2017 (1) TMI 175 - AT - Income Tax

Unexplained cash deposit in ICICI and Axis Bank - Held that - We find that the revenue was not able to prove with material evidences on record that the previous withdrawals made in the said bank accounts were utilized for some other purposes by the assessee thereby failing to act as a source for future cash deposits. It is not in dispute that the assessee had received a sum of 5, 58, 719/- in cash from M/s Piyanshu Projects Pvt Ltd towards transport receipts apart from cheques received from them. It is also not in dispute that the assessee was in receipt of hire charges from M/s Piyanshu Projects Pvt Ltd. This fund is also available for explaining the source for cash deposits. With regard to the cheque deposits of 10 lacs and 5 lacs credited in the said bank account we find that the assessee had duly explained the source and nature of those credits together with the party (Sri Suresh Kumar Gourisiria) from whom the same were received which were also subject to verification by the Inspector of Income Tax. With regard to the other cheque deposits of 5 lacs and 2.50 lacs the same were explained by the assessee to be received towards sale of cars. This fact has not been disputed by the revenue before us. In fact the same AO had accepted this fact while framing a separate addition towards capital gains on sale of the said cars. Hence we hold that there is no case made out by the revenue for making an addition in the facts and circumstances of the case. - Decided against revenue Unexplained investment in Max Life Insurance - Held that - We find that the ld CITA had categorically observed that the investment in Max Life Insurance is duly reflected in the cash book of the assessee. This finding has not been controverted by the revenue before us. Hence we find no infirmity in the order of the ld CITA in deleting addition - Decided against revenue Unexplained advance receipt and payment made to two different parties - Held that - We find that the sums of 15, 00, 000/- has been received as advance from Suresh Kumar Gourisaria which fact was also accepted by the ld AO pursuant to the physical verification by the Inspector of Income Tax. However he only observed that the nature of the transaction has not been proved by the said party with evidence. We find that the ld CITA had also stated that the said sum was received as advance from the said party which was also refunded to the said party on 22.2.2011. He also observed that the assessee had indeed registered the sale deed for which the advance was originally received from Mr. Suresh Kumar Gourisaria but the deal did not fructify and ultimately the sale deed was registered in favour of M/s. Riddhi Siddhi Health Care Pvt Ltd on 11.2.2011. None of these facts were controverted by the revenue before us. - Decided against revenue

Summary

Issues Involved:
1. Unexplained cash deposits in ICICI and Axis Bank accounts.
2. Unexplained investment in Max Life Insurance.
3. Unexplained advance receipt and payment made to two different parties.

Issue-wise Analysis:

1. Unexplained Cash Deposits in ICICI and Axis Bank Accounts:
The primary issue concerns whether the CIT(A) was justified in granting relief for sums of ?1,62,000 and ?45,20,000 regarding unexplained cash deposits in ICICI and Axis Bank accounts. The assessee, a transporter, had cash deposits in these banks which were not reflected in the balance sheet filed with the return of income. The AO observed discrepancies and considered the deposits as unexplained cash credits under Section 68 of the Income Tax Act. The assessee explained that the deposits were either re-deposits of previously withdrawn amounts or advances received against the sale of land and vehicles. The CIT(A) found that the assessee had disclosed interest income from these accounts and had no intention to conceal them. The CIT(A) concluded that the sources of cash deposits were satisfactorily explained and deleted the additions. The Tribunal upheld this decision, noting that the revenue failed to provide evidence that the previous withdrawals were used for other purposes.

2. Unexplained Investment in Max Life Insurance:
The second issue pertains to whether the CIT(A) was justified in deleting the addition of ?1,00,000 made on account of unexplained investment in Max Life Insurance. The AO added this sum as undisclosed income, rejecting the cash book. The assessee argued that this investment was reflected in the personal balance sheet. The CIT(A) observed that the investment was indeed reflected in the cash book and the statement of affairs, thus deleting the addition. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the revenue's appeal on this ground.

3. Unexplained Advance Receipt and Payment to Two Different Parties:
The final issue involves the deletion of additions of ?15,00,000 and ?2,00,000 made on account of unexplained advance receipt and payment. The assessee received an advance of ?15,00,000 from an individual for the sale of land and paid ?7,39,000 as an advance for purchasing residential property. The AO questioned the creditworthiness of the individual providing the advance and added the amount as unexplained cash credit. The CIT(A) found that the transactions were genuine, noting that the advance was ultimately refunded when the sale did not materialize, and the property was sold to another party. The Tribunal upheld the CIT(A)'s decision, finding the explanations satisfactory and noting that the revenue did not dispute the facts.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decisions on all grounds. The assessee satisfactorily explained the sources of the cash deposits, the investment in Max Life Insurance, and the advance transactions, leading to the deletion of the additions made by the AO.