2017 (3) TMI 976 - HC - Income Tax

Unexplained cash deposits - Held that - The agreement in this case was also not on judicial paper. Despite the agreement with Shri Subhash Kumar was cancelled but entire advance money was not refunded immediately to Shri Subhash Kumar. It is not explained as to what happened with regard to the amount refunded on cancellation of agreement to Shri Sanjay Kumar and Shri Harbilas. It is highly unbelievable that the persons who have given advance to the assessee namely Shri Sanjay Kumar and Shri Harbilas, have disappeared and never asked for refund of their amount on cancellation of the agreement in question. Thus, assessee failed to prove credit worthiness and genuineness of the transaction for receipt of advance of ₹ 23 lacs from above persons and even in the case of Shri Sanjay Kumar and Shri Harbilas, assessee failed to prove their identity. In case of deposit of ₹ 50,000/- in the bank account of the assessee, assessee failed to produce any evidence of past savings and even this issue was not at all addressed before ld. CIT (Appeals) and no evidence have been furnished in this regard. Same is the position before us as the assessee has failed to produce any evidence of deposit of ₹ 50,000/- out of any known sources - Decided against assessee

Summary

Issues involved:
1. Whether Tribunal order is unreasonable in overlooking direct evidence under Indian Evidence Act for existence of payee to capital account transactions under Income Tax Act.
2. Whether advance money from agreement to sell should be deducted from cost of asset or treated as revenue receipt under Income Tax Act.

Detailed Analysis:
1. The appellant invoked Section 260-A of the Income Tax Act, 1961 to appeal against additions made by the Assessing Officer on unexplained deposits in bank accounts. The appellant explained the deposits as cash received from sale of properties but failed to produce evidence for the same. The Commissioner and Tribunal rejected the explanations as improbable, especially regarding cash received from individuals who were untraceable. The Tribunal upheld the additions as the appellant failed to prove the genuineness of transactions and failed to refund advance money upon cancellation of agreements. The Tribunal's findings were based on lack of evidence and credibility of explanations provided by the appellant.

2. The appellant also faced additions for unexplained cash deposits and undisclosed interest in bank accounts. The Assessing Officer, Commissioner, and Tribunal upheld these additions as the appellant failed to provide any evidence to explain the cash deposit and interest income. The Tribunal specifically mentioned that the appellant did not furnish any evidence regarding the deposit of ?50,000, leading to the conclusion that the additions were justified due to lack of evidence from the appellant. The Tribunal's decision was based on the appellant's failure to substantiate the sources of these financial transactions.

In conclusion, the High Court dismissed the appeal as it did not raise any substantial question of law. The Court found that the orders of the Assessing Officer, Commissioner, and Tribunal were based on concurrent findings of fact, which were deemed probable and not perverse. The Court upheld the decisions of the lower authorities, emphasizing the lack of evidence and credibility in the appellant's explanations for the financial transactions in question.