2017 (4) TMI 289 - AT - Income Tax

Addition u/s 69 and 68 - Held that - CIT(A) has taken into cognizance all the documentary evidence. The absence of the same during the assessment proceeding which prevented by sufficient cause from filing this documentary evidence before the A.O. was also rightly considered by the CIT(A). Thus additional evidence filed by the assessee was rightly admitted by the CIT(A). The asssessee s bank accounts and copies of mutual fund redemption statements placed in the paper book, various investments made in mutual funds during the year under consideration are out of either redemption of the old investments in mutual funds or out of auto sweep FDR maturity. Therefore, these investments are genuine and was fully explained by the assessee. In support of the loan of ₹ 3,50,000/- from CITI Bank, the assessee filed a copy of the sanctioned letter from the CITI Bank. With regard to loan amount of ₹ 75,000/- given by the assessee and received back on 14/2/2006(Rs. 25,000/-) and on 17/3/2006 (Rs. 50,000/-) a confirmation from Sh. S. Madhusudan was filed to this effect giving his complete address, PAN and the ward where he assessed to tax. Both these amounts were received in the HSBC account of the assessee through cheques. While explaining the source of these cash deposits the assessee submitted before the CIT(A) that these cash deposits had been made out of cash in hand available as on 1/4/2005 amounting to ₹ 2,50,000/-. This explanation of the assessee was rightly not accepted by the CIT(A) because the assessee did not maintain any book of account. No cash flow statement was available on record to show that the assessee actually had cash in hand of ₹ 2,50,000/- as on 1/4/2005. Therefore, amount of ₹ 1,00,000/- deposited in cash on different dates in ICICI Bank as mentioned above was rightly added to the assessee s income as unexplained cash credits in the assessee s bank accounts was restricted to ₹ 1,00,000/-. Thus, the CIT(A) has correctly arrived at the finding after verifying all the documents. There is no need to interfere with the order of the CIT(A).

Summary

Issues:
1. Admitting additional evidence in contravention of Rule 46A.
2. Deletion of additions made under sections 69 and 68 of the Income Tax Act, 1961.

Issue 1: Admitting Additional Evidence
The Revenue appealed against the CIT(A)'s order admitting additional evidence despite the Assessing Officer's objection that the evidence should not be accepted as the assessee had the opportunity to produce it earlier. The Appellate Tribunal noted that the assessee, a retired senior citizen, explained that he was under judicial custody during the assessment proceedings, providing documentary evidence to support his claim. The CIT(A) rightly considered the absence of evidence during the assessment proceedings and admitted the additional evidence, including bank accounts and mutual fund statements, which clarified the investments made by the assessee. The Tribunal upheld the CIT(A)'s decision to admit the additional evidence.

Issue 2: Deletion of Additions under Sections 69 and 68
The Revenue contended that certain investment entries remained unexplained, and the CIT(A) allegedly ignored this aspect. The Assessing Officer added the unexplained investments to the assessee's income under Section 69 of the Act and unexplained credits under Section 68. However, the assessee provided detailed explanations supported by documentary evidence for the investments made in mutual funds, retirement benefits, and loans. The CIT(A) considered the documentary evidence, explanations, and the circumstances preventing the filing of evidence earlier. The Tribunal found that the investments in mutual funds were genuine and explained, loans were supported by sanctioned letters and confirmations, but unexplained cash deposits were added to the income due to lack of verifiable sources. The Tribunal upheld the CIT(A)'s decision to delete the additions made under sections 69 and 68 of the Income Tax Act, 1961.

In conclusion, the Appellate Tribunal dismissed the appeal filed by the Revenue, affirming the CIT(A)'s order in favor of the assessee. The Tribunal found that the additional evidence admitted was crucial in explaining the investments, and the explanations provided by the assessee were supported by documentary evidence. The Tribunal upheld the deletion of additions made under sections 69 and 68 of the Income Tax Act, 1961, based on the detailed explanations and evidence presented by the assessee.