2018 (7) TMI 1410 - AT - Income Tax

Unexplained cash credit - Appellant received gift of ₹ 17,00,000/- from relatives and ₹ 1,50,400/- borrowings from relative and friends - Held that - We are just fail to understand how this much of land can produce such a huge crop. It is a matter of research for the Agriculture Scientist as well. This statement cannot be relied upon and in support of its contention he has not produced any certificate from the agriculture department and when he was specifically asked whether he has maintaining any record then in reply he stated that he does not have any documentary evidence and moreover he has not maintaining any account of agriculture produce and bank account. He further stated that he does not have any gift deed when he gifted the amount to the relatives. So in our considered opinion, appellant has been failed to prove his case as he has not maintaining any bank account nor his relatives and friends are maintaining any bank account either they are labourers or farmers. Therefore, there credit worthiness is in doubt. - Decided against assessee.

Summary

Issues:
Appeal against addition of unexplained cash credit in income tax assessment for AY 2006-07.

Analysis:
The appellant, an individual with salary and agriculture income, faced an addition of ?18,49,305 as unexplained cash credit due to cash deposits in bank accounts. Despite being asked to provide sources for the transactions, the appellant failed to appear before the assessing officer or submit any supporting documents, leading to the addition. The first appeal before the CIT(A) involved the submission of additional evidence, which led to a remand report and subsequent dismissal of the appeal by the CIT(A).

During the proceedings, it was revealed that the appellant received a gift of ?17,00,000 from relatives and borrowed ?1,50,400 from friends and relatives. However, the AO raised concerns about the credibility of the depositors, who were mainly laborers from the APMC market, and the lack of proof regarding the borrowing repayments. The appellant's claims that the gifts were from agricultural income lacked substantiating evidence, such as bank statements or agricultural produce receipts, raising doubts about the source of the funds. Statements from donors were deemed unreliable without documentary evidence, and the lack of maintained accounts by both the appellant and the donors further cast doubt on the transactions.

The AO's scrutiny of a statement from one of the donors revealed inconsistencies and lack of supporting documentation, further weakening the appellant's case. The absence of bank transactions or agricultural records, coupled with the donors' inability to provide concrete evidence, undermined the appellant's claims of legitimate sources for the funds. Ultimately, the tribunal found no grounds to overturn the lower authorities' decision and dismissed the appellant's appeal, upholding the addition of unexplained cash credit in the assessment.

In conclusion, the tribunal's decision to dismiss the appeal was based on the appellant's failure to substantiate the sources of cash deposits and gifts, as well as the lack of credible evidence supporting the transactions. The tribunal highlighted the absence of maintained accounts, documentary proof, and reliable statements from donors as key factors in rejecting the appellant's claims, leading to the affirmation of the addition in the income tax assessment for the relevant year.