2019 (3) TMI 1066 - AT - Income Tax

Addition u/s 69 - cash deposit explained by the assessee as gift received from his father-in-law and mother-in-law - link the sale proceeds of agricultural land received by her father-in-law with the amounts given as hand loans to various persons - HELD THAT - The assessee was unable to explain as to why the sale proceeds received on 05.04.2006 were deposited in the bank account of assessee between the period 01.04.2007 to 31.03.2008. The perusal of deposits made by the assessee shows that the amounts were deposited in bits and pieces totaling ₹ 13,88,500/-. In case the amount was available with the assessee on the sale of properties by her in-laws, then where was the need to deposit the amount in bits and pieces during the month of December, 2007 and thereafter, in March, 2008. The said tabulated details are available at page 21 of appellate order. The assessee has failed to link the sale proceeds of agricultural land received by her father-in-law with the amounts given as hand loans to various persons. The whole exercise is an afterthought by the assessee and the amount if received after the death of father-in-law should be available with the assessee in lump sum and there was no requirement to deposit the amount in bank in bits and pieces on different dates. There is no merit in the stand of assessee in this regard. Hence, the assessee has failed to explain the source of deposits and in the absence of any evidence linking its claim to the evidences available, the addition made by authorities below is upheld in the hands of assessee. - Decided against assessee.

Summary

Issues:
Appeal against addition under section 69 of the Income-tax Act, 1961 based on cash deposits explained as gifts from father-in-law and mother-in-law.

Analysis:

1. Assessment Year 2008-09 - Addition under Section 69 of the Act:
- The appeal challenged the addition of ?10,48,500 under section 69 of the Act by the authorities, based on cash deposits made by the assessee.
- The assessee, a proprietor of M/s Mechatronic Systems, declared a net profit of ?4,24,083 on sales of ?65,15,396 during the year.
- The Assessing Officer noted cash deposits of ?13,88,500 in a bank and sought explanation from the assessee regarding the source.
- The assessee claimed the deposits were gifts from her father-in-law and mother-in-law, supported by some documentary evidence.
- However, the Assessing Officer found discrepancies in the explanation provided by the assessee and added ?10,48,500 to her income.

2. Proceedings before CIT(A) and Tribunal:
- The CIT(A) considered written submissions, additional evidence, and remand reports during the proceedings.
- The CIT(A) found no merit in the assessee's plea and dismissed the appeal.
- The assessee then appealed to the Tribunal, arguing that the source of cash deposits had been adequately explained.
- The Authorized Representative for the assessee highlighted documents submitted during the proceedings to support the source of deposits.
- The Departmental Representative for the Revenue supported the lower authorities' decisions, emphasizing the unexplained deposits made by the assessee.

3. Tribunal's Decision and Reasoning:
- The Tribunal analyzed the source of cash deposits totaling ?12,98,500 explained by the assessee as gifts from her father-in-law and mother-in-law.
- Despite the explanations provided, the Tribunal found discrepancies in the timing and manner of the deposits, questioning the need for multiple deposits if the funds were readily available.
- The Tribunal observed that the assessee failed to link the sale proceeds received by her in-laws with the cash deposits made by her.
- It was noted that the deposits were made in fragments over time, raising doubts about the coherence of the explanation provided by the assessee.
- Ultimately, the Tribunal upheld the addition made by the lower authorities, dismissing the appeal of the assessee based on the lack of sufficient evidence linking the source of deposits to the explanations provided.

4. Conclusion:
- The Tribunal's decision confirmed the addition of ?10,48,500 under section 69 of the Act in the hands of the assessee.
- The appeal was dismissed, and the Tribunal's order was pronounced on February 18, 2019.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented by the parties, and the Tribunal's reasoning leading to the final decision.