2015 (10) TMI 2007 - AT - Income Tax

Addition as peak deposit - Held that - During the assessment proceedings enquiries were made from the bank and it was found that the introduction to the said account had been made by Smt. Prem Kumari wife of the assessee and the withdrawals and the deposits have been made by Shri Kapoor Singh and his sons Vikas and Rajiv from time to time. The Bank Manager has given in writing that accounts statement shows that most of the payments have been made to Shri Kapoor Singh and his sons. Thus Section 132 (4A) of the Act is very much attracted in the present case as the pass book was in the custody of the assessee and not that of in the custody of assessee s sons. Thus, it is clearly established that the account of Shri Sube Singh was operated by the assessee and not by assessee s sons. Therefore, the Assessing Officer has rightly added the said amounts in the hands of the assessee and the CIT(A) has also confirm it with proper reasoning in respect of the Assessment Year 2000-2001 and 2002- 2003. - Decided against assessee. Addition on Kanyadan given - piece of evidence found and seized during search that the appellant has made noting of its undisclosed income on this paper - Held that - The assessee stated before the Investigation Officer that these entries pertain to some Kanyadan given by him. But during the statement at the time of search the assessee clearly stated that the expenses incurred for the marriage of his daughter was ₹ 1.25 lakhs (page no. 17 of the Paper Book filed by AR). As relates to the case law cited by the AR that of Malabar Oil Marketing Co. 2003 (9) TMI 295 - ITAT BOMBAY-F the same is relevant as in the said case, it was held that mere notings on the loose paper without any corroborative evidence, cannot be assessed as income in the hands of the assessee. It further held that there being no material on record to suggest that the assessee has received any amount apart from the amounts received by it per account payee cheques. The Assessing Officer as well as the CIT(A) has not given any reasons or justification as to how the figures mentioned in the loose paper pertains to denomination of thousand. Thus, no case for addition on this account is made out by the Revenue. - Decided against revenue.

Issues Involved:
1. Addition of Rs. 10,15,200 as peak deposit for A.Y. 2000-01.
2. Addition of Rs. 10,40,265 as peak deposit for A.Y. 2002-03.
3. Addition of Rs. 2,97,000 based on figures recorded without narration for A.Y. 2003-04.
4. Addition of Rs. 1,18,000 based on figures recorded without narration for A.Y. 2004-05.
5. Charging of interest under sections 234A, 234B, and 234C for A.Y. 2000-01, 2002-03, 2003-04, and 2004-05.

Detailed Analysis:

1. Addition of Rs. 10,15,200 as Peak Deposit for A.Y. 2000-01:
The assessee contested the addition of Rs. 10,15,200 as peak deposit on 3.1.2000, arguing that the funds in the bank account belonged to Shri Sube Singh and were loans taken for property investment, which were subsequently repaid. However, the CIT(A) held that the assessee could not produce evidence regarding the repayment of alleged loans. The CIT(A) noted that the bank account contained huge cash deposits and withdrawals, and the statement of Shri Sube Singh confirmed no loans or gifts were made to the assessee. The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of evidence for loan repayment and the fact that the bank passbook was found in the assessee's custody, indicating control over the account.

2. Addition of Rs. 10,40,265 as Peak Deposit for A.Y. 2002-03:
Similar to A.Y. 2000-01, the assessee argued that the funds were loans from Shri Sube Singh. The CIT(A) and Tribunal found that the assessee failed to provide evidence of loan repayment. The Tribunal noted that the bank account was operated by the assessee and his sons, and the passbook was found in the assessee's custody. The Tribunal dismissed the appeal, supporting the addition made by the Assessing Officer.

3. Addition of Rs. 2,97,000 Based on Figures Recorded Without Narration for A.Y. 2003-04:
During the search, a paper with figures was found, which the AO interpreted as coded amounts. The CIT(A) upheld the AO's interpretation, as the assessee could not explain the source of these amounts. However, the Tribunal found that the AO and CIT(A) did not provide justification for interpreting the figures as thousands. The Tribunal referenced the ITAT Mumbai Bench ruling in Malabar Oil Marketing Co., concluding that vague notations on loose paper without corroborative evidence cannot be assessed as income. Thus, the addition was not justified, and the Tribunal allowed the appeal for this ground.

4. Addition of Rs. 1,18,000 Based on Figures Recorded Without Narration for A.Y. 2004-05:
Similar to A.Y. 2003-04, the AO assessed figures found on a paper as coded amounts. The CIT(A) upheld the addition, but the Tribunal found no justification for interpreting the figures as thousands. The Tribunal referenced the same ruling in Malabar Oil Marketing Co., concluding that the addition was not justified without corroborative evidence. The Tribunal allowed the appeal for this ground.

5. Charging of Interest Under Sections 234A, 234B, and 234C for A.Y. 2000-01, 2002-03, 2003-04, and 2004-05:
The AO stated that interest would be charged if applicable. Given the findings on the main grounds, the Tribunal dismissed the appeals related to the charging of interest, as they were contingent on the primary issues.

Conclusion:
The Tribunal upheld the additions for A.Y. 2000-01 and 2002-03, dismissing the appeals. However, it allowed the appeals for A.Y. 2003-04 and 2004-05, finding the additions based on vague notations unjustified. The appeals related to charging interest were dismissed, contingent on the primary findings. The order was pronounced on September 15, 2015.

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