2016 (11) TMI 958 - AT - Income Tax

Addition u/s 68 - undisclosed cash deposited by the assessee in her bank account - Held that - The assessee cannot prove that cash was not utilized elsewhere. In our opinion, the assessee as was very much at her liberty to keep availability of cash in such a manner so as to fulfill her family needs by withdrawing cash from her one bank account, keeping it with with her and depositing it into another bank account, in accordance with her family needs and other requirements especially after the death of her husband. In our view, the assessee has been able to successful prove the source of cash deposited in her account maintained with Standard Chartered Bank. Thus, addition made was illegal and incorrect on facts and therefore same is directed to be deleted. This ground is allowed in favour of assessee. Addition on account of cash deposited in bank account - source of cash claimed to be reimbursement received from Imperial Academy and Ms. Sheetu Luthra against expenses incurred earlier by the assessee - Held that - We do not appreciate the approach followed by the Ld. CIT(A) in this regard. While rejecting the evidence submitted by the assessee, in case the Ld. CIT(A) felt some deficiencies in the confirmation, the same should have been confronted to the assessee. Alternatively, it was well within the powers of the lower authorities to get these facts directly verified from Ms. Sheetu Luthra whose complete particulars were there before them. Without properly examining the evidences, these should not be rejected on some surmises and conjectures. Such kind of approach leads to unfairness and shakes the faith of the taxpayers and therefore, it should be avoided. Under these circumstances, in our opinion, the assessee had duly submitted the evidences with respect to said amount. Therefore, the AO is directed to delete sum. This ground is allowed in favour of assessee. Amount received from Imperial College of Professional Studies(ICPS) - Held that - It is noted that assessee brought on record of complete details and findings on record, and copy of ledger account of Imperial College of Professional Studies was also submitted. When the Ld. CIT(A) himself believed the transaction to the extent of ₹ 1,80,000/-, there were no concrete basis to disbelieve the remaining amount of ₹ 20,000, merely because same was received in cash. The Ld. CIT(A) had full powers under the law to make direct verification from the said property in case there were any doubts. But, without making any verification, he was not justified to partly disbelieve the account. Thus, addition of ₹ 20,000/- has been wrongly sustained and same is directed to be deleted. This ground is allowed in favour of assessee.

Summary

Issues:
1. Addition of cash deposit under section 68 of the Income Tax Act.
2. Addition of cash deposit claimed as reimbursement.
3. Addition of cash received from a professional college.

Issue 1 - Addition of cash deposit under section 68 of the Income Tax Act:
The appellant challenged the addition of cash deposited in her bank account under section 68. The appellant explained that the cash was withdrawn from another bank account for family needs and deposited back. The AO and CIT(A) were not satisfied with the explanation. The appellant argued that the burden to prove the cash was not utilized elsewhere was unfair. The ITAT found that the appellant successfully explained the source of the cash deposited. The authorities failed to show the cash was utilized elsewhere, shifting the burden to the revenue. The ITAT held the addition was incorrect and directed its deletion.

Issue 2 - Addition of cash deposit claimed as reimbursement:
The appellant contested the addition of cash deposited claimed as reimbursement from Imperial Academy and Ms. Sheetu Luthra. The authorities disallowed a portion due to lack of evidence. The ITAT upheld the disallowance of one portion but found fault with the rejection of the other. The confirmation letter from Ms. Sheetu Luthra was rejected without proper verification or confrontation with the appellant. The ITAT emphasized the need for fair assessment and directed the deletion of the disputed amount.

Issue 3 - Addition of cash received from a professional college:
The AO added an amount received in cash from a professional college, which the CIT(A) partly sustained. The appellant argued that all transactions were accepted, questioning the disbelief of the remaining amount without verification. The ITAT found the partial disbelief unjustified without concrete basis or verification. The ITAT directed the deletion of the sustained amount.

General Grounds:
Grounds 4 and 5 were dismissed as general and did not require specific adjudication.

In conclusion, the ITAT partly allowed the appeal of the Assessee, directing the deletion of certain additions made by the lower authorities based on lack of concrete evidence or unfair assessment practices.