2018 (6) TMI 612 - AT - Income Tax

Additions made on account of the difference in income declared in the actual return and in the return filed in the bank - information seeked from the bank u/s 133(6) - Held that - When the assessee has denied having filed any such return and apparently when such return is also not found on the record of revenue, there cannot be any reason to uphold an addition based on such unverified documents. Unexplained source of cash deposit in banks - Held that - As found that cash is deposited from regular cash book of the assessee. Assessee produced regular cashbook as well as bank statement of the bank in which cash is deposited - cash deposits is also disclosed in the bank account in the books of accounts and same tallied with the bank statement - thus no additions can be made - Appeal of revenue is dismissed.

Issues Involved:
1. Addition of ?10,29,920/- due to discrepancy in income declared in two different returns.
2. Addition of ?75,98,883/- on account of unsecured loans under Section 68 of the Income Tax Act.
3. Addition of ?15,08,000/- due to unexplained cash deposits.
4. Addition of ?6,41,408/- on account of unverified and unverifiable expenses.

Detailed Analysis:

1. Addition of ?10,29,920/- due to discrepancy in income declared in two different returns:
The Revenue contended that the CIT(A) erred in not treating the certified copies of the return of income and other documents obtained during the enquiry under Section 133(6) as genuine and authentic. The Assessing Officer (AO) found that the assessee had shown different incomes in two returns for the same assessment year—?13,31,370/- in the return filed with the bank and ?3,01,450/- in the return filed with the Income Tax office. The AO added the difference of ?10,29,920/- to the assessee's income. However, the CIT(A) noted that the AO did not verify the authenticity of the return obtained from the bank and relied on unverified and unauthenticated documents. The CIT(A) found that the return filed with the bank was not genuine and deleted the addition. The Tribunal upheld the CIT(A)'s decision, stating that there was no reason to uphold an addition based on unverified documents.

2. Addition of ?75,98,883/- on account of unsecured loans under Section 68 of the Income Tax Act:
The AO made an addition of ?75,98,883/- on account of unsecured loans shown in the balance sheet submitted to the bank. The CIT(A) deleted this addition, noting that the AO relied on unauthenticated documents obtained from the bank. The assessee denied having taken any unsecured loans and stated that the documents obtained from the bank were not prepared by him. The Tribunal agreed with the CIT(A), emphasizing that the AO should not have relied on unreliable documents and that the addition was not sustainable.

3. Addition of ?15,08,000/- due to unexplained cash deposits:
The AO added ?15,08,000/- to the assessee's income, citing unexplained cash deposits in the HDFC Bank. The CIT(A) deleted this addition, stating that the assessee provided complete details of cash withdrawals from the regular books of accounts, which matched the cash deposits in the bank. The Tribunal found no infirmity in the CIT(A)'s decision and dismissed the Revenue's appeal on this ground.

4. Addition of ?6,41,408/- on account of unverified and unverifiable expenses:
The AO made an addition of ?6,41,408/- for various expenses claimed by the assessee, as the assessee failed to produce adequate details. The CIT(A) deleted this addition, noting that the AO relied on unauthenticated documents obtained from the bank and did not verify the genuineness of the expenses. The Tribunal upheld the CIT(A)'s decision, stating that the AO should not have relied on unreliable documents.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the additions based on unverified and unauthenticated documents obtained from the bank. The Tribunal emphasized the importance of relying on genuine and verified documents for making additions to the assessee's income.

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