2004 (7) TMI 291 - AT - Income Tax

Summary

Issues:
- Treatment of deposit as unexplained investment

Analysis:
The appeal before the Appellate Tribunal ITAT Chandigarh-A concerned the treatment of a deposit of Rs. 50,000 as unexplained investment by the assessing officer. The assessee explained that the amount was deposited from a maturity deposit of an earlier fixed deposit receipt (FDR) and provided a cash flow statement to support the claim. However, the assessing officer did not find the explanation satisfactory as the amount was not reflected in the bank account, and efforts to verify the cash deposit with the company were inconclusive.

Upon appeal to the CIT(A), the assessee reiterated that the amount was kept at home for personal welfare and medical purposes due to her age and family circumstances. The CIT(A) upheld the assessing officer's decision, noting the lack of a convincing explanation for keeping the amount at home while maintaining a bank account.

During the Tribunal proceedings, the assessee's counsel argued that there was no prohibition on keeping cash at home and reiterated that the deposit was made from the earlier FDR. The Departmental Representative supported the lower authorities' decisions, emphasizing the lack of evidence regarding the source of the deposit and the inconsistency with the company's repayment practices.

After considering the submissions and evidence, the Tribunal found that the assessee failed to adequately explain the source of the investment. The Tribunal noted that the company typically made repayments by cheque, casting doubt on the claim that the amount was kept at home for a year before being redeposited. Referring to relevant case laws, the Tribunal emphasized the discretion of the assessing officer to treat unexplained investments as income when explanations are unsatisfactory.

Ultimately, the Tribunal upheld the decisions of the lower authorities, concluding that the assessee's explanation was not satisfactory, and the addition on account of unexplained investment was justified. The Tribunal declined to interfere with the CIT(A)'s finding, resulting in the dismissal of the assessee's appeal.