2023 (2) TMI 115 - AT - Income Tax

Unexplained investment u/s 69 - addition received as On Money on sale of agricultural land, shown as such in ITR filed and deposited into bank accounts - HELD THAT - Sources and genuineness of the cash deposit in the bank account of the assessee remained unverified and unsubstantiated. Even before us the assessee merely reiterated the submissions placed before the subordinate authorities and could not place on record any satisfactory reasons regarding such huge cash deposits which were over and above the sale consideration amounts received in cheques. There are plethora of judicial decisions, where the assessee has not been able to explain a particular source of cash, in such circumstances, the assessee has been held liable for tax regarding those unexplained sources of income. In the case Dr. Prakash Tiwari 1983 (4) TMI 13 - MADHYA PRADESH HIGH COURT held, where the assessee could not give satisfactory explanation regarding sources of amount then such amount was held assessable as unexplained investment u/s 69 of the Act. In the case of Himmatram Laxminarain 1985 (8) TMI 31 - PUNJAB AND HARYANA HIGH COURT held that in a case where it was found that a secret business was conducted wherein the assessee has invested a certain amount and it was held that such amount was assessable as income of the assessee u/s 69 of the Act. Hon ble Patna High court in the case of Deo Narayan Bhadani 1986 (4) TMI 28 - PATNA HIGH COURT wherein certain cash deposits were made in a bank by the karta of the assessee-HUF. The explanation that the source of such deposits was withdrawals from a bigger HUF was found to be false. There was no evidence that the karta had any source of income as an individual. It was held that the amount of such deposits were assessable as income of the assessee-HUF. The Hon ble Bombay High Court in the case of Smt. Vasantibai N. Shah 1994 (11) TMI 87 - BOMBAY HIGH COURT held that the Tribunal was right in law in sustaining the addition made by the A.O as the assessee s undisclosed income invested in the purchase of jackpot winning ticket - In the case of Bhawarlal C. Bafna 2002 (6) TMI 40 - MADRAS HIGH COURT where the assessee has failed to explain the cash balances in spite of several opportunities, the addition was held justifiable. Income-tax legislation is a welfare legislation and not a penal legislation as such.The tax collected goes on to build the infrastructure of our Nation and therefore, where the tax planning is acknowledged tax avoidance has to be penalised. When a benefit of doubt is given in favour of an assessee, at the same time, where the assessee tries to conceal his income such act has to be brought in the purview of taxation as per law. In the present case before us admittedly, whatever sale consideration the assessee has received they were received in cheques. But in addition to such receipt the assessee has also deposited cash - assessee never explained the source of such cash deposit in his bank accounts. We do not find any infirmity with the findings of the ld. CIT(A) and the order confirming the addition is upheld. The grounds of appeal of the assessee are dismissed.

Summary

Issues:
1. Addition of Rs. 54,79,500/- as "On Money" on sale of agricultural land
2. Addition of Rs. 54,79,500/- as "Income from Other Sources"
3. Jurisdictional scope of assessment order and change of head of income
4. Application of section 292BB for change of head of income
5. Permission to amend grounds of appeal

Analysis:

Issue 1:
The appellant contested the addition of Rs. 54,79,500/- as "On Money" on the sale of agricultural land, deposited into bank accounts. The ld. CIT(A) upheld the addition, stating that the appellant failed to provide plausible evidence for the cash deposits, as the entire sale proceeds were received via cheques. The appellant's argument that the cash deposits were from the sale of agricultural lands was deemed contradictory, lacking supporting documentation like payment schedules and bank statements. The ld. CIT(A) concluded that the source and genuineness of the cash deposits remained unverifiable and unsubstantiated, justifying the AO's treatment of the amount as income from other sources.

Issue 2:
Regarding the addition of Rs. 54,79,500/- as "Income from Other Sources," the appellant argued that the cash deposits were proceeds from selling agricultural lands, thus exempt from taxation. However, the appellant's failure to provide sufficient evidence, including complete sale deed copies and bank statements, led to the dismissal of this claim. The ld. CIT(A) emphasized the appellant's lack of basic evidences and reliance on irrelevant case laws, ultimately upholding the AO's decision to treat the cash deposits as income from other sources.

Issue 3:
The appellant challenged the ld. CIT(A)'s extension beyond the assessment order's scope by suggesting a different head of income for the addition. The tribunal noted that the appellant received the full sale consideration via cheques but failed to explain the additional cash deposits adequately. Citing judicial precedents, the tribunal affirmed the ld. CIT(A)'s decision, emphasizing the appellant's inability to clarify the source of the cash deposits.

Issue 4:
The appellant questioned the ld. CIT(A)'s application of section 292BB for changing the head of income, arguing that the department never intended to make additions under specific tax provisions. However, the tribunal found the appellant's explanations unsatisfactory, reiterating the necessity of providing essential evidences to support claims. The tribunal upheld the ld. CIT(A)'s decision, emphasizing the appellant's failure to verify the source and genuineness of the cash deposits.

Issue 5:
The appellant sought permission to modify the grounds of appeal during the hearing. However, the tribunal dismissed the appeal, emphasizing the appellant's inability to substantiate the source of the cash deposits, leading to the confirmation of the addition as income from other sources. The tribunal upheld the ld. CIT(A)'s order, highlighting the importance of providing complete and verifiable evidence in tax assessments.

This detailed analysis covers the key issues raised in the judgment, highlighting the arguments presented by the appellant and the decisions rendered by the tribunal.