2022 (2) TMI 77 - AT - Income Tax

Addition representing cash deposit in bank account - unexplained investment u/s 69 - HELD THAT- Assessee filed certain books of accounts. It is worth mentioning that the assessee filed his return of income by offering income u/s 44AD and contending that no books were maintained. The entries in Cash Book prepared and submitted by the assessee were found by the AO to be incorrect for the detailed reasons given in the assessment order. AR could not improve the case of assessee before the Tribunal and candidly accepted that there was no further evidence. Under these circumstances, addition has been rightly sustained in the first appeal. Addition of unexplained credits - assessee could not justify creditworthiness of the alleged loan purportedly taken from his wife, despite repeated opportunities given to explain the sources of her income - HELD THAT - Having heard the rival submissions in Virtual Court and gone through the relevant material on record, it is seen that the assessee recorded credit of ₹ 19 lakhs in the name of his wife but failed to substantiate creditworthiness of loan creditor before the AO. What to talk of creditworthiness, even no source of income was shown. The position remains the same before the Tribunal as well. Under these circumstances, we are satisfied with the findings of the CIT(A) in sustaining the addition. The impugned order is, ergo, upheld.

Summary

Issues Involved:
1. Addition of ?8,50,000 representing cash deposit in bank account.
2. Addition of ?19 lakhs on account of unexplained credits.

Analysis:

Issue 1: Addition of ?8,50,000 representing cash deposit in bank account
The appeal was against the confirmation of the addition of ?8,50,000 as unexplained investment under section 69 of the Income-tax Act, 1961. The assessee claimed the cash deposit was from business income, but the CIT(A) confirmed the addition. The assessee made a repayment of a loan through a Demand Draft from his bank account and made several cash deposits and transfers. The assessee contended that the ?8,50,000 cash deposit was from business receipts, supported by certain books of accounts. However, the AO found discrepancies in the Cash Book entries provided by the assessee. The Tribunal upheld the addition as the assessee failed to provide further evidence to support the claim, leading to the dismissal of the appeal.

Issue 2: Addition of ?19 lakhs on account of unexplained credits
The appeal also challenged the addition of ?19 lakhs as unexplained credits, purportedly taken as a loan from the assessee's wife. The assessee failed to justify the creditworthiness of the loan creditor or provide the source of income before the AO. The Tribunal noted that the assessee recorded the credit but could not substantiate the creditworthiness or the source of income of the loan creditor. As no evidence was presented even before the Tribunal, the addition was upheld based on the findings of the CIT(A). Consequently, the appeal was dismissed, and the impugned order was upheld in its entirety.

In conclusion, the Tribunal upheld both additions of ?8,50,000 and ?19 lakhs, as the assessee failed to provide sufficient evidence to support the claims made, resulting in the dismissal of the appeal.