2024 (6) TMI 1300 - HC - Income Tax

Addition u/s 68 - Unexplained cash deposit in bank account - assessee did not have sufficient cash balance and there was no conclusive proof as to how such huge amount came into the possession of the assessee in the form of cash - CIT(Appeals) deleted such additions on the grounds that confirmations were signed by authorised signatory, as person who advanced loan was in custody at the time of assessment proceedings and such loan from directors and promoters of the group with their PAN number, details of assessment etc. were with AO himself and such loan was accepted through cheques and in earlier years such parties had also given loan to the assessee also upheld by ITAT - HELD THAT - In view of above concurrent findings of fact arrived at by CIT(Appeals) and Tribunal, this appeal stands dismissed as no question of law much-less any substantial question of law arises from the impugned order passed by the Tribunal. Decided in favour of assessee.

Summary

Issues involved:
1. Addition of Rs. 13,85,000 on account of unexplained cash deposit in a cooperative bank.
2. Addition of Rs. 3,21,07,775 under section 68 of the Income Tax Act for unexplained loans.

Analysis:

Issue 1: Addition of Rs. 13,85,000 on account of unexplained cash deposit
The Assessing Officer added Rs. 13,85,000 as unexplained cash deposit in a cooperative bank due to insufficient cash balance and lack of evidence on how such a significant amount was acquired. However, the CIT(Appeals) reviewed the audited cash book and reconciliation statement provided by the assessee, concluding that the cash was accounted for in the business transactions. The CIT(Appeals) highlighted that in normal business operations, cash withdrawals from the bank are common to cover daily or specific expenses, and surplus cash is deposited back. The Tribunal upheld the CIT(Appeals) findings, emphasizing that the cash deposits were duly recorded in the cash book and bank accounts, thus dismissing the appeal.

Issue 2: Addition of Rs. 3,21,07,775 under section 68 for unexplained loans
The Assessing Officer made the addition under section 68 as the loan confirmations lacked the signature of the loan providers, raising doubts about their creditworthiness. However, the CIT(Appeals) overturned this decision, noting that the confirmations were signed by authorized representatives, and the loan providers' details were available with the Assessing Officer. The loans were accepted through cheques, and the parties had previously lent money to the assessee. The Tribunal upheld the CIT(Appeals) ruling, emphasizing the lack of justification for the addition under section 68. The appeal was dismissed based on the consistent factual findings of the CIT(Appeals) and Tribunal, as no substantial legal questions arose from the Tribunal's order.