2022 (10) TMI 1130 - AT - Income Tax

TDS u/s 194C - Disallowance u/s 40(a)(ia) - Non deduction of TDS on freight charges - HELD THAT - Appellant was not liable to deduct TDS u/s. 194C(1) for payments made to the outside parties and consequently the disallowance made u/s.40(a)(ia) by the authorities below are deleted - Decided in favour of assessee. Unexplained cash deposits found to be made in the bank account - HELD THAT - At the time of hearing before us, the learned Counsel for the assessee has not filed any details or documents to explain the cash deposits found to be made in the bank account of the assessee with ICICI Bank which was an undisclosed bank account not being reflected in the books of account of the assessee regularly maintained by the assessee. We, therefore, find no infirmity in the impugned order of the learned CIT(A) sustaining the addition made by the AO on account of cash deposits found to be made in the bank account of the assessee to the extent by treating the same as unexplained and upholding the same, we dismiss the ground No.2 of the assessee s appeal. Unexplained unsecured loans - HELD THAT - As found by the learned CIT(A), even the address and PAN of these loan creditors were not furnished by the assessee. The primary onus that lay on the assessee thus was not discharged by him as rightly held by the learned CIT(A). At the time of hearing before us, there is nothing brought on record to establish the identity and capacity of the concerned loan creditors and the genuineness of the relevant loan transactions. We, therefore, find no justifiable reason to interfere with the impugned order of the learned CIT(A) on this issue and upholding the same, we dismiss Ground No.3 of the assessee s appeal. Unexplained investment made by the assessee in gold ornaments - HELD THAT - As observed that the investment made by the assessee in gold ornaments was duly recorded in the books of account of the assessee regularly maintained inasmuch as the same was duly reflected in the block of assets as noted by the authorities below. In our opinion, it therefore cannot be said that the source of the said investment, which was duly recorded in the books of account, had remained unexplained. Moreover, no deduction even on account of depreciation was claimed by the assessee in respect of the investment made in gold ornaments and this being so, we are of the view that no addition can be made on account of gold ornaments even if the details and documents such as bills/vouchers are not produced by the assessee in support of the purchase of gold ornaments. We, therefore, delete the addition made by the Assessing Officer and confirmed by the learned CIT(A) on this issue and allow Ground of the assessee s appeal.

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Disallowance of freight charges under Section 40(a)(ia) of the Income-tax Act, 1961.
3. Addition on account of unexplained cash deposits.
4. Addition on account of unexplained unsecured loans.
5. Addition on account of unexplained investment in gold.

Issue-wise Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal was delayed by 357 days due to the deteriorating health of the assessee's father and financial problems. The Tribunal condoned the delay as the Departmental Representative raised no objection and the reasons provided were deemed sufficient.

2. Disallowance of Freight Charges under Section 40(a)(ia) of the Act:
The Assessing Officer disallowed Rs.2,81,54,400/- for the assessee's failure to deduct tax at source on freight charges. The CIT(A) confirmed this disallowance. However, the Tribunal found that the issue was covered in favor of the assessee by a previous ITAT decision in a similar case involving the assessee's father. The Tribunal noted that there was no evidence to show that the payees had undertaken any risk or that there was a subcontractor relationship. Consequently, the Tribunal deleted the disallowance.

3. Addition on Account of Unexplained Cash Deposits:
The Assessing Officer added Rs.55,33,807/- as unexplained cash deposits. The CIT(A) reduced this to Rs.15,93,081/-, giving relief for deposits in the Kotak Mahindra Bank account but confirming the addition for deposits in the ICICI Bank account, which was not reflected in the books of account. The Tribunal upheld the CIT(A)'s decision, noting that the assessee failed to provide any explanation or documentation for the ICICI Bank account deposits.

4. Addition on Account of Unexplained Unsecured Loans:
The Assessing Officer added Rs.8,55,310/- for unexplained unsecured loans. The CIT(A) reduced this to Rs.3,41,000/-, finding that loans from certain parties were not explained with addresses or PAN details. The Tribunal upheld the CIT(A)'s decision, as the assessee did not discharge the primary onus of proving the identity, capacity, and genuineness of the loan creditors.

5. Addition on Account of Unexplained Investment in Gold:
The Assessing Officer added Rs.31,639/- for unexplained investment in gold ornaments. The CIT(A) confirmed this addition. However, the Tribunal found that the investment was recorded in the books of account and no depreciation was claimed. The Tribunal deleted the addition, stating that the source of the investment was explained and recorded in the books.

Conclusion:
The appeal was partly allowed. The Tribunal deleted the disallowance of freight charges and the addition for unexplained investment in gold, but upheld the additions for unexplained cash deposits in the ICICI Bank account and unexplained unsecured loans from certain creditors.