2017 (9) TMI 1100 - AT - Income Tax

Unexplained cash deposit in bank account u/s 68 - Held that - As the assessee has explained cash deposit of ₹ 2,50,000 on 07-05- 2009 out of opening cash balance brought forward from previous financial year. We find tht opening cash balance of ₹ 3,17,000 has been explained as out of cash withdrawal from Citi Bank in February, 2011. We further observe that these bank accounts are declared in the regular return filed for the relevant assessment year. Therefore, we are of the view that the assessee has filed necessary evidences to explain the source of cash deposit for ₹ 2,50,000; hence, we direct the AO to delete additions of ₹ 2,50,000 out of total addition sustained by the CIT(A) of ₹ 3,35,000. Insofar as balance amount, though the assessee claims to have source, failed to file necessary evidence to explain cash deposit on various dates. Therefore, we sustain the balance amount of ₹ 85,000 as unexplained cash credit u/s 68. Enhancement made towards low household expenses - Held that - We do not find any merits in the arguments of the assessee for the reason that when an assessee is having a total income of ₹ 1,30,69,630 as income, an expdenditure of ₹ 24,000 per annum for his household expenses cannot be relied upon. As rightly observed by the CIT(A), the assessee is residing in posh are of Mumbai City for which ₹ 2,000 pm is not at all sufficient to manage his household expenses. At the same time, the estimate made by the Ld.CIT(A) is also on higher side. Keeping in view all the facts and circumstances of the case and also the fact that the assessee is a member of joint family, a reasonable estimate towards household expenses would meet the ends of justice. Accordingly, we direct the AO to estimate ₹ 30,000 per month toward household expenses of the assessee. Accordingly, the ground raised by the assessee is partly allowed.

Summary

Issues:
1. Disallowance of long term loss on sale of car
2. Addition on account of difference in valuation
3. Addition on account of cash deposited into bank
4. Enhancement of assessment on alleged unexplained personal expenses
5. Charge of interest u/s 234B and 234C of the Act

Issue 1: Disallowance of long term loss on sale of car
The assessee challenged the rejection of the contention and disallowance of the long term loss on the sale of a car. The CIT(A) was criticized for not allowing the set-off of the incurred loss, deemed bad-in-law. The appellant's arguments were based on the provisions of the Income Tax Act, 1961.

Issue 2: Addition on account of difference in valuation
The CIT(A) confirmed part of the addition based on the variance between the valuation by the department's officer and the sale consideration. The appellant sought deletion of the addition, emphasizing the alleged difference in values. The dispute revolved around the application of the relevant section of the Income Tax Act, 1961.

Issue 3: Addition on account of cash deposited into bank
The CIT(A) upheld part of the addition concerning cash deposits under section 68 of the Income Tax Act, 1961. The appellant contested the addition, seeking its deletion. The CIT(A) partially allowed relief, considering explanations provided by the assessee regarding the source of cash deposits.

Issue 4: Enhancement of assessment on alleged unexplained personal expenses
The CIT(A) enhanced the assessment by adding an amount under section 69C of the Income Tax Act, 1961, for unexplained personal expenses. The appellant challenged the enhancement, citing various reasons such as living in a joint family and lack of concrete material supporting the estimation. The dispute involved the proper application of the law and procedural fairness.

Issue 5: Charge of interest u/s 234B and 234C of the Act
The CIT(A) confirmed the charge of interest under sections 234B and 234C of the Act, which the appellant denied liability for. The disagreement centered on the factual circumstances of the case and the legal provisions governing the imposition of interest.

The judgment highlighted various disputes raised by the appellant against the CIT(A)'s decisions on different issues related to income tax assessments. The detailed analysis provided insights into the legal arguments, factual considerations, and interpretations of relevant provisions of the Income Tax Act, 1961. The tribunal's decision addressed each issue separately, considering the evidence presented and the applicability of the law to the circumstances of the case. Ultimately, the appeal was partly allowed, reflecting a nuanced approach to resolving the complex tax matters raised by the appellant.