2017 (9) TMI 1347 - AT - Income Tax

Unexplained cash credits - addition u/s 68 - Held that - Appellant has discharged the onus placed upon him u/s 68 as filed complete details of confirmation of the creditors, copy of the bank account, copy of the ledger accounts and other details etc. - Decided in favour of assessee Disallowance of depreciation on air conditioners - use for non business purposes - Held that - It is sufficient to place on record the purchase bills but some evidence suggesting that assets was to be use for business purpose in the absence of such evidence in our view, no depreciation cannot be allowed. Therefore, the finding of the Ld. CIT(A) on this issue is reversed and the finding of the AO is restored. Thus, Ground of the revenue is allowed. Disallowance on account of building repair expenses - Held that - Appellant has been able to prove that expenses were incurred on repairs, payments have been made through the banking channels and TDS was made on such payments and therefore, there is no justification in making a disallowance under this head. As regards, the value of opening WDV of the block is concerned it is only a depreciated book value and thus, the amount of repairs being too high cannot be a ground for making the disallowance - Decided in favour of assessee Disallowance made by the AO on account of unexplained cash deposits -Held that - Entries have been made in the capital account of Smt. Kamla Lamba of ₹ 19,41,192 and also the corresponding entries were made in the cash account and of M/s K.C. Industries, a sundry creditor. Therefore, the availability of cash in hand was increased on 01.04.2010 after reversing these entries in the books of accounts. In view of these facts, hold that cash deposits were made out of the balance available in the books of accounts. Thus,find no justification in the action of the AO and delete the addition - Decided in favour of assessee

Summary

Issues Involved:
1. Deletion of addition on account of unexplained cash credits (?55,94,288).
2. Deletion of disallowance out of depreciation on air conditioners.
3. Deletion of disallowance on account of building repair expenses (?5,97,825).
4. Deletion of disallowance on account of unexplained cash deposits (?14,85,000).

Issue-wise Detailed Analysis:

1. Deletion of Addition on Account of Unexplained Cash Credits (?55,94,288):

The Revenue contested the deletion of the addition made by the Assessing Officer (AO) concerning unexplained cash credits. The AO had added ?55,94,288 as unexplained cash credits due to the assessee's failure to provide necessary documentation to verify the unsecured loans. The AO noted that the assessee did not file account statements or bank details for loans from Shri Gaurav, K.C. Industries, and Bank of Baroda. However, the assessee provided complete details, including confirmations from creditors, bank account copies, and ledger accounts during the appellate proceedings. The CIT(A) found that the loans were substantiated with adequate documentation and there was no justification for the AO's addition. The Tribunal upheld the CIT(A)'s decision as the Revenue failed to provide contrary material, thereby dismissing the Revenue's appeal on this ground.

2. Deletion of Disallowance Out of Depreciation on Air Conditioners:

The AO disallowed depreciation on air conditioners, arguing they were not used for business purposes and were installed at the assessee's residence. The CIT(A) deleted the disallowance based on the assessee's submission of purchase bills for computers and televisions. However, the Tribunal reversed the CIT(A)'s finding, emphasizing that mere submission of purchase bills without evidence of business use is insufficient for claiming depreciation. The Tribunal restored the AO's disallowance, allowing the Revenue's appeal on this ground.

3. Deletion of Disallowance on Account of Building Repair Expenses (?5,97,825):

The AO disallowed ?5,97,825 claimed as building repair expenses due to the absence of bills and the disproportionate amount relative to the asset's value. The CIT(A) deleted the disallowance, accepting the assessee's submission of bills, bank payment proofs, and TDS challans. The Tribunal affirmed the CIT(A)'s decision, noting that the Revenue did not provide contrary evidence to dispute the findings. Consequently, the Tribunal dismissed the Revenue's appeal on this ground.

4. Deletion of Disallowance on Account of Unexplained Cash Deposits (?14,85,000):

The AO added ?14,85,000 as unexplained cash deposits, citing discrepancies between the cash book and the income tax return. The CIT(A) deleted the addition, accepting the assessee's explanation that the cash deposits were from the available cash in hand, supported by ledger entries and bank records. The Tribunal upheld the CIT(A)'s decision, stating that the Revenue did not rebut the findings with contrary material. Thus, the Tribunal dismissed the Revenue's appeal on this ground.

Conclusion:

The Tribunal partly allowed the Revenue's appeal, reversing the CIT(A)'s decision on the depreciation disallowance while upholding the deletions related to unexplained cash credits, building repair expenses, and unexplained cash deposits. The order was pronounced in the open court on September 15, 2017.