2017 (9) TMI 308 - AT - Income Tax

Addition made u/s 69A - unexplained bank account - peak credit - Held that - No doubt, the verification is required to be done in connection with the assessing of the income of joint account to the tune of ₹ 19,85,100/- with the Jayesh K Vora. In this regard, we observed that the necessary verification is required to be done at the end of AO to justify the claim if, any raised by the assessee whether this income has been assessed at the end of her husband Jayesh K Vora or not. If, this amount has been assessed with the Jayesh K Vora, in the said circumstances, the said amount is not liable to be added with the income of the assessee. We direct accordingly. The other contention of the assessee is that he was having the SBI Account No.706 in which there was a deposit and withdrawal and the total deposit up to the year ended on 31.03.20111 was amounting of ₹ 22,08,800/-. The copy of the said account is lies at page 14 to 15 of the paper book in which there are number of withdrawal and deposit and the total deposit was to the tune of ₹ 22,85,800/-. The big amount of deposit is to the tune of ₹ 15,67,800/-. We are of the view that the peak amount is liable to be added to the income of the assessee specifically in the circumstances when there is a number of withdrawal and deposit. Since, we are restoring the matters controversy before the AO therefore, the AO is directed to assess the income of the assessee in view of the observation made above we set aside the finding of the CIT(A) on this issue and resorted the matter to the file of the AO for further adjudication Addition on account of unsecured loan credit u/s 68- confirmation on source of transaction - Held that - The loan creditor has a debit balance of ₹ 1,54,118/-. Thus instead of declaring Shri Jayesh K Vora as sundry debtor for ₹ 1,54,118/, the assessee has declared him as a unsecured loan creditor for ₹ 13,42,83.51/-. This difference to the tune of ₹ 14,96,950/- was assessed as unexplained undoubtedly, this addition was not made by the AO. We are of the view that the said loan transactions are required to be examined at the end of the AO by giving an opportunity of being heard to the assessee. While raising the addition by the CIT(A) no opportunity of being heard was given to the assessee, therefore we are of the view that an opportunity being heard is required to be given to the assessee before the addition u/s 68 of the Act to the tune of ₹ 14,96,650/- in accordance with law. Therefore, we set aside the finding of the CIT(A) on this issue and direct the AO to verify the said transaction. Decided in favor of the assessee against the revenue.

Summary

Issues Involved:
1. Disallowance under section 69A of the Income Tax Act, 1961
2. Enhancement of assessment by the CIT(A) by a specific amount

Issue No.1:
The assessee challenged the confirmation of disallowance under section 69A of the Income Tax Act, 1961, totaling ?41,93,100. The contention was regarding cash deposits in specific bank accounts and whether they should be added to the assessee's income. The ITAT observed that proper verification was necessary to ascertain if the deposits in joint accounts were already assessed in the husband's income. The ITAT directed the Assessing Officer to assess the income accordingly and consider the peak amount in the account with multiple withdrawals and deposits. Citing legal precedents, the ITAT set aside the CIT(A)'s decision and remanded the matter for further adjudication.

Issue No.3:
The issue involved an enhancement of assessment by the CIT(A) amounting to ?14,96,950, which was not originally made by the Assessing Officer. The ITAT noted discrepancies in the treatment of loan transactions and observed that the assessee had declared the husband as an unsecured loan creditor instead of a debtor, leading to the addition. The ITAT emphasized the need for proper examination by the AO and providing the assessee with an opportunity to be heard before making such additions. As the CIT(A) had not given the assessee a chance to present their case, the ITAT set aside the CIT(A)'s decision and directed the AO to verify the transactions after hearing the assessee. Consequently, the issue was decided in favor of the assessee against the revenue.

In conclusion, the ITAT allowed the appeal of the assessee for statistical purposes, emphasizing the importance of proper verification and providing the assessee with an opportunity to address discrepancies before making additions to the income.