2024 (6) TMI 514 - AT - Income Tax

Deemed income u/s 69A - cash deposits treated as unexplained - assessee failed to discharge the onus during the assessment proceedings as mentioned in the assessment order and the assessee has not submitted any convincing argument during the appellate proceedings - assessee claimed during the assessment proceedings that she made advances to various persons interest free loans and that borrowers repaid the loan amounts and the same were deposited in the bank account of the assessee - HELD THAT - When a person gives loans to other persons and the amounts are high whether it is interest free or with interest, the creditor certainly keeps records when the loans were given. But here, no such evidences were furnished by the assessee. No acknowledgment regarding the receipt of loans by the borrowers were obtained by the assessee when loans were given to various persons. It is after the initiation of assessment proceedings affidavits from the borrowers are furnished during the assessment proceedings. Therefore, the claim of the assessee that she had given interest free loans to various persons and they have repaid that loan amounts are not tenable. Accordingly, the observations of the ld. AO and of the ld. CIT(A) on the issue of repayment of the interest free loans ought to be upheld and we decide this issue of recovery of interest free loans to the assessee is against the assessee. Assessee sold a house property on vide deed executed on 30-11-2011 in favour of one P. Balaji for a consideration of Rs. 18,00,000/- . It is our considered opinion that the ld. CIT(A) ought to accept the claim of the assessee that the assessee sold a house property for a consideration of Rs. 18,00,000/- vide registered instrument and there is reasonable possibility that the said sale consideration amount may had deposited in the bank account by the assessee. Therefore, there is credible evidence that the assessee sold a house property for a consideration of Rs. 18,00,000/- under a registered sale deed, the assessee has proved her claim that Rs. 18,00,000/- was deposited in the bank account by the assessee. Accordingly, we delete the addition of Rs. 18,00,000/- to the total income of the assessee. Claim of the assessee that she sold jewellery for Rs. 5,25,000/- and that amount was also deposited in the bank account is not tenable as no evidence regarding the selling of jewellery was furnished before the lower authorities. No claim without any supporting evidence thereon can be accepted. Accordingly, we reject the claim of the assessee that she sold jeweler for an amount of Rs. 5,00,000/- and deposited that amount by her into her bank account. Thus, we decide this issue of selling of jewellery against the assessee. To sum up, out of total addition the assessee succeeded in proving cash deposit of Rs. 18,00,000/- to her bank account from the selling of her house property. Accordingly, we delete addition partly and remaining amount of cash deposits assessee failed to furnish acceptable evidence. Hence ground partly allowed.

Issues Involved:
The issues involved in this judgment are:
1. Validity of Notice u/s 148 and assessment proceedings.
2. Treatment of deemed income u/s 69A.
3. Levying of interest u/s 234 and 234B without direction.
4. Right to adduce additional or alternate grounds.
5. Request to set aside assessment order or delete additions.

Issue 1: Validity of Notice u/s 148 and assessment proceedings:
The appeal challenged the assessment order u/s 147 of the Act, citing various reasons such as incorrect notice issuance, lack of reasons for notice u/s 148, and improper timing of notice. The appellant also contested the treatment of the return as invalid and subsequent assessment. The Tribunal noted the cash deposits made by the assessee and the lack of supporting evidence for claimed sources of income. The Tribunal upheld the addition of unexplained cash deposits as per section 69A due to insufficient evidence provided by the assessee.

Issue 2: Treatment of deemed income u/s 69A:
The appellant contested the treatment of Rs. 42,90,000/- as deemed income u/s 69A, which was upheld by the CIT(A). The Tribunal observed that the appellant failed to provide convincing arguments or evidence during the assessment and appellate proceedings, leading to the affirmation of the addition by the assessing officer.

Issue 3: Levying of interest u/s 234 and 234B without direction:
The appellant objected to the levying of interest u/s 234 and 234B without specific direction in the assessment order. However, the Tribunal did not find merit in this objection and proceeded to adjudicate the appeal on its merits.

Issue 4: Right to adduce additional or alternate grounds:
The appellant reserved the right to adduce any additional or alternate grounds during the proceedings, indicating a request for flexibility in presenting arguments or evidence.

Issue 5: Request to set aside assessment order or delete additions:
The appellant prayed for setting aside the assessment order or deleting the addition of Rs. 42,90,000/- and the interest levied u/s 234. The Tribunal partially allowed the appeal, deleting the addition of Rs. 18,00,000/- related to the sale of a house property but upholding the addition of Rs. 24,90,000/- due to lack of acceptable evidence provided by the appellant.

This judgment highlights the importance of providing substantial evidence to support claims during assessment proceedings and the consequences of failing to do so under relevant sections of the Income Tax Act.

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