2021 (3) TMI 1094 - AT - Income Tax

Applicability of Section 69A with regard to the cash deposits found in the bank statement of the assessee - whether the assessee has discharged his onus of explaining this deposit satisfactorily? - HELD THAT - As gone through the statement of Sh. Mohinder Singh recorded by the revenue on 17.09.2013 wherein he has confirmed of payment of ₹ 58,00,000/- on execution of sale agreement and receipt of the same amount after cancellation of the said sale agreement. It is an undisputed fact that Sh. Mohinder Singh unequivocally stated that the money earned by him and belongs to him. In that case, it can be said that the assessee has discharged the onus casted upon him. Even after recording the statement wherein Sh. Mohinder Singh owned up the amounts as being from his own sources, the revenue ought to have examined as to the taxability of the amounts in the hands of Sh. Mohinder Singh. Regarding the amounts received from Sh. Bhrama Nand, Sh. Surjeet Singh and Sh. Leela Ram, the matter is being referred to the file of the AO to examine the matter afresh duly following principles of natural justice and giving the details of the enquiries conducted by the revenue so that the assessee gets an opportunity to furnish their replies. Appeal of the assessee is partly allowed.

Summary

Issues involved:
Challenging rejection of family settlement, rejection of transactions under agreements to sale, addition of undisclosed income, adhoc disallowance of expenses.

Analysis:

1. Family Settlement Rejection:
The assessee challenged the rejection of a family settlement deed by the Assessing Officer (AO) and confirmed by the CIT(A). The AO suspected the veracity of the settlement deed, considering it a cover-up for cash loans. The CIT(A) upheld this view, stating that the deeds and transactions were concocted. However, during the appeal, the assessee provided evidence such as ledger accounts, agreements, and bank withdrawals. The Tribunal noted that the assessee had discharged the onus by producing evidence, including the statement of a party involved. The Tribunal found that the revenue failed to examine the taxability of the amounts in the hands of the other party. The Tribunal partially allowed the appeal, emphasizing the need for a thorough examination.

2. Transactions under Agreements to Sale:
The AO rejected transactions under agreements to sale, suspecting them as a means to introduce undisclosed income. The CIT(A) upheld the rejection, citing various factors like non-registration of deeds and cancellations. During the hearing, the assessee presented details and argued for the genuineness of the transactions. The Tribunal directed a re-examination by the AO, ensuring principles of natural justice are followed. This indicates a need for a fair assessment process and proper consideration of evidence.

3. Addition of Undisclosed Income:
The AO made additions under Section 69A, treating the cash deposits as unexplained money. The CIT(A) confirmed this addition, alleging the assessee concocted evidence to explain the deposits. The Tribunal observed discrepancies in the assessment process and directed a fresh examination of the matter concerning other parties involved. This highlights the importance of a thorough investigation and adherence to procedural fairness in tax assessments.

4. Adhoc Disallowance of Expenses:
The AO made an adhoc disallowance of expenses, alleging improper vouchers and self-generated documents. The assessee disputed this disallowance, stating no defects in the vouchers. The Tribunal did not provide a specific ruling on this issue in the summarized judgment. However, it underscores the significance of maintaining proper documentation to support expense claims and the need for a detailed review of such disallowances.

In conclusion, the Tribunal's judgment addressed various issues raised by the assessee, emphasizing the importance of evidence, fair assessment procedures, and thorough examination in tax matters. The decision highlighted the need for a meticulous approach in evaluating transactions, income sources, and expense claims to ensure a just and accurate tax assessment process.