2021 (7) TMI 279 - AT - Income Tax

Unexplained investment in the property, credit card payment and cash deposited in the bank - HELD THAT - Since the property was purchased in the name of a legal person/director, the PAN number of natural person has been mentioned. It can be seen from the purchased deed that it has been specifically mentioned that the property has been purchased by M/s. Nagarka Property and Finance Private Limited through director/Brigadier Krishna Nandan - since the assessee has not purchased any property in his own name we do not find any merit in the addition made by the AO the same is accordingly directed to be deleted. In this finding we find support from the Bank Statements, Nagarka Property and Finance Private Limited from where we have verified the payments made to the seller Prabha Sinha addition is directed to be deleted. Cash deposit in the Kotak Mahindra Bank as perused the bank statement which is part of our record on every entry of cash deposit the Nomenclature is cash deposit @ Dwarka. The assessment order and also the order of the first appellate authority is completely silent on such entries made by the person mentioned in the bank statements. Neither of the lower authorities has verified the cash withdrawal in the bank statement. Thus where neither the AO has given any specific finding for making the additions nor the assessee has given any explanation. Further we do not find any substantial balance in the said bank account and considering the fact that the assessee is a ex Army Men retired as Brigadier we direct the AO to restrict the addition to ₹ 3.5 lacs. The assessee gets a part relief. Credit card payment added as payment for which no explanation of the sources has been given, since we have confirmed the addition of ₹ 3.50 lacs this should become the source of credit card payment accordingly we direct the AO to delete the addition of ₹ 3,38,210/-. Appeal filled by assessee is partly allowed.

Summary

Issues:
1. Addition of cash deposits in the bank
2. Addition of credit card payment
3. Purchase of property in the name of a legal person

Analysis:
1. Cash Deposits in the Bank:
The AO observed cash deposits of &8377; 14.21 lacs in Kotak Mahindra Bank and added this amount to the assessee's total income under undisclosed sources. However, the ITAT Delhi noted that the bank statements indicated the cash deposits were made with a specific nomenclature of "cash deposit @ Dwarka." The AO's decision lacked specific findings on these entries, and neither the AO nor the CIT(A) verified the cash withdrawals. Given the lack of clarity and the ex-Army background of the assessee, the ITAT directed the AO to limit the addition to &8377; 3.5 lacs, providing partial relief to the assessee.

2. Credit Card Payment:
An amount of &8377; 3,38,210/- related to credit card payments was added to the assessee's income due to unexplained sources. However, since the ITAT decided to restrict the cash deposit addition to &8377; 3.5 lacs, they directed that this restricted amount should be considered as the source for the credit card payment. Consequently, the ITAT directed the AO to delete the addition of &8377; 3,38,210/- related to credit card payments.

3. Purchase of Property in the Name of a Legal Person:
The property purchase of &8377; 41 lacs was questioned by the AO, but the ITAT found that the property was acquired by M/s. Nagarka Property and Finance Private Limited through its director, Brigadier Krishna Nandan. As the property was not bought in the assessee's name, the ITAT ruled that the addition made by the AO was unjustified. Supported by bank statements and purchase documents, the ITAT directed the deletion of the &8377; 41 lacs addition related to the property purchase.

In conclusion, the ITAT partially allowed the appeal filed by the assessee, directing the deletion of additions made on account of the property purchase and credit card payment while limiting the addition related to cash deposits. The decision was announced on 30.06.2021 in the presence of both parties' representatives.