2017 (6) TMI 1045 - AT - Income Tax

Addition made under section 68 - the said bank account was not disclosed in assessee s return - family connection - Held that - The total cash deposit in the said bank was ₹ 18,95,000/- and the explanation of assessee in respect of ₹ 4 lakhs cash deposit being out of withdrawals from his sole proprietary concern, has been accepted and no addition has been made in the hands of assessee. In case the bank account has not been disclosed by the assessee and that is the reason for making the addition, then the addition in the hands of assessee should have been made of ₹ 18,95,000/- and not ₹ 14,95,000/-. The authorities below have taken different stands in respect of cash deposit of ₹ 4 lakhs and cash deposit totaling ₹ 14,95,000/- and there is no merit in the stand of authorities below in this regard. Coming to the explanation filed by the assessee that his father agreed to sell his share of ancestral land to his brother for sum of ₹ 40 lakhs, against which sum of ₹ 6 lakhs was received in the preceding year and ₹ 14,95,000/- was received during the instant assessment year. The assessee has placed on record the copy of agreement to sell and the Rock pavati issued by the father of assessee on different dates accepting the said cash. The said cash has also immediately been transferred to the bank account of father of assessee. Thus because of family connection between the persons transacting the said transaction, there is no merit in not accepting the plea of assessee and in making the aforesaid addition. Accordingly, AO directed to delete the addition - Decided in favour of assessee.

Summary

Issues involved:
Appeal against addition under section 68 of the Income Tax Act, 1961.

Detailed Analysis:
1. The appeal challenges the addition of ?14,95,000 made by the Assessing Officer under section 68 of the Income Tax Act, 1961.
2. The assessee, engaged in a car hire business, explained that the cash deposited in the bank account was received as advance for the sale of agricultural land. However, the Assessing Officer considered the explanation an afterthought and made the addition.
3. The CIT(A) upheld the addition, rejecting the explanation that the cash was received on behalf of the father for the sale of ancestral land. The CIT(A) deemed the explanation illogical as the bank account was not disclosed in the tax return.
4. The Authorized Representative argued before the Tribunal that the cash deposits were part payments for the sale of agricultural land by the father to the uncle. He presented agreements and cash receipts to support the claim.
5. The Revenue Department contended that non-disclosure of the bank account in the tax return invalidated the assessee's plea.
6. After considering the arguments, the Tribunal focused on the cash deposits totaling ?18,95,000. It noted that the explanation for ?4 lakhs was accepted, but the addition of ?14,95,000 was made based on the undisclosed bank account.
7. The Tribunal found merit in the explanation provided by the assessee regarding the sale of ancestral land and directed the Assessing Officer to delete the addition of ?14,95,000. The appeal was allowed, setting aside the CIT(A)'s order.

This comprehensive analysis outlines the key arguments, decisions, and reasoning behind the judgment, emphasizing the interpretation of section 68 of the Income Tax Act and the importance of disclosing relevant financial information in tax returns.