2022 (12) TMI 1304 - AT - Income Tax

Unexplained source of deposits - whether amount routed through bank account and registries existed in the name of M/s Vardhman Industrial Estate and its concern, proves the genuineness of transactions? - CIT (Appeals) deleted these additions based on the evidences furnished by the assessee in the form of confirmation from M/s. Vardhman Industrial Estate and its sister concern that they have paid the assessee these moneys - HELD THAT - These moneys are routed through banking channels and they are verifiable. The finding of the ld. CIT (Appeals) that the documents show that lands were registered in the name of M/s. Vardhman Industrial Estate where the assessee acted only as an agent in facilitating the purchase of land from farmers on behalf of M/s. Vardhman Industrial Estate. As observed that the ld. CIT (Appeals) deleted these additions based on these evidences where major portion of the lands were registered in the name of M/s. Vardhman Industrial Estate and a small portion to its sister concern. Addition being cash deposits into bank account - CIT (Appeals) was of the view that it would be unreasonable to add the entire amount as these proceeds emanate from the business of the assessee which is on-going. The ld. CIT (Appeals) also observed that assessee had opening balance of Rs.24,05,867/-. Therefore, the ld. CIT (Appeals) considered the peak credit of this account as undisclosed income of the assessee and worked out the peak credit at Rs.21,59,522/-. CIT (Appeals) on appreciation of evidences furnished by the assessee deleted the additions of Rs.76,50,000/- and Rs.10,50,000/- and restricted the peak credit in respect of cash deposits into bank account at Rs.21,59,522/- which, in our opinion, is justified. Therefore, we see no good reason to interfere with the findings of the ld. CIT (Appeals). Thus, we sustain the order of the ld. CIT (Appeals) and reject the grounds raised by the Revenue.

Summary

Issues:
Appeal against order of CIT (Appeals) for assessment year 2009-10.

Analysis:

1. Cash Deposits and Undisclosed Income:
The Assessing Officer treated cash deposits of Rs.1,04,99,400/- as undisclosed income from other sources. The assessee explained that the deposits were from previous withdrawals and capital contributed by AOP members. The CIT (Appeals) considered the evidence provided by the assessee, including cash flow statements and bank statements, and deleted the additions made by the Assessing Officer. The CIT (Appeals) observed regular deposits and withdrawals in the bank account, concluding that the peak credit of Rs.21,59,522/- should be considered as undisclosed income, which was upheld by the Tribunal.

2. Income from M/s. Vardhman Industrial Estate:
The Assessing Officer treated Rs.76,50,000/- received from M/s. Vardhman Industrial Estate as income from other sources, as the assessee failed to provide evidence of receiving the amount or registering any land. However, the CIT (Appeals) considered the evidence presented by the assessee, including confirmations from M/s. Vardhman Industrial Estate, and documents showing land transfers. The CIT (Appeals) deleted the additions, stating that the assessee acted as a commission agent for M/s. Vardhman Industrial Estate, facilitating land purchases. The Tribunal upheld this decision, noting that the evidence supported the assessee's claims.

3. Judicial Decision:
The Tribunal upheld the CIT (Appeals)'s decision to delete the additions made by the Assessing Officer regarding cash deposits and income from M/s. Vardhman Industrial Estate. The Tribunal found the evidence provided by the assessee, including confirmations and documents, to be credible and sufficient to support the assessee's explanations. The Tribunal agreed with the CIT (Appeals) that the additions should be deleted based on the evidentiary support presented. Therefore, the appeal of the Revenue was dismissed, and the order of the CIT (Appeals) was upheld.