2018 (9) TMI 1304 - AT - Income Tax

Addition u/s 69 - unexplained cash deposits in the bank account - Held that - Records asserts the fact that the alleged transaction of cash deposits belonged to the society namely M/s Laxmi Sakh Sahakarita Maryadit Society. The society was holding six bank accounts and in one of the bank Narmada Jhabua Gramin Bank, Kukshi bearing No.3612 in the computer system of the bank the PAN of the assessee was mentioned who was the President of the society as at that point of time the society was not allotted the PAN number. CIT(A) examined the issue in detail and also noted that the society was allotted the PAN No. AAAAL4305L and also allotted registration certificates given by MP Autonomous Corporation as well as MP Co-operative Society Ltd. CIT(A) rightly deleted the addition as the alleged cash belonged to M/s Laxmi Sakh Sahakarita Maryadit Society and was deposited in the bank account held by the society and the alleged cash transactions are duly reflected in the cash book maintained by the society. - Decided against revenue Unexplained fixed deposit credited in the bank - AO made additions as they were appearing under the PAN Number of the assessee - Held that - It is an admitted fact that in the instant appeal the addition were made only because of quoting PAN of President in the bank account held by the society. All details of the alleged fixed deposits have been filed and placed on record which have been duly examined by the first appellate authority and thereby concluding that the society was having fixed deposit of ₹ 50 lakhs in the maturity and interest of ₹ 5,42,838/- was received after deduction of tax at source. The alleged TDS was reflecting in the form 26AS of the assessee as his PAN number was quoted in the bank records. Audited and financial statemesnt of the society clearly shows that the fixed deposits as well as interest accrued thereon belong to the society only and not to the assessee. Therefore we find no inconsistency in the findings of Ld.CIT(A) in deleting the addition - Decided against revenue

Summary

Issues Involved:
- Addition of unexplained cash deposits in the bank account of a society
- Addition of unexplained fixed deposit credited in the bank account of the society
- Deletion of addition of fixed deposit when TDS was claimed
- Deletion of addition based on PAN information provided

Analysis:

Issue 1: Addition of Unexplained Cash Deposits
The Assessing Officer (AO) doubted the existence of the society and added the amount of cash deposits to the income of the assessee. However, the CIT(A) deleted the addition after considering documents proving the society's existence, including registration certificates, PAN card, auditor's letter, and bank account details. The CIT(A) found that the cash deposits belonged to the society and were duly reflected in the society's cash book. The Tribunal upheld the CIT(A)'s decision, emphasizing that the alleged cash belonged to the society, as evidenced by the documents submitted. The Tribunal noted that the society was later allotted a PAN number, and the addition was rightly deleted by the CIT(A).

Issue 2: Addition of Unexplained Fixed Deposit
The AO made an addition for unexplained fixed deposit credited to the bank account under the assessee's PAN number. However, the CIT(A) deleted this addition after verifying the details and concluding that the fixed deposit belonged to the society, not the assessee. The Tribunal agreed with the CIT(A)'s decision, stating that the fixed deposits and interest accrued belonged to the society as per audited financial statements. The Tribunal noted that the TDS reflected under the assessee's PAN was due to the quoting of the PAN in the bank records by the society. Therefore, the Tribunal dismissed the revenue's appeal on this issue.

Issue 3: Deletion of Addition Based on PAN Information
The Tribunal did not adjudicate on the general nature of the fourth ground raised by the revenue. The Tribunal ultimately dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the additions related to unexplained cash deposits and fixed deposit credited in the bank account of the society. The Tribunal found no inconsistency in the CIT(A)'s findings and concluded that the additions were rightly deleted based on the evidence provided regarding the society's ownership of the funds.