2022 (11) TMI 819 - AT - Income Tax

Cash deposit made in the bank account - assessee could not explain the source of cash deposits, AO added the entire amount to the income of the assessee by invoking the provision of section 69 - HELD THAT - After verifying the documentary evidences including letter of confirmation of M/s. Sheela Credit Leasing Ltd. the Bench had given a categorical finding that assessee s claim that it has repaid an amount of Rs. 8,40,000/- out of the total advance of Rs. 15,00,000/- received from M/s. Sheella Credit Leasing Ltd. towards sale of the property was found to be correct. Irrespective of the fact whether the assessee had enough documentary evidences to prove the ownership of the property, fact remains that assessee s claim that he has received advance of Rs. 15,00,000/- from M/s. Sheela Credit Leasing Ltd. on the basis of agreement to sell is established on record through proper documentary evidence. Therefore, the source of cash deposited in the bank account stands explained. Accordingly, delete the addition sustained by Commissioner (Appeals). Appeal of the assessee is allowed.

Summary

Issues:
1. Addition of cash deposit in bank account.
2. Source of cash deposits.
3. Validity of documentary evidence.
4. Repayment of advance received.

Analysis:
1. The dispute in the appeal revolves around the addition of Rs. 10,37,260 representing cash deposits made in the bank account, which was sustained by the Commissioner (Appeals) for the assessment year 2006-07.

2. Initially, the Assessing Officer added the entire amount of Rs. 17,93,050 to the income of the assessee under section 69 of the Act due to unexplained cash deposits. However, during the appeal process, the Commissioner (Appeals) found that the total cash deposits were Rs. 17,23,050 and deleted the excess addition made by the Assessing Officer. The Commissioner partly accepted the assessee's contention that part of the deposits were from business receipts, granting further relief of Rs. 6,84,790 but confirmed the addition of Rs. 10,37,260.

3. The assessee presented additional evidence before the Commissioner (Appeals) to prove the source of cash deposits, claiming to have received an advance from M/s. Sheela Credit & Leasing Ltd. for the sale of a property. The Tribunal initially rejected this claim, stating it was a sham agreement. However, upon reviewing further evidence, including a confirmation letter from M/s. Sheela Credit & Leasing Ltd., the Tribunal found that the assessee had repaid Rs. 8,40,000 out of the total advance of Rs. 15,00,000, establishing the source of the cash deposits.

4. The Tribunal concluded that the documentary evidence, including the confirmation letter from M/s. Sheela Credit & Leasing Ltd., supported the assessee's claim of receiving an advance for the property sale, and subsequently, the repayment made. As a result, the Tribunal deleted the addition of Rs. 10,37,260 sustained by the Commissioner (Appeals), allowing the appeal of the assessee.

This detailed analysis of the judgment highlights the progression of the case, the evaluation of evidence, and the final decision reached by the Tribunal in favor of the assessee based on the validity of the documentary evidence provided.