2018 (1) TMI 756 - AT - Income Tax

Unexplained cash deposits - Held that - It is well settled law that when the initial onus placed by explanation has been discharged by the assessee, the onus shift on the revenue to show that the amount in question constituted undisclosed income. (Mak Data P. Ltd. V/s CIT - 2013 (11) TMI 14 - SUPREME COURT) All the facts of the case show that sale agreement and sale deed clearly indicates that all the funds deposits in the banks are out of sale proceeds of the ancestral agriculture land of the appellant. All the document are signed by the buyer. The addition made by the assessing office is wrong in law of natural justice. - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of addition of cash deposits in bank accounts.

Analysis:
The appeal was filed by the Revenue challenging the deletion of an addition of ?35,40,000 made by the Assessing Officer on account of unexplained cash deposits. The assessee explained the deposits as proceeds from the sale of ancestral agricultural land, supported by an affidavit. However, since the purchaser did not respond to summons, the AO held the deposits unexplained. The CIT(A) deleted the addition based on the remand report and facts. The AO relied on the assessment order, while the AR supported the CIT(A) order.

The appellant argued that the cash deposits were explained with documentary evidence from the sale of land, and also provided details of salary and loan payments to justify the deposits. The AO was criticized for not verifying facts from the purchaser and for making the addition without appreciating the evidence. The appellant emphasized that the sale agreement and deed proved the source of funds. The appellant also cited legal precedent to shift the onus to the revenue to prove the deposits were undisclosed income.

The CIT(A) remanded the issue to the AO for further enquiry. The AO confirmed the sale consideration between the purchaser and sellers, verifying the authenticity of the documents. The AO did not oppose the documents, leading to the deletion of the addition by the CIT(A). The AO's failure to rebut the facts and evidence from the remand proceedings led to the dismissal of the departmental appeal. The court criticized the mechanical approval for filing the appeal, emphasizing the need for responsible actions by tax authorities to avoid frivolous appeals and uphold public trust.

In conclusion, the departmental appeal was dismissed due to the AO's failure to challenge the facts considered in the remand proceedings, highlighting the importance of responsible and fair actions by tax authorities to maintain public trust and avoid wasteful appeals.