2016 (11) TMI 953 - AT - Income Tax

Unexplained bank transactions - Held that - The assessees could not explain as to how the amount of ₹ 5 lakhs withdrawn from the common bank account was utilized. Looking at the entire facts and circumstances, the issues were to be decided on surrounding circumstances and human conduct. The burden to prove the cash entries is on the assessee since the requisite burden has not been discharged by the assessee in this behalf. In view thereof, the orders of the ld. CIT(A) on this issue are upheld. Thus, assessees appeals are dismissed. Apropos Somabhai Ambaalal Prajapati for AY 2005-06, it has not been disputed that the corresponding purchases are not shown in the seized record. Consequently they remained unaccounted. In view thereof, ld. CIT(A) has rightly appreciated the issue and held the entire unaccounted sales to be unaccounted income as the purchases expenditure are not found recorded. Apropos Pankaj Somabhai Prajapati, ld. CIT(A) in his order has given proper calculation and established that the source of loan of ₹ 18,81,429/- remained unexplained. Assessee, except making general comments, could not objectively prove that the assessee s prima facie onus in respect of this loan was satisfactorily discharged. Assessee appeal dismissed

Summary

Issues:
Appeals against common order of CIT(A) for three assessees regarding addition of undisclosed income, treatment of unaccounted sales, and loan source explanation.

Analysis:
1. The appeals by the assessees challenged the CIT(A)'s decision to uphold additions of undisclosed income for three individuals. The assessees, engaged in bricks manufacturing, faced discrepancies after a search under section 132 of the Income-tax Act. The CIT(A) confirmed the addition of undisclosed income based on the lack of maintained books of accounts and discrepancies in cash flow entries.

2. In the case of Shri Somabhai A. Prajapati and Shri Chandulal A. Prajapati, the CIT(A) upheld the addition of 1/3rd cash flow difference, emphasizing the lack of original books of accounts and the attempt to explain investments in land using cash balance. The CIT(A) dismissed the contention due to non-maintenance of books, confirming the additions made by the Assessing Officer.

3. Regarding Shri Somabhai A. Prajapati for AY 2005-06, the CIT(A) treated unaccounted sales as net profit since corresponding purchases were not recorded. The CIT(A) held the entire unaccounted sales as income due to the absence of evidence of unaccounted purchases, distinguishing the case from precedents cited by the assessee.

4. In the case of Shri Pankaj Somabhai Prajapati, the CIT(A) reduced the addition from ?30 lakhs to ?18,81,429, highlighting discrepancies in loan source explanation. The CIT(A) found the source of the loan unexplained despite the appellant's arguments, leading to the dismissal of the appeal.

5. The assessee's counsel raised objections regarding the incriminating paper, joint cash flow statement, and treatment of unaccounted sales, citing relevant case laws. However, the Tribunal upheld the CIT(A)'s orders, emphasizing the burden of proof on the assessee and lack of satisfactory explanations for the discrepancies.

6. The Tribunal dismissed all appeals, affirming the CIT(A)'s decisions on undisclosed income additions, treatment of unaccounted sales, and loan source explanations. The orders were pronounced on 20th July 2016 in Ahmedabad, concluding the consolidated appeals by the assessees.