2018 (3) TMI 1410 - AT - Income Tax

Cash credit - Additions u/s 68 instead of u/s 69 - The contention of assessee that amount was withdrawn for property deal could not materialized and she deposited back the cash was not found tenable - A.O. noted that assessee kept on withdrawing the cash throughout the year for the purpose of buying a property and kept accumulating the cash at home. Any property deal would not go throughout the year. Moreover, for a property deal no one keeps withdrawing the cash throughout the year in small-small amounts. The assessee is not in business of real estate where she would frequently require cash withdrawals for sale and purchase of the property. Held that - The assessee has income from salary, house property and income from other sources. The assessee has no business income in assessment year under appeal. The assessee is also not a property dealer. - assessee did not produce any evidence in support of same, if any, transaction was conducted by assessee dealing in any property. - ultimately, assessee failed to explain the source of the cash deposit in the bank account. Even as against the returned income declared, the deposit of cash in the bank account is more. Therefore, assessee has no explanation at all for deposit of the cash in the bank account. Mentioning of wrong Section in the orders of the authorities below would not be fatal to the case of Revenue. May be technically Section 68 is not applicable in the case of the assessee, but, assessee failed to explain source of the cash deposit in her bank account. Addition was rightly made against the assessee for unexplained cash deposit in bank account of the assessee. No merit in the arguments of the Assessee that when Ld. CIT(A) could accept the explanation of assessee for ₹ 9 lakhs, the entire addition should have been deleted. This argument itself has no force and is rejected because assessee failed to explain the source of the cash deposit in the bank account and also failed to explain any co-relation between the cash withdrawals and cash deposit in her bank account. - Decided against assessee.

Summary

Issues:
- Addition of ?26,25,000 on account of cash credit under section 68 of the I.T. Act, 1961.

Analysis:
1. The appellant, a Director in a company, declared income of ?21,25,283 and had a cash deposit of ?35,25,000 in the bank account. The appellant claimed the cash was withdrawn for a property deal but failed to provide evidence. The AO noted discrepancies in the withdrawals and deposits, concluding the cash was unexplained income. The CIT(A) partially allowed a benefit but confirmed the addition of ?26,25,000, citing the test of human probabilities.

2. The appellant argued that since no books of account were maintained, no addition under section 68 could be made. The appellant contended that the entire addition should be deleted if a partial benefit was accepted. The Revenue maintained that the unexplained cash deposit attracted Section 69 of the I.T. Act, regardless of the wrong section mentioned in previous orders.

3. The Tribunal found the appellant failed to explain the source of the cash deposits or the correlation between withdrawals and deposits. The appellant's explanation of property dealings was not substantiated. The Tribunal rejected the appellant's arguments, citing the decision in CIT vs. Jauharimal Goel, and upheld the addition, dismissing the appeal.

4. The Tribunal concluded that the appellant's failure to explain the cash deposits warranted the addition under section 68. The technical error in citing the section did not invalidate the addition. The Tribunal dismissed the appeal, emphasizing the lack of merit in the appellant's arguments and the failure to establish a link between withdrawals and deposits.