2020 (5) TMI 509 - AT - Income Tax

Unexplained investment - Money paid for purchase of residential property out of own funds - incriminating material of accepting on-money from different parties - Assessee submission out of his past savings over the years, and his wife and other family member - HELD THAT - Since no satisfactory explanation has been offered by the assessee about the nature and source of payment of cash, the value of the investment is deemed to be the income of the assessment of the relevant F.Y. and accordingly, the same was added to the hands of the assessee Details given by the appellant of the withdrawal of amount of the last 2 years clearly suggests that the appellant has even withdrawn ₹ 5,000/- for his personal need. If this cash of ₹ 5 lakhs was lying in his house, why he will withdraw such petty amount from the bank. The transactions given by the appellant clearly shows that he has good banking habit and no prudent person will keep cash of ₹ 5 lakhs in his house for any emergency in the present scenario where the money can be withdrawn from the ATM and the payments also can be made through cheque, debit card, credit card, internet etc. Further, this is also relevant that the almost entire withdrawal of the last 2 years have been claimed by the appellant as his savings then what happened for his household expenses and from where these have been met Hence, clearly these submissions are an afterthought and given by the appellant when the clinching evidence of his payment in cash of ₹ 5 lakhs was recovered by the Department during the course of search and seizure proceedings form Cosmo Group. Apparently the withdrawals from the bank account is made for meeting the expenses and not for keeping the money at house. Hence, the explanation of the appellant that cash of ₹ 5 lakhs is deposited out of savings is not supported by any documentary evidence and against the preponderance of probability and deserves to be rejected. - Decided against assessee.

Summary

Issues:
Confirmation of addition of ?5.00 lakhs as unexplained investment in purchase of residential property.

Analysis:
The appeal was filed against the order passed by the Commissioner of Income Tax confirming the addition of ?5.00 lakhs as an unexplained investment in the purchase of a residential property. The assessee claimed that the amount was paid out of own funds. The incriminating material was found during a search proceeding related to Cosmos Group, leading to the reopening of the assessee's case under section 147. The assessee failed to provide satisfactory explanation or supporting documents regarding the source of the cash payment. The Assessing Officer deemed the investment as the assessee's income and added it to the total income. The Commissioner of Income Tax (Appeals) dismissed the appeal, leading to the appeal before the Tribunal.

The Tribunal analyzed the submissions made by both the assessee and the revenue authorities. The Commissioner of Income Tax (Appeals) had elaborately discussed the issue and decided against the assessee, providing well-reasoned findings. The assessee argued that the addition of ?5.00 lakhs should be deleted, while the revenue authorities supported the decision of the Commissioner. The Tribunal reviewed the orders passed by the revenue authorities and found no infirmity in the decision of the Commissioner. The Tribunal upheld the findings of the Commissioner and dismissed the grounds raised by the assessee, ultimately dismissing the appeal.

In the detailed analysis provided by the Commissioner of Income Tax (Appeals), it was noted that the transaction between the assessee and Cosmos Group for the purchase of an apartment involved multiple payments made through cheques, except for the ?5.00 lakhs paid in cash. The assessee's claim that the cash payment was made from past savings was not accepted, as no documentary evidence or bank statement was provided to support this claim. The Tribunal also referred to legal precedents emphasizing the importance of considering human probabilities and surrounding circumstances in tax assessments. The Tribunal concluded that the assessee's explanations were not supported by evidence and, therefore, confirmed the addition of ?5.00 lakhs as unexplained income.

In conclusion, the Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) to confirm the addition of ?5.00 lakhs as unexplained investment in the purchase of a residential property. The Tribunal found no reason to interfere with the well-reasoned findings of the Commissioner and dismissed the appeal filed by the assessee.