2024 (4) TMI 134 - AT - Income Tax

Addition u/s. 69A - unexplained cash deposits in the bank account - assessee has mentioned about the receipts of sale consideration as per the sale of agreement in his books of accounts but contention of the Revenue is that the purchase agreement was not signed by the purchaser - HELD THAT - On perusal of the Agreement of Sale, it is clear that the stamp paper is also in the name of the purchaser. Apart from the above, the assessee is engaged in the real estate business. Thus it is apparent that the assessee has received sale consideration of Rs. 30 lakhs as per the agreement of sale and filed the confirmation letter saying that the purchaser has paid the sale consideration to the assessee. Therefore, assessee has properly explained the source of cash deposit to this extent. For loan receipts assessee has availed a loan on 26/9/2016 and withdrawn the same on 29/9/2016. But, the assessee has deposited the said amount on 13/11/2016. The assessee has not properly explained as to why the loan was availed by the assessee and for what purpose he has withdrawn the amount on 29/11/2016 and deposited the same after one and half months. Therefore, the contention of the assessee is not tenable. Assessee has not properly explained the source for the cash deposit. Petty cash in hand for petty expenses and the same was deposited due to demonetization - As considering the assessee s submissions and the assessee s nature of the business and the material available on record, find force in the argument of the assessee and therefore the cash deposit of such amount is treated as explained. Deposit of old currency notes which are kept for petty expenses and obtained the new currency notes from the Bank we find force in the argument of the assessee and therefore the cash deposit hereof is treated as explained. Appeal of the assessee is partly allowed.

Summary

Issues:
The case involves the appeal against the order of the Ld. Commissioner of Income Tax (Appeals) regarding unexplained cash deposits made by the assessee, invoking section 69A of the Income Tax Act, 1961 for the Assessment Year 2017-18.

Facts:
The assessee, an individual, filed his return of income for the AY 2017-18 declaring a total income under 'Short Term Capital Gains' and 'other sources'. The case was selected for Limited Scrutiny to examine cash deposits made during demonetization and agricultural income exemption claim. The Ld. AO treated a cash deposit of Rs. 25,40,000/- as unexplained, resulting in an assessed income of Rs. 30,68,089/-. The assessee appealed, arguing that the cash deposits were proceeds from the sale of real estate sites and supported by agreements and confirmation letters.

Arguments:
The Ld. Authorized Representative contended that the cash deposits were sale consideration for real estate transactions, with supporting documentation. The Ld. Departmental Representative argued that the source of cash deposits was not adequately explained, emphasizing the absence of the purchaser's signature on the sale agreement.

Judgment:
The Tribunal found that the assessee had adequately explained the source of Rs. 21,50,000/- as sale consideration from real estate transactions, directing deletion of this amount from the addition. However, the Tribunal sustained the addition of Rs. 2,60,000/- as unexplained, as the source of a loan withdrawn and redeposited was not satisfactorily explained. Cash deposits of Rs. 90,000/- and Rs. 40,000/- were deemed explained, considering the nature of the business and the purpose of the transactions. Consequently, the appeal was partly allowed, and the addition of Rs. 2,60,000/- was upheld as unexplained cash deposits.

Conclusion:
The Tribunal partially allowed the appeal, deleting the addition of Rs. 21,50,000/- while upholding the addition of Rs. 2,60,000/- as unexplained cash deposits, based on the explanations provided by the assessee and the nature of the transactions.