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2017 (7) TMI 767 - AT - Income TaxUnexplained cash deposits - Held that - The time between the sum paid by the society to the appellant and the sum repaid by the assessee to the society does not inspire confidence about the genuineness of the transaction. Similarly, another conformation was provided by the assessee that is from St Xavier School but signed by some chairman there also the permanent account number of the person who has paid cash to the assessee is missing. Furthermore we do not approve of the reasoning given by the Ld. CIT appeal that the same assessing officer who passed the order for assessment year 2007 08 wherein the cash withdrawal shown by previous entries before the date of cash deposited in bank account has been duly considered and accepted. According to us this reason he is full of fallacy. During the year the cash has been deposited of the magnitude of ₹ 66.98 lakhs and it is always factual exercise for the every year and for each and every transaction. Such precedents or instances cited by the CIT appeal cannot be approved of. CIT (A) has accepted the claim of the assessee of receipt in cash from the Alay Hassan educational society of ₹ 13,75,000/-without verifying the creditworthiness of the society as well as the genuineness of the transaction. In the result ground, No. 1 of the appeal of the revenue is allowed accordingly. Addition on account of claim of loan from Mod. Ilyas - proof of identity and creditworthiness of credit and genuineness of the transaction - Held that - Merely holding of the land do not justify the credit less of the depositor unless there are evidences of produce of the agricultural and it sale. When the depositor has deposited the sum through account payee cheque it is also important to verify about the source of such cheques and whether they are received on sale of agricultural produce or otherwise, The Ld CIT (A) has not examined this himself and nor directed ld AO to do so. The Ld. CIT appeal has without verifying any such evidences which justifies the creditworthiness and genuineness of the about transaction has deleted the addition. Further the amount of addition is made by the assessee is ₹ 24 Lacs whereas the addition and conformation received from the depositor is just 12 lakhs therefore there is a mismatch in the amount stated. Therefore in the interest of Justice the addition of ₹ 2 400000/-is once again set aside to the file of the Ld. CIT appeal with a direction to verify the creditworthiness and genuineness of the transaction and then decide the issue on merit. In the result ground No. 2 of the appeal of the revenue is allowed with above direction. Addition of unexplained cash deposits in the bank account - whether the sources are past withdrawals? - Held that - Had there been balance it would have been also known that the assessee was on certain dates huge cash balance on hand such as on 26.04.2006 assessee has withdrawn a sum of ₹ 7 lakhs, which were deposited only on 18/05/2006 in the bank accounts. These are the startling features looking at the financial status who is merely earning salary and income from other sources. Further on looking at the cash flow statement at many places tuition income is shown however no such income is available to the assessee as assessee is said to be deriving only income from salary and other sources. Even assessing officer stated that assessee earns other than this short-term capital gain, interest income and dividend income but nowhere there is a reference of tuition income. Therefore we are of the opinion that the Ld. that CIT appeal has deleted the addition without using the material produced before him as well as not granting Ld. assessing officer an opportunity of verifying the evidences submitted. In the result the ground No. 3 of the appeal of the revenue with respect to deletion of the addition of ₹ 292 3500/-is set aside to the file of the Ld. CIT (A) with a direction to decide the issue with respect to the above some on merits of the case after granting proper opportunity of hearing to the assessee and Ld. assessing officer.
Issues Involved:
1. Deletion of addition of ?13,75,000/- on account of unexplained cash deposits from Alay Hasan Education Society. 2. Deletion of addition of ?24,00,000/- on account of a loan from Md. Ilyas. 3. Deletion of addition of ?29,23,500/- on account of unexplained cash deposits in the bank account. Issue-wise Detailed Analysis: 1. Deletion of addition of ?13,75,000/- on account of unexplained cash deposits from Alay Hasan Education Society: The revenue contended that the CIT(A) deleted the addition without allowing the Assessing Officer (AO) an opportunity to examine the evidence under Rule 46A. The CIT(A) had accepted new evidence from the assessee, which included confirmations, the Memorandum of Association, the Certificate of Registration, and other documents. However, the Tribunal found that the CIT(A) did not provide the AO with an opportunity to comment on these new pieces of evidence. The Tribunal noted discrepancies in the confirmation provided by the educational society, such as the lack of a permanent account number and the signature of the chairman instead of the president. The Tribunal also questioned the genuineness of the transactions and the relationship between the society and the assessee. Consequently, the Tribunal set aside this ground to the file of the CIT(A) for re-examination, giving the AO an opportunity to verify the evidence. 2. Deletion of addition of ?24,00,000/- on account of a loan from Md. Ilyas: The revenue argued that the CIT(A) erred in accepting the identity, creditworthiness, and genuineness of the transaction involving Md. Ilyas. The AO had made the addition because the evidence provided by the assessee, such as the election card and revenue records, did not satisfactorily establish these three ingredients. The CIT(A) had deleted the addition based on the evidence provided, which included confirmation of the transaction through account payee cheques. However, the Tribunal found that the CIT(A) did not adequately verify the creditworthiness of Md. Ilyas, such as the source of the cheques and whether the landholding justified the deposits. The Tribunal also noted a mismatch in the amount of addition and the confirmation received. Therefore, the Tribunal set aside this ground to the file of the CIT(A) for further verification. 3. Deletion of addition of ?29,23,500/- on account of unexplained cash deposits in the bank account: The revenue contended that the CIT(A) deleted the addition without any evidence justifying the deletion. The AO had identified three bank accounts where ?66,98,500/- was deposited in cash and made additions for unexplained cash deposits. The CIT(A) deleted the entire addition based on the cash flow statement provided by the assessee, which showed cash deposits from earlier withdrawals. However, the Tribunal found that the CIT(A) did not provide sufficient reasons for deleting the addition of ?41,23,500/-. The Tribunal noted discrepancies in the cash flow statement, such as the absence of a statement of affairs and unexplained tuition income. The Tribunal set aside this ground to the file of the CIT(A) for re-examination, granting the AO an opportunity to verify the evidence. Conclusion: The Tribunal allowed the appeal of the revenue for statistical purposes, setting aside the deletions made by the CIT(A) and directing re-examination of the evidence with proper opportunities for the AO to verify the claims. The order was pronounced in the open court on 07/02/2017.
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