2013 (11) TMI 526 - HC - Income Tax

Addition u/s 69A of the Income Tax Act for unexplained money - Amount of Rs.22,51,000/- was seen as deposit in the Savings Bank Account of the appellant Held that - In a letter dated 14.12.2007, as reply to the request of the department, the assesseee had only reiterated the earlier deposit stating that the funds were withdrawn from the Savings Bank Account to advance to his brother and when such amounts were returned by his brother, the same were deposited in the account - It is also contended that the funds have also been received from the sister when she was in station. He also sought for time to obtain details of the remittance from Italy. He was granted time upto 27/12/2007, on which date he had given a letter dated 26.12.2007 making a declaration stating that his brother Mr.Thomas K.George had received amounts from his sister in Italy through Western Union Money Transfer which was credited to the Post Office Savings Bank Account of Sri Thomas Geroge and Raji Thomas. The amounts that were received by them from his sister in 2003-04 were used as temporary fund adjustments which got routed in his Savings Bank Account. Assessee did not furnish any proof regarding his claim other than producing a copy of the Post Office Savings Bank Accounts pass book - The assessing Officer found that there was no proof to substantiate such contention. When the amounts in the Savings Bank account of the appellant remained unexplained, the assessing officer was justified in passing the impugned order - This is purely a question of fact which has been found against the petitioner Decided against the Assessee.

Summary

Issues:
Assessment of unexplained cash credit in Savings Bank Account under Section 69A of the Income Tax Act for the assessment year 2005-06.

Analysis:
The appellant, a dealer of Art and Craft paper, filed his return of income declaring total income at Rs.2,19,730 for the assessment year 2005-06. The assessing officer issued a scrutiny notice under Section 143(2) of the Income Tax Act, revealing discrepancies in the computation of total income related to personal elements in expenditure under vehicle maintenance, hire purchase interest on car, and depreciation on car. Additionally, discrepancies were found in the treatment of sundry creditors and a substantial amount deposited in the Savings Bank Account. The assessing officer, relying on Commissioner of Income Tax v. P.Mohnakala judgment, treated the cash credit in the Savings Bank Account as unexplained money under Section 69A and added a disallowance as business income.

The appellant appealed before the Commissioner of Income-tax, who upheld the assessing officer's decision. Subsequently, the appellant filed an appeal before the Tribunal, arguing that the unexplained money was received from a close relative, an NRI, and proper verification should have been conducted with the relative. The Tribunal, however, agreed with the lower authorities' findings. The appellant raised a substantial question of law regarding the addition under Section 69A of the Act on credits received from the appellant's sister.

The High Court noted that the assessing officer found the appellant unable to explain the credit of Rs.22,51,000 in the Savings Bank Account satisfactorily. Despite the appellant's contentions about funds received from Italy and his sister, no substantial proof or cash flow statement was provided. The assessing officer did not find the explanations satisfactory and passed the impugned order based on lack of proof. The Court emphasized that the assessing officer's decision was based on factual findings that were upheld by the lower authorities, making it a question of fact rather than law. As such, the Court found no merit in the appeal and dismissed it.