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2024 (7) TMI 137 - AT - Income TaxUnexplained Cash Deposits - Assessee had made a large number of cash deposits in the various bank accounts held by the assessee on various dates - CIT(A) restricted the addition to only Rs. 9,56,400/- by holding that the assessee has been able to prove the identity, creditworthiness and genuineness of the balance gifts and source of cash deposit was out of agreement for sale of agricultural land, which was placed before the assessing officer, during the course of assessment proceedings - HELD THAT - CIT(A) has noted specifically that agreement to sale of land was furnished before the assessing officer during the course of assessment proceedings, clearly this fact is not coming either from the contents of the assessment order and neither from the assessment records placed before us. The assessee has not been able to conclusively proof that copy of agreement to sale of land was furnished before the assessing officer and further, the assessee has also not furnished copy of bank statement of the donors to establish that the source of such gifts made by them to the assessee was sourced out of agreement to sale. Accordingly, in our considered view, in view of the apparent contradiction between the findings of the assessing officer and ld. CIT(A), in the interest of justice, the matter is restored to the file of assessing officer to confirm whether the donors had entered into agreement of sale in respect of certain immovable property and also to examine the copy of bank statement of the donors to confirm whether any amounts were received by the donors pursuant to such agreement of sale , which formed the source of such amounts being given as gift to the assessee. As assessee has not been able to establish the creditworthiness of the donors and in our considered view, necessary verification needs to be carried out to ascertain whether the donors had the capacity to make the aforesaid gift to the assessee. Ground No.1 of Departments appeal is allowed for statistical purposes. Addition on account of Loan Receipts - AO held that the deposit represents the unaccounted income of the assessee - CIT(A), while allowing the appeal of the assessee has held that the assessee has submitted PAN, Address, Bank statement and confirmation of both the parties from whom the short term loans were taken - HELD THAT - There is a clear contradiction between the findings of the assessing officer in the assessment order and findings of the Ld. CIT(A) in the appellate order. While in the assessment order, the assessing officer has observed that the assessee has failed to furnish confirmation of the parties and the assessee has not furnished any documentary evidence to show when the loans were taken etc, in the appellate order, Ld. CIT(A) has held that the assessee has furnished all the documentary evidences, including confirmation of the parties and accordingly, established the genuineness and creditworthiness of the parties - the matter is being restored to the file of assessing officer to carry out necessary verification regarding the identity, creditworthiness and genuineness of the transaction. Ground No.2 of Departments appeal is allowed for statistical purposes. Unexplained Unsecured Loans - assessee has not been able to establish the genuineness of the transaction as the confirmation of the parties was also not furnished by the assessee - as per CIT(A) loans stand explained by the appellant, the Assessing Officer is directed to delete the entire additions - HELD THAT - There is an apparent contradiction between the findings of the assessing officer and the Ld. CIT(A). While the assessing officer has observed that the assessee has failed to file confirmation of the parties as well as the copy of the bank statement of the respective parties, whereas the Ld. CIT(A) has allowed relief to the assessee by observing that the assessee has filed copies of confirmation and bank statement of the respective parties and accordingly has been able to establish the identity and creditworthiness of these parties. Accordingly,matter is restored to the file of the assessing officer to carry out the necessary verification as to whether the copy of confirmation of the parties and the bank statement of the parties have been furnished by the assessee to establish their creditworthiness. Ground No. 3 of the Department s appeal is allowed for statistical purposes. Disallowance of interest paid to various Lenders U/s 40(a)(ia) - Since this ground is connected with ground no. 3, which has been restored to the file of assessing officer for carrying out necessary verification, accordingly, Ground no. 4 is restored to the file of assessing officer as well. Unexplained Investment in Mutual Funds - during the course of assessment proceedings, the assessing officer observed that the assessee is not in a position to give details of mutual funds transactions and source thereof - As per CIT(A) entire additions are made without any evidence in possession of A.O. or making any enquiry about the correctness of the information about the unrecorded investments by the appellant, the addition cannot be sustained - HELD THAT - Assessee has furnished a chart in support of investments made by the assessee in various mutual funds, during the impugned year under consideration - the contents of the chart and the details of investments made by the assessee as coming in the chart/table furnished by the assessee is clearly at variance with the details of investments in mutual funds noted by the assessing officer during the course of assessment proceedings. We observe that at several places, there is a clear mismatch between the date of transaction as coming from the assessment order and the table furnished by the assessee. Accordingly, in the interest of justice, the issue is being restored to the file of assessing officer for carrying out the necessary verification. Ground No. 5 of the Department s appeal is allowed for statistical purposes. Levy of penalty u/s. 271(1)(c) in respect of cash deposits - HELD THAT - As we have restored this issue to the file of assessing officer for carrying out the necessary verification, accordingly, the appeal filed by the assessee in respect of confirmation of penalty U/s 271(1)(c) of the Act is also restored to the file of assessing officer.
