2018 (9) TMI 148 - AT - Income Tax

Unexplained deposits - amount received on sales transactions of agricultural land - amount deposited in the bank account of the assessee by mistake - Held that - In the instant case, nothing is brought on record to substantiate that the amount was deposited by Shri Sunil Kumar, (the assessee) and it was withdrawn by him from his account because no deposit slip filled by the assessee. Sh. Sunil Kumar or withdrawal form was produced before the AO rather it was stated that no record was available with him which clearly proves that the amount was deposited by Sh. Kulwant Singh and not by the assessee and when the bank realised its mistake the entry was reversed and the amount was the deposited in the account of the six persons. In the present case, nothing is brought on record that the sale proceeds from the family land claimed to be received on 15. 02. 2011 or 16. 02. 2011 was utilized elsewhere and not deposited in the bank accounts of aforesaid six persons. The impugned amount was wrongly added in the hands of the assessee, particularly when the same amount was credited in the names of 6 persons. The said amount received from the sale proceeds of the land can not be stated to be related to the assessee as well as the other six persons at a same time. If it was to be presumed that said amount belonged to the assessee then there should have been another amount which was deposited in the bank account of the six persons. Nothing is brought on record to substantiate that the amount deposited in the bank account of the assessee by mistake, was different from the amount deposited in the bank account of the six persons out of the sale proceeds of the agricultural land. Impugned addition made by the AO and sustained by the Ld. CIT(A) was not justified. Addition made by the AO and sustained by the Ld. CIT(A) is deleted. - Decided in favour of assessee

Summary

Issues Involved:

1. Confirmation of addition of ?1,62,50,000 made by the Assessing Officer (AO).
2. Explanation of the source of cash deposits.
3. Factual errors in the assessment regarding sale proceeds and bank deposits.
4. Misconstruction of facts by the CIT(A) affecting the judgment.
5. Procedural aspects and limitations of the appeal.

Issue-Wise Detailed Analysis:

1. Confirmation of Addition of ?1,62,50,000:
The primary grievance of the assessee is the confirmation of the addition of ?1,62,50,000 made by the AO. The AO observed that the assessee made cash deposits of ?1,57,50,000 and ?5,00,000 on 17.02.2011 in his bank account. The assessee denied making the deposit of ?1,57,50,000 and claimed that it was a banking error. The AO recorded statements from various individuals, including the bank manager, who confirmed that the deposits were made by the assessee. However, the assessee argued that the amount was part of the sale proceeds of agricultural land and was wrongly credited to his account by the bank.

2. Explanation of the Source of Cash Deposits:
The assessee explained that the cash deposits were part of the sale proceeds of agricultural land belonging to the HUF. The sale deeds were executed on 22.03.2011, and the total sale consideration was ?1,98,75,000. The assessee provided a detailed family tree and explained the distribution of the sale proceeds among family members. Statements from family members and the bank manager were recorded to support the claim that the amount was received from the sale of agricultural land.

3. Factual Errors in Assessment:
The assessee argued that the AO made factual errors in assessing the sale proceeds and bank deposits. The AO noted discrepancies in the amounts mentioned in the sale deeds and the bank deposits. The assessee provided copies of sale deeds and other documents to clarify that the amounts were received from the sale of agricultural land and were distributed among family members. The assessee also highlighted that the bank manager admitted to a banking error in crediting the amount to the assessee's account.

4. Misconstruction of Facts by CIT(A):
The CIT(A) confirmed the addition by questioning the credibility of the transactions and the banking procedures followed. The CIT(A) found it incomprehensible that the bank would accept such a large cash deposit and reverse the entry on a verbal request. The CIT(A) also questioned the apportionment of the sale proceeds among family members. The assessee argued that the CIT(A) misconstrued the facts and ignored the evidence provided, including the statements of family members and the bank manager's admission of error.

5. Procedural Aspects and Limitations of the Appeal:
The assessee contended that the appeal was within the limitation period and no admitted tax was due. The assessee requested that the orders of the AO and CIT(A) be quashed and canceled. The assessee provided various documents, including bank statements, sale deeds, family tree, and statements of individuals involved, to support the claim that the amount was received from the sale of agricultural land and was wrongly credited to the assessee's account due to a banking error.

Conclusion:
The Tribunal concluded that the assessee provided sufficient evidence to prove that the amount deposited in the bank was part of the sale proceeds of agricultural land and was wrongly credited to the assessee's account due to a banking error. The Tribunal noted that the AO and CIT(A) failed to consider the evidence provided by the assessee, including the statements of family members and the bank manager. The Tribunal deleted the addition of ?1,62,50,000 made by the AO and sustained by the CIT(A), allowing the appeal in favor of the assessee.