2017 (6) TMI 690 - AT - Income Tax

Addition of cash deposit and credit card expenses - addition made as per AIR information - CIT-A allowed claim - Held that - The Assessing Officer in the remand report had accepted substantial availability of the cash and credit card payment. Therefore revenue has no grievance against the order of the Ld. CIT(A) in deleting the addition to that extent which is agreed by the Assessing Officer to be deleted in the remand report. Ld. CIT(A) also considered the issue of cash deposit of ₹ 15,71,200/- and accepted the explanation of assessee based on the letters sent to the bank by the assessee in which no infirmity has been pointed out by the Ld. DR. CIT(A) correctly deleted the substantial addition on the basis of the remand report submitted by Assessing Officer agreeing to availability of funds with the assessee and that the cash withdrawal of ₹ 15,00,000/- post last date of deposit was considered favourably and available to assessee based on the evidence and material on record - Decided against revenue

Summary

Issues:
Challenge to deletion of addition on account of cash deposit and credit card expenses.

Analysis:
The appeal by the revenue challenged the deletion of an addition of ?54,90,116 on account of cash deposit and credit card expenses for the assessment year 2008-09. The facts of the case revealed that the assessee had filed a return declaring income and agricultural income, but additional information was received regarding credit card payments, unit purchases, and cash deposits. The assessee filed additional evidence under rule 46A before the Ld. CIT(A), who admitted the evidence for examination. The Assessing Officer provided a remand report, considering the cash deposits and availability of funds. The Ld. CIT(A) noted that certain aspects were accepted by the Assessing Officer, while some additions remained unresolved.

Regarding the additions, the Ld. CIT(A) confirmed the addition on account of investment in mutual funds but considered the issue of cash deposit separately. The explanation provided by the assessee, stating that withdrawals were for loan repayments, was considered valid by the Ld. CIT(A). The withdrawals post the last date of deposit were seen as a source for making cash deposits, leading to the partial allowance of the appeal by the assessee.

Upon reviewing the submissions, it was found that the Assessing Officer had accepted the availability of cash and credit card payments in the remand report. The revenue had no grievance against the deletion of the addition to that extent. The Ld. CIT(A) accepted the explanation provided by the assessee regarding cash deposits, and no infirmity was pointed out. The order of the Ld. CIT(A) in deleting the addition was upheld, as there was no serious challenge to the findings. Consequently, the departmental appeal was dismissed.

In conclusion, the judgment upheld the deletion of the addition on account of cash deposit and credit card expenses, based on the acceptance of evidence and explanations provided by the assessee. The decision highlighted the importance of thorough examination and consideration of all relevant aspects before making additions to the income of the assessee.