2022 (10) TMI 1184 - AT - Income Tax

Unexplained investment in purchase of properties u/s 69 - CIT-A allowed part relief - main contention of the assessee is that the opening cash balance was duly supported by two cash withdrawals made by the assessee from his bank account with Kotak Mahindra Bank Ltd and Bank of Baroda but CIT(A) accepted only the cash withdrawal from Bank of Baroda - HELD THAT - A sum was deposited by the assessee in cash in Kotak Mahindra Bank immediately on 24.03.2012 and the assessee has not been able to explain either before the authorities below or even before the Tribunal the purpose of maintaining substantial cash balance of more than Rs. 8,00,000/- throughout the FY 2012-13 when the income declared by the assessee in his return of income for AY 2013-14 was only Rs. 3,53,910/-. Moreover, there is hardly any withdrawal shown by the assessee for personal and household expenses in cash book prepared for three financial years i.e. FYs 2011-12, 2012-13 and 2013-14. Keeping in view all these facts of the case, we find in agreement with learned CIT(A) that the cash of Rs. 9,00,000/- withdrawn by the assessee from his bank account with Kotak Mahindra Bank Ltd on 01.02.2012 cannot be said to be available for making investment in purchase of properties in FY 2013-14. We uphold the impugned order of the learned CIT(A) sustaining the addition made by the Assessing Officer on account of unexplained investment made by the assessee in properties under Section 69 - Decided against assessee.

Issues Involved:
1. Delay in filing the appeal
2. Unexplained investment in properties under Section 69 of the Income-tax Act, 1961
3. Acceptance of cash withdrawals as a source of investment

Issue-wise Detailed Analysis:

1. Delay in filing the appeal:
At the outset, the Tribunal noted a delay of 46 days in filing the appeal. The appellant's counsel attributed the delay to the complete lockdown declared in the country due to the Corona virus. Considering the circumstances, the Tribunal condoned the delay and proceeded to address the appeal on its merits.

2. Unexplained investment in properties under Section 69 of the Income-tax Act, 1961:
The assessee filed a return declaring a total income of Rs. 5,85,440/-. During scrutiny, it was found that the assessee made a large investment in properties amounting to Rs. 20,03,649/-. The Assessing Officer (AO) treated this amount as unexplained investment under Section 69 since the assessee could not satisfactorily explain the source of cash used for the investment. The assessee claimed an opening cash balance of Rs. 15,09,454/- and additional cash generated from current year income. However, the AO noted discrepancies, such as the absence of a balance-sheet for AY 2013-14 and no reflection of the claimed cash balance in the return. Consequently, the AO added Rs. 20,03,649/- to the assessee's total income as unexplained investment.

3. Acceptance of cash withdrawals as a source of investment:
The assessee provided a cash book during the appellate proceedings to explain the source of cash for the property investments. The CIT(A) accepted part of the explanation, allowing credit for certain cash deposits but rejecting others. Specifically, the CIT(A) allowed credit for a cash withdrawal of Rs. 4,50,000/- from Bank of Baroda but did not accept a withdrawal of Rs. 9,00,000/- from Kotak Mahindra Bank. The CIT(A) reasoned that the withdrawal from Kotak Mahindra Bank was made when the assessee already had a substantial cash balance and could have been for other purposes. The CIT(A) thus sustained an addition of Rs. 11,77,949/- as unexplained investment, while giving relief of Rs. 8,25,700/- to the assessee.

Upon further appeal, the Tribunal upheld the CIT(A)'s decision. The Tribunal noted that the withdrawal of Rs. 9,00,000/- was made in FY 2011-12, and the properties were purchased in FY 2013-14. The Tribunal agreed that the substantial cash balance maintained by the assessee was not adequately explained, especially given the low income declared for AY 2013-14 and minimal withdrawals for personal expenses. Therefore, the Tribunal concluded that the Rs. 9,00,000/- withdrawal could not be considered available for the FY 2013-14 property investments and upheld the addition of Rs. 11,77,949/- as unexplained investment.

Conclusion:
The Tribunal dismissed the appeal, upholding the CIT(A)'s order sustaining the addition of Rs. 11,77,949/- under Section 69 of the Act for unexplained investment in properties. The appeal was dismissed, and the order was pronounced in open court on 14th October 2022 at Ahmedabad.

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