2022 (6) TMI 1006 - AT - Income Tax

Addition u/s 68 - unexplained deposits in bank account - HELD THAT - After going through the cash book submitted before the Ld.CIT(A), the Ld.CIT(A) has recorded a finding of fact that assessee had sufficient cash withdrawals and deposits are made from the same. The Ld.CIT(A) has found that Rs.50 lakhs was withdrawn on 23-10-2013 which was deposited back on 24/10/2013. The Ld.CIT(A) has found that assessee has discharged his onus of proving the source of deposits made in his bank accounts. During the hearing, the learned DR could not find fault with the reconciliation / cash flow statement filed before us by the assessee which is placed at pages 55 to 68 of the paper book, and we find that the source of money deposited, which has been found fault with by the Assessing Officer, has been fully explained by the assessee. In such a scenario, we do not find any infirmity in the order passed by the Ld.CIT(A); so we confirmed the same and dismiss these grounds of appeal of the Revenue. Unexplained loans - CIT-A deleted the addition - HELD THAT - The assessee had filed the confirmation of the party which also contains the PAN of the lender (AADPV7541E). We also note the bank statement of the lender is found placed wherein we note that the opening balance as on 14/06/2013 is shown to be 1,37,732,277/- and the transaction on 19/06/2013 and 12/07/2013 has been taken note of. The assessing officer has made the addition simply because the assessee failed to produce the lender. Merely because the assessee failed to produce the lender, cannot be the ground for disbelieving the transaction. The Ld.CIT(A), on the aforesaid facts, discussed, has rightly deleted the addition, which does not need any interference from our side. Therefore, we confirm the order of the Ld.CIT(A) and dismiss the grounds raised by the Revenue. Deemed dividend addition u/s 2(22)(e) - CIT-A deleted the addition - HELD THAT - In the light of the aforesaid CBDT circular which was binding on the Assessing Officer as well as the department and on our factual finding that the transaction was purely commercial in nature does not attract section 2(22)(e) of the Act, therefore, we do not find any infirmity in the action of the Ld. CIT(A) in deleting the addition. Ground of the Revenue stands dismissed.

Summary

Issues Involved:
1. Deletion of addition of Rs.88,88,000/- as unexplained cash deposit.
2. Deletion of addition of Rs.50 lakhs under section 68 of the Income-tax Act.
3. Deletion of addition of Rs.29,94,481/- under section 2(22)(e) of the Income-tax Act as deemed dividend.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs.88,88,000/- as Unexplained Cash Deposit:
The Assessing Officer (AO) noticed large cash deposits in the assessee's bank accounts and deemed Rs.88,88,000/- as unexplained, adding it under section 68 of the Income-tax Act. The Ld.CIT(A) deleted this addition, observing that the assessee had provided sufficient evidence through cash and bank books, showing that the deposits were made from prior cash withdrawals. The AO failed to substantiate his claim that the deposits were separate from the withdrawals. The Tribunal upheld the Ld.CIT(A)'s decision, noting that the assessee had adequately explained the source of the deposits, and the AO's addition was based on assumptions rather than evidence.

2. Deletion of Addition of Rs.50 Lakhs under Section 68:
The AO added Rs.50 lakhs as unexplained under section 68, questioning the genuineness of a loan from Mr. Abdulkadar Vadgama, as the assessee only provided a loan confirmation without further documentation. The Ld.CIT(A) deleted the addition, noting that the assessee had provided the lender's complete details, including PAN and address. The Ld.CIT(A) emphasized that the initial burden of proving the identity, genuineness, and creditworthiness of the creditor was met by the assessee. The Tribunal confirmed this, stating that the AO's addition was based solely on the non-production of the lender, which was insufficient grounds for disbelieving the transaction.

3. Deletion of Addition of Rs.29,94,481/- under Section 2(22)(e) as Deemed Dividend:
The AO added Rs.29,94,481/- as deemed dividend under section 2(22)(e), asserting that the assessee, a director holding significant shares in M/s Hicons Developers Pvt Ltd (HDPL), received a loan from the company. The Ld.CIT(A) deleted this addition, clarifying that the transaction was a commercial one related to the purchase of a flat, not a loan. The Tribunal agreed, noting that the transaction was reflected as an advance for the sale of flats in HDPL's accounts and was commercial in nature. The Tribunal also referenced CBDT Circular No.19 of 2017, which excludes commercial transactions from the ambit of section 2(22)(e).

Conclusion:
The Tribunal dismissed the Revenue's appeal, confirming the Ld.CIT(A)'s deletions of the additions under sections 68 and 2(22)(e), as the assessee had adequately substantiated the transactions, and the AO's additions were based on assumptions without sufficient evidence.