2021 (11) TMI 38 - AT - Income Tax

Addition under the head conveyance allowance - AO is of the view that the appellant is eligible for exempt conveyance allowance - HELD THAT - As per circular No. 6/2004 dated 6.12.2004, the assessee-individual is entitled to deduction of ₹ 9600/- per year with regard to conveyance allowance. In this case, the assessee has claimed ₹ 36,649/-, which is not in accordance with the CBDT circular. Therefore, we concur with the findings of ld. CIT(A) in confirming the disallowance. This ground of appeal is dismissed. Addition of interest income - HELD THAT - Assessee had deposited of ₹ 3,00,000/- as fixed deposit and has shown ₹ 1,00,000/- in the return of income. Therefore, the AO calculated the interest income of ₹ 18,000/- on the fixed deposit of ₹ 2,00,000/- and added to the total income of the assessee. We also observe that during the appellate proceedings, the ld. A.R. of the assessee accepted the addition and same was confirmed. If this is the position, there was no necessity to agitate the issue before the Tribunal. Hence, we confirm the addition and this ground of appeal is dismissed. Unexplained cash deposits and cheque deposits in bank account - undisclosed sources of income - HELD THAT - AO has not considered the facts of the assessee on right perspective and added the cash collected by him to his income and part of the cheque collection has been allowed. When one part of collection of loan instalment has been allowed being receipt through cheque then other part cannot be disbelieved and disallowed merely because it was cash deposit. It is also not necessary that any other additional positive material should be produced by the assessee in order to discharge this burden which rests upon him. The assessee may claim to have discharged the burden by relying on the material which is on record by filing a letter dated 7.11.2016 asking the employer to intimate the collection and deposit, irrespective of whether it is complied by the employer or not. If it can be said on a preponderance of probabilities that the failure to give the collection and deposit by the employer has not arisen on account of any fraud or any gross or wilful neglect on the part of the assessee - thus direct the AO to delete the addition.

Summary

Issues:
1. Quashing of assessment order passed by the AO without recorded reasons.
2. Confirmation of addition under the head "conveyance allowance."
3. Confirmation of addition on account of interest income.
4. Confirmation of addition regarding deposits made in the bank account.
5. Addition related to cheque deposits in banks.

Issue 1 - Quashing of Assessment Order:
The appeal challenged the assessment order passed by the AO without recorded reasons under section 148 of the Income Tax Act. The AO had recorded reasons before issuing the notice, as per the notice sheet dated 8.12.2013. The Tribunal held that the validity of reassessment proceedings is judged based on the reasons recorded for reopening the assessment, which was done in this case. Thus, the ground of appeal was dismissed.

Issue 2 - Confirmation of Conveyance Allowance Addition:
The appeal contested the confirmation of an addition under "conveyance allowance." The CIT(A) upheld the addition, citing the appellant's claim of &8377; 36,649 instead of the eligible &8377; 9,600 as per CBDT circular. The Tribunal concurred with the CIT(A)'s findings, dismissing the appeal ground.

Issue 3 - Confirmation of Interest Income Addition:
The appeal challenged the addition of &8377; 18,000 on account of interest income. The AO added this amount due to a fixed deposit discrepancy, which the appellant accepted during appellate proceedings. The Tribunal upheld the addition, dismissing the appeal ground.

Issue 4 - Confirmation of Bank Deposits Addition:
The appeal contested the addition of &8377; 22,77,420 as cash deposits and &8377; 2,20,950 as cheque deposits in various bank accounts. The AO made the additions as the appellant failed to provide evidence of transferring collected money to the employer company. The CIT(A) confirmed the additions due to the lack of confirmation from the employer. However, the Tribunal found that the appellant's explanation of collecting money for the employer was credible. Therefore, the Tribunal directed the AO to delete the additions, allowing the appeal partially.

Issue 5 - Addition Related to Cheque Deposits:
The appeal also challenged the addition related to cheque deposits in banks. This issue was addressed along with the bank deposits addition issue, where the Tribunal directed the AO to delete the additions, partially allowing the appeal.

In conclusion, the Tribunal dismissed some appeal grounds while partially allowing the appeal concerning the additions related to bank deposits and cheque deposits. The Tribunal emphasized the importance of considering the appellant's explanations and circumstances while making additions to the income.