2022 (11) TMI 728 - AT - Income Tax

Unexplanied cash deposits - undisclosed income - HELD THAT - It is pertinent to note that the assessee has only submitted before the authorities that the assessee made withdrawal of unsecured loan lying in the company Excel Health Care Pvt. Ltd. but the assessee never explained as to the ledger of loan given or taken alongwith rate of interest charge/paid alongwith details TDS deducted and documentary evidences. The assessee did not explain the relationship of the persons such as friends and relatives while deducting loan which was deposited in Axis Bank. In fact, M/s. Excel Health Care Pvt. Ltd. were also asked the details but it clearly stated that no interest has been paid to the assessee in F.Y. 2007-08 and company did not made any transaction with the assessee in cash except the transaction entered into F.Y. 2007-08. Thus, from the perusal of the records it can be seen that the assessee has not given the evidence related to cash deposits before the AO as well as before the CIT(A) and the explanation by the assessee during the assessment proceedings as well as during the appellate proceedings were inadequate. The ledger account of Excel Health Care Pvt. Ltd. is inadequate to show as to why the cash deposits have been made by the assessee. Hence, the appeal of the assessee is dismissed.

Summary

Issues:
1. Addition of cash deposits as unaccounted income for A.Y. 2008-09
2. Consideration of evidence by Ld. CIT(A)
3. Excessive addition of cash deposits
4. Appeal against assessment order

Analysis:
1. The appeal pertains to the addition of Rs. 16,63,000 as unaccounted income due to cash deposits made by the assessee. The Assessing Officer re-opened the case based on cash deposits in the Saving Bank Account, leading to the addition in question. The assessee failed to comply with the notice under Section 148, and the Assessing Officer deemed the cash deposits as undisclosed income.

2. The Ld. A.R. argued that the cash deposits were from unsecured loans and salary income, supported by documents like audited balance sheets and salary certificates. However, the Assessing Officer did not conduct independent verification, relying on assumptions. The CIT(A) did not consider the remand report or the explanations provided by the assessee, leading to the dismissal of the appeal.

3. The Ld. A.R. further contended that the cash deposits were legitimate, originating from the unsecured loan and sale proceeds, which were adequately explained with evidence. On the other hand, the Ld. D.R. disputed the lack of evidence supporting the unsecured loan claim and highlighted the active account in Axis Bank without sufficient proof of the loan source.

4. The final judgment emphasized the inadequacy of the evidence presented by the assessee regarding the cash deposits. The absence of detailed explanations, ledger accounts, interest rates, and relationship details with lenders led to the dismissal of the appeal. The court found the explanations during assessment and appellate proceedings insufficient, ultimately upholding the addition of unaccounted income.

In conclusion, the appeal challenging the addition of cash deposits as unaccounted income for A.Y. 2008-09 was dismissed due to the lack of substantial evidence and incomplete explanations provided by the assessee, leading to the affirmation of the assessment order.