2020 (11) TMI 446 - AT - Income Tax

Unexplained investment u/s. 69 - amount deposited in the individual bank accounts maintained by the assessee in ING Vysya Bank - HELD THAT - There are no findings by the Ld. Revenue Authorities that both the assessees are engaged in any other activity earning income other than agricultural income. In this situation, it is a great injustice inflicted on both the assessees by the Ld. Revenue Authorities for making additions without properly examining the veracity of the claim of the assessees when sufficient documents and explanation were furnished before them - amount deposited by both the assesses are from the sale proceeds of the agricultural owned by them. Hence the addition made by the Ld. AO which was further sustained by the Ld. CIT (A) on this count is not justifiable - order of the Ld. CIT (A) set aside and the Ld. AO directed to delete the addition made u/s 69. Unexplained expenditure invoking the provisions of section 69C - HELD THAT - Assessee has enough resources from his accumulated funds to make payment towards the expenditure as he is earning income from his profession as insurance commission agent for quite a period of time. Further, the assessee's family has also resources for earning agricultural income. Hence, addition made by the Ld. AO which is further sustained by the Ld. CIT (A) on this regard is not warranted. Accordingly, hereby set aside the order of the Ld. CIT (A) and direct the Ld. AO to delete the addition made in the hands of the assessee invoking the provisions of section 69C of the Act as unexplained expenditure. Accordingly, this ground raised by the assessee is also allowed in his favour.

Summary

Issues:
- Addition towards unexplained investment U/s. 69 of the Act in the case of both the assesses
- Addition towards unexplained expenditure U/s. 69C of the Act in the case of Sri Sunil Kumar Bommineni

Analysis:

Issue 1: Addition towards Unexplained Investment U/s. 69 of the Act
The Appellate Tribunal ITAT Hyderabad heard appeals by the assessees against orders of the Ld. CIT (A) regarding unexplained investments in bank accounts. The Ld. AO added amounts deposited in ING Vysya Bank by the assessees as unexplained investments under section 69 of the Act. The assessees failed to explain the sources for the bank deposits, resulting in additions to their income. The Ld. CIT (A) upheld the AO's decision. However, the assessees presented documents showing the sale of agricultural land and explained the source of the deposits. The Tribunal found that the assessees were related parties and had sold land, receiving on-money. The Tribunal criticized the Revenue Authorities for not examining all relevant parties involved in the transactions. Considering the evidence provided, the Tribunal concluded that the deposits were from the sale proceeds of agricultural land, overturning the additions made by the Ld. AO and Ld. CIT (A).

Issue 2: Addition towards Unexplained Expenditure U/s. 69C of the Act in the case of Sri Sunil Kumar Bommineni
The Ld. AO added an amount claimed as expenditure by Sri Sunil Kumar Bommineni under section 69C of the Act due to insufficient withdrawals from the bank account. The Ld. CIT (A) confirmed this addition. However, the Tribunal noted that the assessee had sufficient resources from accumulated funds and income as an insurance commission agent to cover the claimed expenditure. Additionally, the family had resources for agricultural income. Therefore, the Tribunal found the addition by the Ld. AO and Ld. CIT (A) unwarranted and directed the deletion of the added amount from the assessee's income.

In conclusion, the Tribunal allowed both appeals of the assessees, overturning the additions made by the Ld. AO and Ld. CIT (A) in both cases. The judgment was pronounced on 8th July 2020, taking into account the extraordinary circumstances of the Covid-19 pandemic.