2017 (7) TMI 99 - AT - Income Tax

Sale of tractors - cash advances received towards purchase of tractors - Held that - All the three purchasers of the tractors made deposits with the assessee for purchase of tractors which have been ultimately delivery to them against the sale bill and their names have been recorded in the registration certificate. The ld. CIT(Appeals) was therefore not justified in holding that tractors have not been supplied to these persons. There is no law to prohibit making cash sale. It is for the businessman to judge as to how he has to make the sales. Since tractors have been sold and supported by all the documents as well as registration certificates in the names of purchasers it is difficult to believe that these were the ordinary cash credits/deposits with the assessee. The authorities below were therefore wholly unjustified in making the addition on this issue. - Decided in favour of assessee. Unexplained credit in the name of Shopneal daughter of the assessee - Held that - Assessee failed to establish credit worthiness of the creditor and genuineness of the transaction in the matter. The addition was rightly made by the authorities below. This ground of appeal of the assessee is dismissed. Low household withdrawal - Held that - Household withdrawals shown by assessee in assessment year 2011 12 are on very lower side and assessee has not disclosed complete details of his household expenditure. Therefore estimated addition is wholly justified. This ground of appeal of the assessee is dismissed.

Summary

Issues:
1. Addition of unexplained cash deposits received for the purchase of tractors.
2. Addition of unexplained credit in the name of a creditor.
3. Unexplained credits in the names of Smt. Rama Sharma and Kumari Sujata.
4. Addition on account of low household withdrawals.

Analysis:

Issue 1: Addition of unexplained cash deposits for tractors
The Assessing Officer added amounts received for tractors as unexplained credits due to lack of proper explanation. The ld. CIT(Appeals) upheld the additions, stating that tractors were not supplied to the depositors. However, the ITAT Chandigarh found the additions unjustified. The tribunal noted that all purchasers had deposited money for tractors, which were later delivered and registered in their names. The tribunal emphasized that cash sales are permissible, and since all transactions were supported by evidence, the additions were unwarranted. Consequently, the tribunal deleted the additions.

Issue 2: Unexplained credit in the name of a creditor
The Assessing Officer added an amount as unexplained credit, suspecting the genuineness of the loan due to the creditor's low income and sudden cash deposits. The ld. CIT(Appeals) confirmed the addition. The ITAT Chandigarh agreed with the lower authorities, stating that the assessee failed to prove the creditor's creditworthiness and the transaction's genuineness. Citing precedents, the tribunal upheld the addition, dismissing the assessee's appeal.

Issue 3: Unexplained credits in the names of Smt. Rama Sharma and Kumari Sujata
The ld. CIT(Appeals) did not decide on these unexplained credits, prompting the ITAT Chandigarh to remand the issues for further consideration. The tribunal directed the ld. CIT(Appeals) to decide these grounds on their merits in accordance with the law.

Issue 4: Addition on account of low household withdrawals
The Assessing Officer estimated household expenses and made an addition, which was partially upheld by the ld. CIT(Appeals). The ITAT Chandigarh found no reason to interfere, considering the low household withdrawals and lack of detailed expenditure disclosure. Consequently, the tribunal dismissed the appeal on this ground.

In conclusion, the ITAT Chandigarh partly allowed the assessee's appeal, deleting certain additions while upholding others based on the evidence and legal precedents cited during the proceedings.