2018 (5) TMI 1004 - AT - Income Tax

Addition u/s 68 - unexplained deposits - Held that - On careful reading of the cash flow statement and bank statement submitted by the assessee, we find that there are cash deposits in the bank of Dhanalakshmi, Nellore to the extent of ₹ 2 lakhs per month in AY 2012-13 and no regular deposits in AY 2009-10 and 2010-11. However, we also find that such deposits of ₹ 2 lakhs were made in each month regularly in the AY 2012-13. It clearly shows that assessee was in receipt of ₹ 2 lakhs of professional income in cash. It was not deposited regularly in AY 2009-10 and 2010-11. Therefore, the income of the assessee must be the official salary income, professional income of ₹ 24 lakhs per annum and relevant bank interest. Since assessee has disclosed the income based on bank deposits, which is not consistent with the source of income disclosed or found after search, we direct the AO to assess the income of the assessee only to the extent of above sources of income and wherever additional incomes based on the deposits are disclosed by the assessee should be eliminated as per the findings of CIT(A). Therefore, we are in agreement with the findings of the ld. CIT(A). The grounds raised by the assessee are partly allowed in all the three years under consideration.

Summary

Issues:
Delay in filing appeals, Addition of unexplained cash credit u/s 68 of the Income-tax Act.

Delay in Filing Appeals:
The assessee filed appeals with a delay of 45 days due to shifting residence to care for her ill mother, leading to a petition for condonation of delay. The Tribunal, considering the reasons beyond the assessee's control, condoned the delay as per provisions of law.

Addition of Unexplained Cash Credit:
The Assessing Officer (AO) made additions towards unexplained cash credit based on undisclosed cash salary received by the assessee. The AO observed discrepancies in the assessee's income declaration and bank deposits, leading to the addition of ?24,00,000 as unexplained cash credit u/s 68 of the Act. The CIT(A) confirmed the addition, emphasizing the need for accurate income disclosure and rejecting the explanation based on bank deposits. The Tribunal, after hearing both parties, analyzed the source of income, considering the cash flow and bank statements. It concluded that the income should be assessed based on official salary, professional income, and bank interest, eliminating discrepancies in disclosed additional incomes. Consequently, the Tribunal partly allowed the appeals, directing the AO to assess income based on the disclosed sources.

In conclusion, the Tribunal partly allowed the appeals, addressing the delay in filing and the addition of unexplained cash credit, emphasizing accurate income disclosure and consistent assessment based on legitimate sources.