2013 (8) TMI 179 - AT - Income Tax

Unexplained cash credit - CIT(A) deleted the addition - Held that - CIT(A) has correctly appreciated the facts of the case as AO made additions merely on certain surmises and apprehensions. The AO has ignored the entries which were made in the cash book maintained by the assessee. Rather, he has proceeded on the premise that it was not normal for the assessee to redeposit the cash which was earlier withdrawn from the same bank without giving any reason. It is not the case of the Revenue that the cash, which was time and again, withdrawn by the assessee from the bank was otherwise utilized for some other purposes, therefore, the cash was not available with the assessee. Thus it was not justified on the part of the AO to presume that the cash, which was withdrawn earlier was not the same cash, which was re- deposited by the assessee. Against revenue. Unexplained investment - CIT(A) deleted the addition - Held that - No cogent or satisfactory reason has been given by the learned CIT(A) while granting relief to the assessee. In fact there was an adverse noting by the AO that the capital introduced in the capital account of the assessee in the books of the firm, source of which was not explained by the assessee, therefore, the impugned addition was made. As a part of the deposits belonged to the firm, then it is expected from the assessee to place on record the final outcome of those amounts in the hands of the firm, whether duly disclosed or not. It is also expected from the assessee to explain to the AO the availability of cash of Rs.1,15,000/- stated to be deposited out of the personal cash. Because of these two reasons, restore this ground back to the stage of the AO to be decided de novo - in favour of revenue for statistical purpose. Profit from sale of Terrace - Assessment on protective basis - CIT(A) deleted the addition - Held that - CIT(A) has judiciously appreciated all the evidences, through which it was established that the amount in question was in fact belonged to the firm, M/s. Amardeep Associates. It could be possible that while completing the assessment of the assessee, the return of the firm was not made available to the AO, but established factual position was that a return of income was filed, and in the return the assessee has furnished the details of the sale of the terrace and also furnished the connected accounts. Presumably, that was the reason that the AO has also not made a substantive addition in the hands of the assessee, merely to safeguard the interest of the Revenue, it might have been thought, proper to assess the impugned amount only on protective basis. Thus CIT(A) has rightly deleted the addition. Against revenue.

Summary

Issues Involved:
1. Deletion of addition on account of unexplained cash credit.
2. Deletion of addition on account of unexplained investment.
3. Deletion of addition on account of profit from sale of terrace on a protective basis.

Issue-wise Detailed Analysis:

1. Deletion of Addition on Account of Unexplained Cash Credit:

The first issue pertains to the deletion of an addition of Rs. 9,97,900/- made by the Assessing Officer (AO) on account of unexplained cash credit. The AO observed several cash deposits in the assessee's UCO Bank account and questioned the source of these deposits. The assessee explained that the cash deposits were re-deposits of cash withdrawn from the same bank on various dates and also included an opening cash balance of Rs. 2,50,000/- as on 1.4.2008. However, the AO was not convinced and added the amount as unexplained cash deposits.

Upon appeal, the CIT(A) accepted the assessee's explanation, noting that the cash flow prepared by the assessee showed sufficient cash balance on the dates of deposits. The CIT(A) criticized the AO for not appreciating the cash book entries and for making assumptions without credible evidence. The Tribunal upheld the CIT(A)'s decision, stating that the AO's addition was based on surmises and that the cash book maintained by the assessee was a self-explanatory evidence supporting the assessee's claims.

2. Deletion of Addition on Account of Unexplained Investment:

The second issue involves the deletion of an addition of Rs. 2,65,000/- made by the AO due to unexplained investment in the partnership firm, M/s. Amardeep Associates. The AO noted discrepancies in the capital contribution entries and added the amount as unexplained investment.

The CIT(A) deleted the addition after the assessee explained that part of the capital contribution was mistakenly credited to the assessee's account instead of another partner's account and that Rs. 1,15,000/- was from personal cash. The Tribunal, however, found the CIT(A)'s reasoning insufficient and remanded the matter back to the AO for a fresh investigation, directing the assessee to provide adequate evidence to support their claims.

3. Deletion of Addition on Account of Profit from Sale of Terrace on a Protective Basis:

The third issue concerns the deletion of an addition of Rs. 16,75,000/- made on a protective basis for profit from the sale of a terrace. The AO added this amount, suspecting that the partnership firm, M/s. Amardeep Associates, did not file a return of income and thus the sale proceeds were not taxed.

The CIT(A) deleted the addition, accepting the assessee's evidence that the terrace was owned by the firm, the sale proceeds were credited to the firm's bank account, and the firm had filed its return of income. The Tribunal upheld the CIT(A)'s decision, noting that the protective addition was unjustified as the firm had indeed filed its return, and the sale proceeds were duly reflected in the firm's accounts.

Additional Judgments:

For the case of Shri Jaydeep Amartlal Patel, the issues were similar:
- The deletion of an addition of Rs. 1,69,900/- on account of unexplained cash credit was dismissed on the same reasoning as above.
- The issue of Rs. 3,20,000/- on account of unexplained investment was remanded back for re-investigation.
- The deletion of an addition of Rs. 16,75,000/- on account of profit from the sale of terrace on a protective basis was upheld.

Conclusion:

Both appeals of the Revenue were partly allowed for statistical purposes, with specific issues remanded back for further investigation and others dismissed based on the CIT(A)'s findings and the Tribunal's agreement with those findings. The order was pronounced in the open court.