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2019 (5) TMI 415 - AT - Income TaxAddition of cash deposits in Axis Bank - as alleged assessee could not produce any evidence to support the explanation of the assessee to prove the credits in the bank account were in fact related to business transactions - represent the trade transactions - CIT(A) upheld the disallowance considering peak credit - HELD THAT - Since, there were withdrawals as well as deposits in the bank account it is reasonable to hold that the deposits were made out of cash withdrawals and the deposits and withdrawals are circulation of the same money. Therefore, we are of the considered view that in the facts and circumstances of frequent cash deposit and the withdrawal, it is correct to make the addition of peak credit balance, but not the entire deposits which the Ld.CIT(A) has directed the AO. Hence, we do not see any reason to interfere with the order of the CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed. Addition of unsecured loans received from the creditor u/s 68 - HELD THAT - In the instant case, what the commissioner has examined is the income tax record which is already available with the department and the account copy of the bank account, which was also furnished by the assessee at the time of original assessment proceedings. Furnishing of Aadhar card is fortifying the identity already accepted in original assessment and the same cannot be treated as additional evidence. Since the assessee has furnished the copy of the bank account to establish the balance available and there was sufficient balance in the account to advance the amount of ₹ 10 lakhs to the assessee, CIT(A) has rightly observed that the assessee has satisfied the identity, credit worthiness and genuineness of the transaction and accordingly deleted the addition. No reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed. Addition of credits in the bank account of ING Vysya - deposits relates to sales - additional evidence - HELD THAT - Neither the CIT(A) nor the AO reconciled the deposits made in the bank account with the sales declared by the assessee in the P L account and verified whether the deposits in the ING Vysya bank and other bank accounts relate to business transactions or not. Though the Ld.CIT(A) entertained the additional evidence, the same was not referred to the AO as required under Rule 46A of Income Tax Rules. CIT(A) has not given opportunity to the AO to verify the additional evidence and to submit the comments on the additional ground. Therefore, we are of the considered opinion that the issue should be remitted back to the file of the Ld.CIT(A) to call for the remand report from the AO and decide the issue afresh on merits of the case. Addition in IndusInd Bank - deposits relates to sales - additional evidence - HELD THAT - The assessee consistently claimed the deposits in the bank account represent the turnover. However, neither the AO nor the assessee have reconciled the total turnover declared in the trading account or VAT with the deposits made in the bank account and the sales admitted by the assessee. It is a fact that the assessee is engaged in the business and made sales to various parts of the state. It is also a fact that the sales are deposited in various locations. In the circumstances making addition of deposit in the bank account without verification would cause injustice to the assessee. In this case, it is to be seen whether deposits relates to sales or not. If the deposits are related to sales, only gross profit required to be brought to tax, but not the entire deposits. In case, the deposits do not represent sales, the addition should be restricted to peak credits if the same money is in circulation. All these aspects were not examined by the AO / CIT(A). Hence, issue requires detailed examination - remit the matter back to the file of the Ld.CIT(A) for re-examination - Appeal of the revenue is partly allowed for statistical purpose.
Issues Involved:
1. Addition of ?16,98,150/- pertaining to cash deposits in Axis Bank. 2. Addition of ?10,00,000/- unsecured loans received from the creditor. 3. Addition of ?42,24,817/- in ING Vysya Bank. 4. Addition of ?21,67,758/- in IndusInd Bank. Issue-wise Detailed Analysis: 1. Addition of ?16,98,150/- pertaining to cash deposits in Axis Bank: The assessee, engaged in manufacturing and trading of food products, did not disclose an Axis Bank account with total credits of ?27,06,800/-. The AO treated ?16,98,150/- as unexplained cash credits after segregating ?10,00,000/- as an unsecured loan and ?2,16,510/- as a cheque transaction. The CIT(A) reduced the addition to ?12,29,969/- considering peak credit. The Tribunal upheld the CIT(A)'s decision, noting the frequent deposits and withdrawals indicated circulation of the same money, thus justifying the peak credit addition rather than the total deposits. 2. Addition of ?10,00,000/- unsecured loans received from the creditor: The AO added ?10,00,000/- received from Smt. A. Sharada as unexplained cash credit under Section 68, due to lack of evidence of the creditor's identity and creditworthiness. The CIT(A) deleted the addition after verifying the creditor's identity, creditworthiness, and genuineness of the transaction, supported by bank statements and Aadhar card. The Tribunal upheld the CIT(A)'s decision, stating that the additional evidence (Aadhar card) only fortified the already accepted identity and was not new evidence requiring AO's verification. 3. Addition of ?42,24,817/- in ING Vysya Bank: The AO treated ?42,24,817/- in ING Vysya Bank as unexplained income due to lack of supporting evidence for claimed business transactions. The CIT(A) accepted the assessee's claim based on confirmation letters from various parties and estimated a 10% profit on the undisclosed turnover. The Tribunal found that neither the AO nor CIT(A) reconciled the deposits with declared sales and remitted the issue back to CIT(A) to call for a remand report from the AO and decide afresh on merits. 4. Addition of ?21,67,758/- in IndusInd Bank: The AO added ?21,67,758/- from IndusInd Bank as unexplained income after excluding cheque returns. The CIT(A) deleted the addition, noting that the deposits were trade transactions and the cash deposit was only ?6,70,450/-. The Tribunal observed that neither the AO nor CIT(A) reconciled the deposits with the declared sales and remitted the issue back to CIT(A) for detailed examination and reconciliation, directing a remand report from the AO. Conclusion: The Tribunal upheld the CIT(A)'s decisions on the first two issues, dismissing the revenue's appeals. For the latter two issues, the Tribunal remitted the matters back to CIT(A) for further examination and reconciliation with the AO's input, allowing the revenue's appeals for statistical purposes. The overall appeal of the revenue was partly allowed for statistical purposes.
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