2020 (7) TMI 391 - AT - Income Tax

Unexplained deposits in bank account - unexplained cash credit - assessee has submitted that advances in question were received by the wife of the assessee against sale of her property and the amounts so received were deposited in the joint bank account of the assessee and his wife - HELD THAT - As wife of assessee submitted that the said advances were wrongly shown in the balance sheet of the assessee and since the same were received by the wife of the assessee and not the assessee, the concerned parties in reply to the notices issued by the AO u/s 133(6) stated that the advances in question were not paid by them to the assessee. Also there is a sufficient documentary evidence to support and substantiate this claim being made by her and urged that the matter may be sent back to the AO for necessary verification. Keeping in view all the facts of the case and the documentary evidence placed on record, we are inclined to accept this contention of the ld. counsel for the assessee. Even the Ld. DR has not raised any objection for sending the matter back to the AO for proper verification. - Decided in favour of assessee for statistical purposes.

Summary

Issues involved: Addition of unexplained cash credit of ?11,00,000 made by AO and confirmed by CIT(A) based on deposits in the bank account of the assessee.

Detailed Analysis:

1. Background and Facts: The assessee, an individual engaged in retail trading, filed a return of income declaring ?97,250. The AO observed claimed advances of ?7,00,000 and ?4,00,000 from two parties, which were treated as unexplained cash credit, leading to an addition of ?11,00,000 to the total income.

2. AO's Decision and CIT(A) Confirmation: The AO treated the advances as unexplained as the parties denied providing any such advances to the assessee. The CIT(A) upheld the addition, noting that the deals were made by the assessee's wife, not the assessee, and lacked evidence of the assessee's right to receive the cash advances.

3. Tribunal's Decision: The Tribunal heard arguments and reviewed the material. The assessee's counsel contended that the advances were received by the wife against the sale of her property, deposited in a joint account. The Tribunal accepted this argument, noting documentary evidence supporting the claim and directed the matter back to the AO for verification.

4. Judicial Precedent and Conclusion: The Tribunal excluded lockdown days in the pronouncement of the order due to the COVID-19 pandemic, following a Mumbai Tribunal decision. Ultimately, the appeal was allowed for statistical purposes, setting aside the CIT(A)'s order and remanding the matter to the AO for fresh consideration.

This detailed analysis highlights the progression of the case from the AO's decision to the Tribunal's final ruling, emphasizing the key arguments, findings, and legal precedents invoked during the proceedings.