2017 (5) TMI 354 - AT - Income Tax

Unexplained cash credit U/s. 69A - Held that - The assessee has failed to bring on record any evidence to establish his claims that the deposits in the ICICI Bank, saving bank account at Khar (W), Mumbai was out of receipts connected with his business transactions. In our view the assessee has failed to controvert the findings of the authorities below that he was not engaged in any business activity during the year under consideration. Therefore, in our considered opinion, the said unexplained deposits the source of which has not been satisfactorily explained by the assessee, has been correctly treated as unexplained money under section 69A of the Act and brought to tax in the assessee s hands. In this view of the matter, and finding no reason to interfere with the decision of the learned CIT(A) in the impugned order, we uphold the same - Decided in favour of revenue.

Summary

Issues:
Assessment under section 68 of the Income Tax Act, 1961 for A.Y. 2009-10 based on unexplained deposits in bank accounts and lack of evidence of business activity.

Analysis:
The case involved the appellant, a travel agent/readymade garments business, who failed to file the income tax return for A.Y. 2009-10, leading to proceedings under section 147 of the Act. The Assessing Officer (AO) initiated scrutiny assessment due to incomplete details provided by the appellant, resulting in an ex parte assessment under section 144 r.w.s. 147. The AO determined the income at ?27,10,812 under the head 'income from other sources' as the appellant did not provide evidence of business activities. The CIT(A) dismissed the appellant's appeal ex parte, directing the AO to treat the amount as unexplained money under section 69A of the Act.

The appellant challenged the CIT(A)'s order before the Tribunal, but failed to appear for hearings, leading to the Tribunal proceeding based on the material on record. The Tribunal considered the grounds raised by the appellant, arguing that the deposits in the bank account were related to business transactions. However, the Tribunal found that the appellant did not provide evidence to support this claim and failed to establish engagement in any business activity during the relevant year. Consequently, the unexplained deposits were upheld as unexplained money under section 69A, and the appeal was dismissed.

The Tribunal's decision was based on the lack of evidence provided by the appellant to substantiate the source of deposits in the bank account as business-related. The Tribunal noted discrepancies in the appellant's business details and bank account locations, leading to the conclusion that the deposits were unexplained. Despite the appellant's arguments regarding higher profit declaration under a presumptive taxation scheme, the Tribunal found no merit in the appellant's claims and upheld the CIT(A)'s decision to treat the deposits as unexplained money under section 69A.

In conclusion, the Tribunal dismissed the appellant's appeal for A.Y. 2009-10, affirming the treatment of the deposits as unexplained money under section 69A of the Income Tax Act, 1961. The decision was based on the lack of evidence provided by the appellant to establish the source of the deposits as business-related, ultimately upholding the CIT(A)'s order.