2015 (2) TMI 403 - AT - Income Tax

Unexplained credit - addition to income - for AY 2004-05 - Held that - As can be seen, in the sworn affidavit dt. 18/02/2011, the creditor Shri L. Giri Babu has stated that the amount of ₹ 1.00 lakh was advanced to assessee through cheque No. 603464 dated 11/03/04 drawn on ICICI Bank, Tirupathi. It has further been stated in the said affidavit the said amount was out of his earning while he was working in Deutsche Bank, Singapore. However, on a perusal of the passport, it is very much evident that the same was issued on 16/12/09. Therefore, it is not understood how it proves the fact that the said creditor was working in Singapore in 2004 and from the income earned therein, the said creditor advanced the amount of ₹ 1 lakh. Moreover, it is a fact on record that assessee has not produced relevant bank statement to correlate the receipt of loan from the said creditor. In these circumstances, we cannot record a conclusive finding holding the loan transaction to be genuine. Remit the issue back to the file of AO to examine it afresh - Decided in favour of assessee for statistical purposes. Unaccounted cash credit for AY 2004-05 - Held that - matter requires re-examination by AO. Though it is a fact that the loan creditor has confirmed of advancing the loan and to some extent it is also proved that the loan creditor was having income from agricultural activities, but, it requires to be examined whether the creditor was having creditworthiness to advance loan of ₹ 29.70 lakhs. Further, genuineness of the transaction also requires to be proved. In this context, ld. AR submitted before us that loan transaction was through banking channel, but, it appears from the orders of the departmental authorities, assessee never brought such fact to their notice.- Decided in favour of assessee for statistical purposes. Peak amount of the cash flow in the seized material - CIT(A) deleted addition of ₹ 4,30,22,313 - Held that - nfirmity in the order of ld. CIT(A) while deleting the addition. On a perusal of seized material which also form part of the ld. CIT(A) s order, it is very much clear that from such notings, it cannot be deduced whether they are receipt or payments nor it can be concluded whether they are in relation to any particular transaction as no names have been mentioned. In these circumstances, no addition can be made on the basis of such a dumb document. - Decided in favour of assessee. Undisclosed investment - purchased a land in his wife s name - CIT(A) deleted addition - Held that - On a perusal of return of income filed by assessee originally as well as in pursuance to notice u/s 153A of the Act,it is very much clear that assessee has disclosed the investment made in purchase of land. Similarly, his wife has also disclosed the investment made by her in the return filed. Therefore, when the investment made by assessee and his wife have been disclosed to the department prior to the search and is from explainable sources, there is no reason to treat it as undisclosed investment. Accordingly, we do not find any infirmity in the order of ld. CIT(A) in deleting the same.- Decided in favour of assessee. Unaccounted cash credit for AY 2007-08 - Held that - Matter requires re-examination by AO. Though, it is a fact that the loan creditor has confirmed of having advanced the loan and he may be having land holding, but, whether he has the capacity to advance loan of ₹ 4,24,000 requires to be verified by examining the creditor, which has not been done. Further, assessee s claim that the loan was received through regular banking channel also needs examination. If assessee can establish the creditworthiness of the creditor, then, the loan cannot be treated as unexplained credit. With the aforesaid observations, we remit the issue back to the file of AO. For loan amount of ₹ 9 lakhs treated as unexplained cash credit by AO and confirmed by ld. CIT(A) assessee has not been able to prove the aforesaid loan amount by bringing any evidence on record. Even a confirmation letter has not be obtained from the creditor. As assessee has failed to establish the three ingredients i.e., identity of the creditor, creditworthiness and genuineness of the transaction by furnishing any evidence, the addition made is confirmed. - Decided partly in favour of assessee for statistical purposes. Unexplained investment in purchase of plots - Held that - Seized material except mentioning certain f igures does not reveal whether they are receipts nor payments nor any name is mentioned. It is also neither in the name of assessee nor bears his signature. The AO has not brought on record any other corroborat ive evidence to substant iate the allegation that notings in seized material represent undisclosed investment of assessee. In these circumstances, conclusion of ld. CIT(A) that it is merely a dumb document and no addition can be made on the basis of such dumb document, in our view, is totally justif ied and cannot be interfered with. - Decided in favour of assessee. Undisclosed investment in gold ornaments - Held that - Assessee has not properly explained the contents of the seized material. As can be seen, while before the AO, he has completely disowned the seized material, before the first appellate authority, he has stated that the seized material is only an estimate. In these circumstances, we do not find any infirmity in the order of ld. CIT(A) in confirming the addition - Decided against assessee. Unaccounted loan - Grievance of the department that evidences were produced for the first time before ld. CIT(A) and without giving an opportunity to AO to verify the same, ld. CIT(A) has deleted the addition on the basis of those evidences - Held that - As can be seen, assessee has not produced any evidence before AO to prove the credits. Whereas before ld. CIT(A) assessee has produced returns of income, bank statement, P&L account, balance sheet, etc. of Sri M.V. Ramana and Smt. Radhika to prove genuineness of the loan. Similarly in case of rental advance received from the tenants, assessee has submitted the lease agreement. Ld. CIT(A) without calling for a remand report from AO, on the evidences submitted by assessee has accepted assessee s claim and deleted the addition. Therefore, to that extent there is violation of rule 46A. Remit the issue to the file of AO to verify evidences produced by assessee and take a decision in the matter. - Decided in favour of revenue for statistical purposes.

