2018 (1) TMI 992 - AT - Income Tax

Addition u/s 69 on account of undisclosed investments - Held that - From findings of Ld.CIT(A) except for the opening cash balance, we do not want to interfere with the other findings of Ld. CIT(A). He has allowed opening cash of ₹ 2,00,000/- for the assessee. In the instant case all the other income as well as cash flow has been taken together for the assessee and his wife. We therefore accepting the same reasoning as given by Ld. CIT(A) are of the view that it would be justified to accept a sum of ₹ 2,50,000/- each as the opening cash balance of both the assessee and his wife. The assessee accordingly gets relief of ₹ 3,00,000/- over and above the relief granted by Ld.CIT(A) of ₹ 3,56,630/-. In the result the addition made u/s 69 of the Act is sustained to ₹ 9,88,370/-. In the result of the assessee are partly allowed. Addition u/s 68 - Held that - No possible source of income justifying the alleged cash deposit in the bank account of Shri Rajesh Singh Chouhan has been brought on record. Copy of bank account of another lender Shri Mithlesh Singh Chouhan has not been placed on record till date. We therefore in the given facts and circumstances of the case are inclined to confirm the view of the Ld.CIT(A) as the assessee has been unable to prove the creditworthiness of the alleged cash credit of ₹ 4,00,000/-. We, therefore find no infirmity in the orders of Ld.CIT(A) confirming the addition - Decided against assessee Undisclosed interest income addition - assessee has been unable to prove that the interest income earned from fixed deposit receipts were not earned by the him during the year - Held that - Since the assessee has not shown the interest income of ₹ 51,760/- earned on FDR s is his return of income, no interference is called for in the findings of Ld. CIT(A) and therefore Ground is dismissed.

Summary

Issues Involved:
1. Addition of ?17,40,130 confirmed by CIT(A).
2. Addition of ?12,88,370 under Section 69 for unexplained investments.
3. Addition of ?4,00,000 under Section 68 for unexplained loan.
4. Addition of ?51,760 for undisclosed interest income.

Detailed Analysis:

1. Addition of ?17,40,130 Confirmed by CIT(A):
The assessee contested the confirmation of an addition totaling ?17,40,130 by the CIT(A). The breakdown of the addition includes ?12,88,370 for unexplained investments under Section 69, ?4,00,000 for unexplained cash credit under Section 68, and ?51,760 for undisclosed interest income. The Tribunal reviewed the CIT(A)'s decision and the evidence presented, ultimately sustaining a portion of the additions while providing partial relief.

2. Addition of ?12,88,370 Under Section 69 for Unexplained Investments:
The CIT(A) adjudicated the issue of unexplained investments and partly allowed the assessee’s claim by considering agricultural income, income earned by the assessee and his wife, and opening cash balances. The CIT(A) found discrepancies in the assessee's claims regarding opening cash balances and agricultural income. After a detailed analysis, the CIT(A) allowed a total cash availability of ?8,26,630, resulting in an addition of ?12,88,370 for unexplained investments. The Tribunal further adjusted the opening cash balance, providing an additional relief of ?3,00,000, thereby sustaining the addition to ?9,88,370.

3. Addition of ?4,00,000 Under Section 68 for Unexplained Loan:
The assessee received loans of ?2,00,000 each from two individuals. The CIT(A) confirmed the addition under Section 68, citing the assessee's failure to prove the creditworthiness of the lenders and the genuineness of the transactions. The Tribunal noted that although confirmations and PAN details were provided, the source of the lenders' income and bank statements were not adequately substantiated. Consequently, the Tribunal upheld the CIT(A)'s decision, confirming the addition of ?4,00,000.

4. Addition of ?51,760 for Undisclosed Interest Income:
The CIT(A) confirmed the addition of ?51,760 for undisclosed interest income from fixed deposits, which the assessee failed to report in the tax return. The Tribunal found no evidence to contradict the CIT(A)'s findings and upheld the addition, dismissing the assessee's ground.

Conclusion:
The Tribunal provided partial relief to the assessee by adjusting the opening cash balance, resulting in a reduction of the addition under Section 69 to ?9,88,370. However, the Tribunal upheld the additions under Sections 68 and for undisclosed interest income, confirming the CIT(A)'s findings. The appeal was partly allowed, with the order pronounced in open court on 19.01.2018.