Issues Involved:
1. Unexplained Cash Deposits 2. Deletion of Addition on Account of Loan Receipts 3. Deletion of Addition on Account of Unexplained Unsecured Loans 4. Disallowance of Interest Paid to Various Lenders U/s 40(a)(ia) 5. Unexplained Investment in Mutual Funds 6. Penalty U/s 271(1)(c) for Cash Deposits Detailed Analysis: Issue 1: Unexplained Cash Deposits - The assessing officer observed large cash deposits in the assessee's various bank accounts, including one in the name of the assessee's wife. The assessee claimed these deposits were gifts from his father and brother-in-law, but provided no substantial evidence to support the donors' capacity to give such gifts. Consequently, Rs. 41,56,400/- was added as undisclosed income. - The Ld. CIT(A) restricted the addition to Rs. 9,56,400/-, accepting the gifts as genuine based on agreements for the sale of agricultural land by the donors, which were allegedly presented to the assessing officer. - The Tribunal found contradictions between the assessing officer's and Ld. CIT(A)'s findings regarding the submission of the sale agreements. Therefore, the matter was restored to the assessing officer for verification of the donors' capacity and the genuineness of the transactions. Issue 2: Deletion of Addition on Account of Loan Receipts - The assessing officer added Rs. 10,32,620/- as unaccounted income, noting that the assessee failed to provide confirmations or evidence of loans taken from two individuals. - The Ld. CIT(A) deleted the addition, stating that the assessee had submitted PAN, address, bank statements, and confirmations for the loans. - The Tribunal noted an apparent contradiction between the assessing officer and Ld. CIT(A)'s findings. The matter was restored to the assessing officer to verify the identity, creditworthiness, and genuineness of the transactions. Issue 3: Deletion of Addition on Account of Unexplained Unsecured Loans - The assessing officer added Rs. 71,34,329/- as unexplained unsecured loans, stating the assessee failed to establish the creditworthiness and genuineness of the transactions. - The Ld. CIT(A) deleted the addition, noting that the loans were received by account payee cheques, interest was paid, and confirmations and bank statements were submitted. - The Tribunal found contradictions between the assessing officer's and Ld. CIT(A)'s findings regarding the submission of confirmations and bank statements. The matter was restored to the assessing officer for necessary verification. Issue 4: Disallowance of Interest Paid to Various Lenders U/s 40(a)(ia) - This issue is connected to the unexplained unsecured loans. Since the matter of unsecured loans was restored to the assessing officer, this issue was also restored for necessary verification. Issue 5: Unexplained Investment in Mutual Funds - The assessing officer added Rs. 36,00,000/- as unexplained investments, noting discrepancies in the details provided by the assessee. - The Ld. CIT(A) deleted the addition, stating that the assessee provided mutual fund statements and that the assessing officer did not conduct further inquiries. - The Tribunal found discrepancies between the details provided by the assessee and those noted by the assessing officer. The matter was restored to the assessing officer for verification of the investments in mutual funds. Issue 6: Penalty U/s 271(1)(c) for Cash Deposits - The Ld. CIT(A) confirmed the penalty of Rs. 2,95,585/- levied by the assessing officer for unexplained cash deposits of Rs. 9,56,500/-. - Since the issue of unexplained cash deposits was restored to the assessing officer, the penalty issue was also restored for necessary verification. Conclusion: The Tribunal restored all issues to the assessing officer for necessary verification due to apparent contradictions between the findings of the assessing officer and Ld. CIT(A). The appeals were allowed for statistical purposes.
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