Summary

Issues Involved:
1. Addition of unexplained credit of Rs. 1 lakh for AY 2004-05.
2. Addition of Rs. 29.70 lakh as unexplained credit for AY 2006-07.
3. Deletion of addition of Rs. 4,30,22,313 by CIT(A) for AY 2006-07.
4. Deletion of addition of Rs. 4,38,000 by CIT(A) for AY 2006-07.
5. Addition of Rs. 4,24,000 as unexplained credit for AY 2007-08.
6. Addition of Rs. 9 lakh as unexplained cash credit for AY 2007-08.
7. Addition of Rs. 1,52,72,000 as unexplained investment for AY 2007-08.
8. Addition of Rs. 5 lakh as unexplained credit for AY 2008-09.
9. Addition of Rs. 91,618 for undisclosed investment in gold ornaments for AY 2008-09.
10. Deletion of addition of Rs. 28 lakh by CIT(A) for AY 2008-09.

Detailed Analysis:

1. Addition of unexplained credit of Rs. 1 lakh for AY 2004-05:
The assessee, an ex-serviceman, declared a total income of Rs. 2,97,900 in response to a notice u/s 153A. The AO added Rs. 1 lakh as unexplained credit due to lack of evidence. The CIT(A) confirmed this addition. The Tribunal noted the affidavit and passport submitted by the creditor but found inconsistencies. The issue was remitted back to the AO for fresh examination to verify the genuineness of the loan transaction.

2. Addition of Rs. 29.70 lakh as unexplained credit for AY 2006-07:
The AO added Rs. 29.70 lakh as unexplained credit due to insufficient evidence. The CIT(A) rejected the assessee's explanation based on the creditor's income. The Tribunal remitted the issue back to the AO for re-examination, emphasizing the need to verify the creditor's creditworthiness and the genuineness of the transaction.

3. Deletion of addition of Rs. 4,30,22,313 by CIT(A) for AY 2006-07:
The AO added Rs. 4,30,22,313 as undisclosed income based on seized documents. The CIT(A) found the documents to be dumb, lacking clarity on the nature of transactions. The Tribunal upheld the CIT(A)'s decision, noting that the documents did not conclusively indicate undisclosed income and lacked corroborative evidence.

4. Deletion of addition of Rs. 4,38,000 by CIT(A) for AY 2006-07:
The AO added Rs. 4,38,000 as undisclosed investment in land. The CIT(A) deleted the addition, verifying that the investment was disclosed in the returns filed by the assessee and his wife. The Tribunal upheld this decision, confirming that the investment was from explainable sources.

5. Addition of Rs. 4,24,000 as unexplained credit for AY 2007-08:
The AO added Rs. 22,24,000 as unexplained credit, which included Rs. 4,24,000 from P. Dayalam. The CIT(A) confirmed this addition. The Tribunal remitted the issue back to the AO, instructing to verify the creditor's creditworthiness and the genuineness of the transaction.

6. Addition of Rs. 9 lakh as unexplained cash credit for AY 2007-08:
The AO added Rs. 9 lakh as unexplained cash credit. The CIT(A) deleted this addition based on evidence provided by the assessee. The Tribunal remitted the issue back to the AO for re-examination, emphasizing the need to verify the evidence and the genuineness of the transaction.

7. Addition of Rs. 1,52,72,000 as unexplained investment for AY 2007-08:
The AO added Rs. 1,52,72,000 as undisclosed investment based on seized documents. The CIT(A) deleted the addition, finding the documents to be dumb and lacking clarity on the transactions. The Tribunal upheld the CIT(A)'s decision, noting the absence of corroborative evidence.

8. Addition of Rs. 5 lakh as unexplained credit for AY 2008-09:
The AO added Rs. 28 lakh as unexplained credit, including Rs. 5 lakh from Sriramulu. The CIT(A) confirmed this addition. The Tribunal remitted the issue back to the AO, instructing to verify the creditor's creditworthiness and the genuineness of the transaction.

9. Addition of Rs. 91,618 for undisclosed investment in gold ornaments for AY 2008-09:
The AO added Rs. 91,618 as undisclosed investment in gold ornaments based on seized material. The CIT(A) confirmed this addition. The Tribunal upheld the CIT(A)'s decision, noting the lack of proper explanation from the assessee.

10. Deletion of addition of Rs. 28 lakh by CIT(A) for AY 2008-09:
The AO added Rs. 28 lakh as unexplained credit. The CIT(A) deleted the addition based on evidence provided by the assessee. The Tribunal remitted the issue back to the AO for re-examination, emphasizing the need to verify the evidence and the genuineness of the transaction.

Conclusion:
The Tribunal allowed some appeals for statistical purposes, partly allowed others, and dismissed the revenue's appeal, emphasizing the need for proper verification and examination of evidence in each case.