2018 (2) TMI 1523 - AT - Income Tax

Addition u/s 69 - deposits made by the assessee in an undisclosed bank account of the assessee - Held that - Although, the assessee has disclosed interest income from savings bank account with the HDFC Bank Ltd., he has not disclosed the interest income from ICICI Bank Ltd. Therefore, from the conduct of the assessee, it is apparent that the assessee had no intention of disclosing the impugned bank account. Also when the assessee was required to explain before the Assessing Officer that if he had received cash amount of ₹ 20,45,400/- as gifts from the various friends and relatives and that cash was kept as cash in hand during the previous financial year, why the assessee did not file a wealth tax return in respect to this cash, no explanation was forthcoming from the assessee in this regard. Also, since the assessee had not been preparing and filing the statement of affairs on a regular basis, this claim cannot be substantiated by a statement of affairs which has been filed by the assessee post the inquiry by the Assessing Officer. Thus, it is seen that the assessee could not give details of marriage expenses incurred by him and has claimed the entire gifts received as cash lying with him. Thus, as far as the cash of ₹ 20,45,400/- is concerned, given the fact that the assessee was asked to substantiate his stand by the Ld. CIT (A) by providing numerous opportunities and many queries were raised by the Ld. CIT(A), which the assessee has failed to reply, we are of the considered opinion that the Ld. CIT(A) has recorded a proper finding of fact that this cash of ₹ 20,45,400/- was rightly added as unexplained amount u/s 69 of the Act. As far as the remaining cash balance of ₹ 10,38,000/- is concerned, it is seen that no explanation was given from the assessee in this regard. In this case also it is seen that the assessee has not responded to the queries raised by the Ld. CIT (A) and, therefore, this amount also deserves to be added back to the income of the assessee and we find the action of the Ld. CIT (A) in confirming the addition as correct. In so far as the contention of the assessee that the opening cash balance brought from the earlier years cannot be challenged in the year under consideration is concerned, it is our considered opinion that in view of the assessee s failure to substantiate the existence of cash balance as on the close of the previous financial year, the statement of affairs as on 31.03.2008 loses its persuasive value - Decided against assessee.

Summary

Issues:
Addition of unexplained cash deposits under section 69 of the Income Tax Act, 1961 for assessment year 2009-10.

Analysis:
The appellant challenged the addition of ?30,83,400 as income from other sources by the Assessing Officer under section 69 of the Income Tax Act. The appellant's income was assessed at ?35,99,370 after the addition. The appellant claimed that the cash deposits were gifts received during his marriage in the previous financial year and were deposited for property purchase and investment. However, the Assessing Officer found the explanation inadequate as no wealth tax return was filed for the cash received. The Commissioner of Income Tax (A) upheld the addition, leading to the appeal before the ITAT.

The appellant raised various grounds of appeal, including lack of opportunity to rebut, netting off losses against cash deposits, benefit of peak theory, exemption under section 56 for gifts received on marriage, and reliance on documentary evidence over oral statements. The appellant argued that the gifts were genuine, received in the previous year, and the cash deposits represented the opening balance from the previous year.

The Senior DR contended that the appellant failed to prove the genuineness of the transactions and had not disclosed the bank account or interest income in the return. The Senior DR supported the CIT (A)'s findings and upheld the addition.

The ITAT analyzed the evidence and submissions. It noted the undisclosed bank account, lack of intention to disclose, failure to file wealth tax return for cash gifts, and absence of regular statement of affairs filings. The list of gift-givers was deemed unreliable, and the appellant failed to provide details of marriage expenses or gifts given. The ITAT upheld the addition of ?30,83,400 as unexplained income under section 69.

Regarding the remaining cash balance of ?10,38,000, the appellant provided no explanation, leading to its addition as well. The ITAT rejected the appellant's argument on the opening cash balance, stating that without substantiation, the claim could not be accepted. Despite reliance on judicial precedents, the ITAT found the appellant's claims unsubstantiated and dismissed the appeal.

In conclusion, the ITAT upheld the addition of unexplained cash deposits, emphasizing the lack of substantiated explanations and failure to provide necessary details, leading to the dismissal of the appeal.