2016 (5) TMI 1219 - AT - Income Tax

Addition u/s 68 - undisclosed cash deposits - Held that - The assessee has failed to bring on record any material evidence to controvert the findings of the learned CIT(A). We, therefore, see no reason to interfere with or deviate from the findings of the learned CIT(A) that the assessee has failed to satisfactorily explain the source of cash deposits of ₹ 25,93,000/- in his undisclosed bank account with Corporation Bank, Mandvi, Mumbai - Decided against assessee Set off of business loss against the addition u/s 69 - Held that - No cause for interference with or deviation from the findings of the learned CIT(A) that the assessee s claim for setting off loss against the income taxed under section 69 of the Act is not tenable - Decided against assessee Disallowance of short term capital gains - Held that - Business loss of ₹ 15,05,455/-, instead of ₹ 17,60,242/- as claimed by assessee, shall be treated as business loss in futures and options and be allowed to be set off as per the provisions of section 70 to 79 of the Act. No material evidence has been placed before us to controvert this finding of the learned CIT(A).- Decided against assessee Charging of interest under section 234B and 234C is consequential and mandatory and the AO has no discretion in the matter. See Anjum Ghaswala (2001 (10) TMI 4 - SUPREME Court )

Summary

Issues Involved:
1. Unexplained cash deposits under section 69 of the Income Tax Act, 1961.
2. Denial of set-off of business loss against income assessed under section 69.
3. Disallowance of short-term capital loss.
4. Charging of interest under sections 234B and 234C.

Issue-wise Detailed Analysis:

1. Unexplained Cash Deposits under Section 69:
The assessee contested the addition of ?25,93,000/- made by the Assessing Officer (AO) under section 69 of the Income Tax Act, 1961, treating the cash deposits in the bank account as unexplained investments. The assessee claimed that these deposits were generated from cash sales recorded in the cash book. However, the CIT(A) upheld the AO's addition, noting discrepancies and the dubious nature of the transactions. The Tribunal, after reviewing the material on record and the submissions of the learned D.R. for Revenue, found that the assessee failed to provide satisfactory evidence to explain the source of the cash deposits. Consequently, the Tribunal upheld the CIT(A)'s decision and dismissed the assessee's grounds on this issue.

2. Denial of Set-off of Business Loss:
The assessee argued that the CIT(A) erred in confirming the AO's action of denying the set-off of business loss amounting to ?9,66,297/- against the addition under section 69. The CIT(A) reasoned that the provisions of sections 70 to 79 of the Income Tax Act, 1961, do not allow the set-off of losses from business against income assessed under section 69. The Tribunal concurred with the CIT(A)'s interpretation, noting that the assessee did not provide any material evidence to counter the findings. Thus, the Tribunal dismissed the assessee's ground on this issue.

3. Disallowance of Short-term Capital Loss:
The assessee contested the disallowance of short-term capital loss amounting to ?17,60,242/-. The CIT(A) found that the loss from futures and options transactions, claimed as business loss, was not reflected in the assessee's audited financial statements. The CIT(A) concluded that the loss of ?17,60,242/- was essentially the same as the business loss of ?15,03,455/- from futures and options, with a discrepancy of ?2,56,787/-. The CIT(A) allowed the business loss of ?15,03,455/- to be set off as per the provisions of sections 70 to 79. The Tribunal upheld this finding, noting that the assessee failed to provide evidence to support the claimed short-term capital loss. Consequently, the Tribunal dismissed the assessee's grounds on this issue.

4. Charging of Interest under Sections 234B and 234C:
The assessee denied liability for interest under sections 234B and 234C. The Tribunal stated that the charging of interest is consequential and mandatory, as upheld by the Hon'ble Apex Court in the case of Anjum Ghaswala (252 ITR 1) (SC). The Tribunal directed the AO to recompute the interest chargeable under sections 234B and 234C while giving effect to its order.

Conclusion:
The Tribunal dismissed the assessee's appeal for A.Y. 2009-10, upholding the CIT(A)'s findings on all contested issues. The order was pronounced in the open court on 25th May, 2016.