2022 (10) TMI 494 - AT - Income Tax

Unexplained cash deposits - HELD THAT - As gone through the Assessment Order and the order of the Commissioner of Income Tax (Appeals) and the arguments of Assessee that these cash withdrawals are the sources of cash deposits, we noted that the Commissioner of Income Tax (Appeals) has categorically given a finding that the Assessee could not substantiate the linkage of the cash withdrawals of that of the cash deposits. Even before us, the Assessee could not substantiate these cash deposits vis- -vis cash withdrawals and hence we confirm the order of the Commissioner of Income Tax (Appeals) on this issue and this issue in the Assessee s appeal is dismissed.

Summary

Issues:
1. Confirmation of agricultural land as capital assets for capital gains under Section 50C of the Income Tax Act.
2. Addition of unexplained cash deposits as unexplained cash credit under Section 68 of the Act.
3. Reopening of assessment under Section 147 of the Income Tax Act.

Issue 1:
The first issue involves the confirmation of agricultural land as capital assets for capital gains under Section 50C of the Income Tax Act. The Assessee contended that the lands were agricultural and hence not liable for capital gains. However, the Commissioner of Income Tax (Appeals) upheld the Assessing Officer's decision, stating that the lands were in a municipality area and no evidence of agricultural operations was provided. The Tribunal reviewed the evidence, including a certificate from the Village Administrative Officer, confirming agricultural use. Additionally, in a similar case involving the Assessee's brother, the Commissioner had accepted the land as agricultural. Considering the evidence and consistent decisions, the Tribunal held in favor of the Assessee, deleting the addition of capital gains.

Issue 2:
The second issue pertains to the addition of unexplained cash deposits as unexplained cash credit under Section 68 of the Act. The Commissioner of Income Tax (Appeals) found that the Assessee failed to substantiate the linkage between cash withdrawals and deposits. The Assessee's argument that the withdrawals were the source of deposits was not supported by relevant documents or accounts. The Commissioner emphasized the Assessee's failure to provide necessary evidence and confirmed the addition. The Tribunal, after considering the arguments and lack of substantiation by the Assessee, upheld the Commissioner's decision, dismissing the issue in the Assessee's appeal for both assessment years.

Issue 3:
The final issue concerns the reopening of assessment under Section 147 of the Income Tax Act. Although this issue was raised, the Assessee's counsel did not present arguments, leading to the issue not being adjudicated. Consequently, the Tribunal did not address this issue in the judgment.

In conclusion, the Tribunal partially allowed both appeals of the Assessee concerning the confirmation of agricultural land as capital assets for capital gains and the addition of unexplained cash deposits. The Tribunal dismissed the issue of reopening assessment as it was not argued by the Assessee's counsel. The judgment was pronounced on 12th October 2022 in Chennai by the Appellate Tribunal ITAT Chennai.