2014 (2) TMI 1019 - AT - Income Tax

Addition u/s 68 of the Act Cash deposit out of undisclosed sources of income No documentary evidences furnished - Held that - The assessee has claimed that there was planning to purchase the land jointly with his father Shri Subhash Chand Jain for group housing complex at G.T. Road, Sonepat, Haryana - Assessee had not filed any documentary evidence in this regard. Assessee s claim that the amount was withdrawn for initial payments to land owners though Satbir Singh with whom the assessee was negotiating to purchase the land but assessee failed to produce the same - It is claimed that agreements to sell were prepared with respect of the deal with the intended sellers - no evidence was filed in this regard. The assessee also claims that he came to know at later stage that the land, which was intended to be purchased, was already identified by the HUDA for the purposes of housing complex for M/s. Omaxe Limited - None of the claims of the assessee as made in letter are substantiated by any documentary evidence - Even the concerned persons with whom the transaction were made or negotiated were not produced thus, the claim of assessee that cash withdrawal was not utilized for other purposes have remained unproved - Primary onus is on assessee to substantiate the claim of failure of land deals due to which cash remained unutilized - Assessee had not discharged onus by filing any evidence either documentary or oral in this regard - thus, the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Summary

Issues Involved:
1. Addition of Rs. 17,70,400/- as unexplained cash deposit under Section 68 of the Income-tax Act, 1961.
2. Adequacy of the assessment process and opportunity of hearing provided to the assessee.
3. Charging of interest under Sections 234B and 234C of the Income-tax Act, 1961.

Detailed Analysis:

1. Addition of Rs. 17,70,400/- as Unexplained Cash Deposit:
The core issue revolves around the addition of Rs. 17,70,400/- to the assessee's income as unexplained cash deposits under Section 68 of the Income-tax Act, 1961. The assessee, engaged in the business of computer repair and maintenance, had cash deposits totaling Rs. 27,70,400/- in two bank accounts. The Assessing Officer (AO) accepted Rs. 10,00,000/- as a cash loan from the assessee's father, but treated the remaining Rs. 17,70,400/- as unexplained. The assessee claimed an opening cash balance of Rs. 19,00,000/- as on 01-04-2005, which, along with the loan, sufficiently explained the deposits. The assessee argued that the cash was withdrawn for a planned land purchase that did not materialize, leading to the redeposit of the funds. The AO and CIT (A) rejected this explanation, citing a lack of supporting evidence and the implausibility of keeping such a large amount of cash idle.

2. Adequacy of the Assessment Process and Opportunity of Hearing:
The assessee contended that the assessment order was passed without adequate opportunity of hearing and was based on incorrect facts and findings. The AO's observation that the balance sheet showing cash in hand of Rs. 19,00,000/- was not filed with the return of income was disputed by the assessee, who claimed it was filed subsequently. The AO's failure to consider this balance sheet and the reasons for the cash withdrawals and redeposits were highlighted as procedural lapses.

3. Charging of Interest under Sections 234B and 234C:
The assessee also challenged the charging of interest under Sections 234B and 234C of the Income-tax Act, 1961. However, detailed arguments on this issue were not elaborated in the judgment.

Tribunal's Decision:
The Tribunal noted that the assessee failed to substantiate the claims regarding the land deals and the reasons for the cash withdrawals and redeposits with documentary evidence. The primary onus to prove the genuineness of the transactions was on the assessee, which was not discharged. The Tribunal found that the explanations provided were unsubstantiated and the persons involved in the alleged transactions were not produced before the authorities. Given the procedural concerns raised by the assessee, the Tribunal decided to restore the issue to the file of the Assessing Officer for a fresh assessment, ensuring that the assessee is given adequate opportunity to present evidence.

Conclusion:
The appeal was allowed for statistical purposes, with the matter being remanded back to the Assessing Officer for a re-evaluation of the evidence and claims made by the assessee. The Tribunal emphasized the need for the assessee to substantiate the claims with proper evidence and for the AO to provide adequate opportunity for the assessee to be heard.