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2020 (12) TMI 219 - AT - Income TaxUnexplained deposit in the bank account with Standard Chartered Bank - CIT(A) deleting the substantial addition held that the AO failed to controvert with evidence that the amount deposited in cash in the bank accounts of the assessee was not received from sale of paintings - HELD THAT - Differential amount Ld. CIT(A) has accepted that assessee sold the paintings genuinely to these two parties. Therefore, on the same set of documentary evidences when CIT(A) deleted the substantial addition in respect of two parties for sale of paintings to them, there were no justifiable reason for CIT(A) to sustain part addition against the assessee. The documentary evidences brought on record and examined by the AO at appellate stage and not controverted by the AO would lead to the conclusion that assessee received the impugned amount on account of sale of paintings from the above two purchasers and the evidences brought on record have not been controverted by the AO through any evidence or material on record. For sale of paintings by assessee, strictly the provisions of section 68 may not apply in the case of the assessee. Onus upon assessee to explain the source of the cash deposit in the bank account is duly discharged and, as such, there was no justification to make or sustain even part addition against the assessee. In view of the above discussion, we set aside the orders of the authorities below and delete the entire addition. AO is also directed to grant benefit of section 54F to the assessee on account of deletion of this addition as per law. - Decided in favour of assessee.
Issues Involved:
1. Justification of the addition of ?1,73,27,000 as unexplained deposit. 2. Non-acceptance of the claim for exemption under section 54F of the Income Tax Act. Detailed Analysis: Issue 1: Addition of ?1,73,27,000 as Unexplained Deposit The assessee filed a return declaring an income of ?12,20,170. The Assessing Officer (AO) examined various bank accounts and found unexplained deposits. Specifically, the AO questioned the source of deposits in multiple bank accounts, including: - Union Bank of India: ?32,10,000 (unexplained credits of ?25,000 and ?40,000). - Standard Chartered Bank (M/s G Corporation): ?29,22,742 (unexplained cash deposit of ?45,000 and other deposits). - Standard Chartered Bank (in the name of assessee): ?2,82,87,000 (claimed to be from the sale of property) and other deposits of ?1,63,87,867 (?98,01,587 unexplained). - Standard Chartered Bank (another account in the name of assessee): ?95,76,576 (?6,61,576 unexplained). - Standard Chartered Bank (Dehradun): ?45,89,620 (?1,39,117 unexplained). The AO added these amounts to the income of the assessee, considering them as income from undisclosed sources. The assessee challenged these additions before the Commissioner of Income Tax (Appeals) [CIT(A)], who admitted additional evidence and remanded the case to the AO. The AO's remand report indicated that the purchasers of the paintings (claimed source of deposits) did not appear in person but provided affidavits, bank statements, and PAN details through their representatives. The CIT(A) found that the AO did not bring any adverse evidence against the assessee's claims and deleted substantial additions. However, the CIT(A) confirmed the addition of ?1,73,27,000 related to the sale of paintings to Shri Parveen Goyal and Shri Rakesh, as their Income Tax Returns (ITRs) were not submitted. The assessee contended that the ownership and sale of paintings were supported by documentary evidence, confirmations, affidavits, and bank statements of the purchasers. The assessee argued that the AO could verify the identity and genuineness from the assessment records of the purchasers. The Tribunal observed that the ownership of the paintings was not in dispute and the sale was supported by sufficient evidence. The Tribunal noted that the CIT(A) accepted similar evidence for other purchasers but not for Shri Parveen Goyal and Shri Rakesh solely due to the absence of their ITRs. The Tribunal held that this reason was not sufficient to sustain the addition and directed the deletion of the entire addition of ?1,73,27,000. Issue 2: Claim for Exemption under Section 54F The assessee claimed exemption under section 54F for investment in residential property. The CIT(A) directed the AO to allow the exemption after verifying the investment details, excluding the amount related to the disputed sale of paintings. Following the Tribunal's decision to delete the addition, the AO was directed to grant the benefit of section 54F as per law. Conclusion: The Tribunal allowed the appeal of the assessee, deleted the entire addition of ?1,73,27,000, and directed the AO to grant the benefit of section 54F. The Tribunal emphasized that the assessee had discharged the onus of proving the source of deposits and that the AO had not provided any contrary evidence.
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