2023 (1) TMI 528 - AT - Income Tax

Unexplained money u/s 69A - absence of establishing the business activity and non-submission of the purchase/sales bills/invoices etc. - HELD THAT - Since the AO has accepted the profit declared by the assessee u/s 44AD, therefore, the source of cash deposit to the extent of turnover at Rs.44,28,000/- in the Bank A/c is accepted as explained. However, the balance amount of Rs.38,91,058/- is sustained in absence of any proper explanation given by the assessee to explain the source of such cash deposit. The explanation of the learned Counsel for the assessee that part of the amount is from the previous withdrawals from the Bank cannot be accepted. It is also not understood as to why the assessee who is not maintaining any books of account, shall withdraw the money from the Bank, keep it with herself and then again deposit a part of the same in the Bank A/c. Similarly, the amount being the amount received from the son of the assessee cannot be accepted without any evidence and explanation/confirmation from the son. Under these circumstances, we direct the Assessing Officer to delete the amount of Rs.44,28,000/- out of the addition of Rs.83,19,058/- and the balance amount is sustained. The grounds raised by the assessee on this issue are partly allowed. Disallowance of deduction claimed u/s 80C 80DDB for want of evidence - HELD THAT - Undisputedly, the assessee did not file any evidence either before the Assessing Officer or before the learned CIT (A) or even before us for such claim. Under these circumstances, the disallowance made by the Assessing Officer and sustained by the learned CIT (A) is confirmed and the grounds raised by the assessee on these issues are dismissed.

Issues:
1. Delay in filing appeal and condonation application.
2. Treatment of cash deposits as unexplained money under section 69A.
3. Disallowance of deductions claimed under sections 80C and 80DDB.
4. Sustaining of additions by CIT (A) and Assessing Officer.
5. Source of cash deposits and explanation provided by the assessee.
6. Discrepancies in explanations and lack of evidence.
7. Judicial analysis and decision by ITAT Hyderabad.

Delay in Filing Appeal and Condonation Application:
The appeal filed by the assessee was directed against the order of the CIT (A)-7, Hyderabad for A.Y. 2015-16. The delay of 61 days in filing the appeal was condoned after considering the condonation application along with an affidavit filed by the assessee.

Treatment of Cash Deposits as Unexplained Money under Section 69A:
The Assessing Officer treated cash deposits in the bank account as unexplained money under section 69A due to lack of satisfactory explanation and evidence provided by the assessee. The CIT (A) upheld the addition of Rs. 83,19,058 as unexplained money, emphasizing the failure to substantiate the source of cash deposits despite multiple opportunities.

Disallowance of Deductions Claimed under Sections 80C and 80DDB:
The Assessing Officer disallowed deductions claimed under sections 80C and 80DDB totaling Rs. 77,152 due to lack of evidence provided by the assessee. The CIT (A) sustained this disallowance as the assessee failed to substantiate the claims before both authorities.

Sustaining of Additions by CIT (A) and Assessing Officer:
The CIT (A) upheld the additions made by the Assessing Officer, emphasizing the lack of substantiation and evidence provided by the assessee. The total income of the assessee was determined at Rs. 87,04,060, which was significantly higher than the declared income of Rs. 3,07,850.

Source of Cash Deposits and Explanation Provided by the Assessee:
The assessee explained the cash deposits as proceeds from cash sales, withdrawals from the bank account, and an amount received from the son. However, the authorities found the explanations insufficient and lacking proper documentation to support the claims made by the assessee.

Discrepancies in Explanations and Lack of Evidence:
The explanations provided by the assessee regarding the source of cash deposits were found to be inconsistent and unsupported by documentary evidence. The failure to provide necessary documentation and substantiation led to the sustained additions and disallowances by the authorities.

Judicial Analysis and Decision by ITAT Hyderabad:
After considering the arguments from both sides and reviewing the orders of the Assessing Officer and CIT (A), the ITAT Hyderabad partially allowed the appeal. The ITAT accepted the source of cash deposits to the extent of the turnover declared under section 44AD but sustained the remaining unexplained amount. The disallowance of deductions under sections 80C and 80DDB was confirmed due to the lack of evidence provided by the assessee.

The ITAT Hyderabad, in its judgment, analyzed the issues of delay in filing the appeal, treatment of cash deposits, disallowance of deductions, and the explanations provided by the assessee. The decision highlighted the importance of substantiating claims with proper evidence and documentation to support the income and deductions declared. The ITAT partially allowed the appeal, acknowledging the source of cash deposits to some extent but confirming the disallowances due to insufficient evidence presented by the assessee.

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