowance of various expenses was also upheld due to non-presentation during the hearing.