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2017 (11) TMI 1207 - AT - Income TaxAddition of cash deposits in the bank account while applying the peak credit theory - Held that - Though the assessing officer made the addition of cash deposits in the bank account while applying the peak credit theory, the Ld.CIT(A) has neither conducted the necessary enquiry nor given any opportunity to the assessing officer to find out the true and correct nature of the receipts. The conduct of the account shows that withdrawals were made after substantial gap of credit and in between the assessee has withdrawn small amounts also on certain occasions. The account shows that the amounts withdrawn are not available to the assessee for redeposit. The assessee has withdrawn the amounts in quick succession which shows that the amounts are not available to the assessee for making any deposits of the same. Therefore, it is necessary to ascertain the true nature of the receipts, names of the persons from whom the advances were received and names and addresses of the persons to whom the advances were paid. In the absence of any such information, the entire deposits required to be brought to tax since the assessee neither established that it has carried on the business nor established the source of the credit. the assessee has neither established the fact that he is carrying on business and the sources of the credit. Though the assessee had offered the income on estimation basis ranging from 5% to 8% on turnover, the Ld.CIT(A) has not considered the same at the time of disposing the appeal. During the appeal hearing also the assessee could not furnish any details with regard to the sources of deposit and the destination of payment. No evidence was filed by the assessee to establish that he is carrying on the business. Therefore, we are of the considered opinion that the matter should be remitted back to the file of the assessing officer with a direction to ascertain the true nature of the receipts and payments - Decided in favour of revenue for statistical purposes. Claim of deduction u/s 54F - as per AO assessee had acquired the commercial property - Held that - As per the development agreement, the assessee has acquired the residential flat but given it to NRI academy for running the school. The assessing officer was of the view that the assessee had acquired the commercial property but not the residential property and using it for commercial purpose. It is not ascertainable from the information whether the flat in question was residential or not and require further verification at the level of assessing officer. Therefore we remit the matter back to the file of the assessing officer to make further verifications of the impugned property and give finding whether the property given for rent to the school is residential property with all amenities like kitchen etc.. or not and decide the issue afresh on merits. The appeal of the revenue is allowed for statistical purposes. Unexplained cash balance - Disallowance of opening cash balance - Held that - Though the assessee stated to have opening cash balance of ₹ 14,90,000/- there was no evidence to establish the cash balance available with the assessee. As rightly stated by the CIT(A), the assessee has not furnished the return of income for the earlier years and in the absence of any evidence to show that the cash balance was available and suffered to tax the same required to be brought to tax. Mere claim of availability of sufficient opening balance without supporting evidence is not acceptable. Ld.CIT(A) relied on the decision of Hon ble Madras High Court in the case of Sri C.Pakirisamy Vs. ACIT 2008 (12) TMI 190 - MADRAS HIGH COURT 3 and confirmed the addition. During the appeal proceedings before us also, the assessee has not placed any evidence to show that there was sufficient cash balance available with the assessee. - Decided against assessee.
Issues Involved:
1. Addition towards unexplained cash deposits. 2. Claim of deduction under Section 54F of the Income Tax Act. 3. Credit for opening cash balance. Detailed Analysis: 1. Addition towards unexplained cash deposits: The Revenue filed appeals against the Ld. Commissioner of Income Tax (Appeals) [CIT(A)]'s order for the assessment years 2006-07 to 2009-10, contesting the addition made by the assessing officer towards unexplained cash deposits. The assessee, an individual, was found with substantial cash deposits during a survey under Section 133A. The assessing officer deemed these deposits as unexplained income because the assessee could not provide a satisfactory explanation or documentary evidence. The Ld. CIT(A) applied the peak credit theory, confirming partial additions and deleting the rest. The Revenue argued that the peak credit theory was incorrectly applied as the assessee failed to explain the source of the deposits. The Tribunal found that the assessee did not establish the nature of the business or the source of receipts and remitted the matter back to the assessing officer for further verification and to ascertain the true nature of the receipts and payments. 2. Claim of deduction under Section 54F of the Income Tax Act: For the assessment year 2009-10, the assessee's claim for deduction under Section 54F was rejected by the assessing officer on the grounds that the property was given on rent to an educational academy, thus not used for residential purposes. The Ld. CIT(A) allowed the appeal, but the Tribunal found that further verification was needed to ascertain whether the property was residential or commercial. The matter was remitted back to the assessing officer for further verification. 3. Credit for opening cash balance: The Revenue contested the Ld. CIT(A)'s confirmation of peak credits for the assessment years 2006-07 to 2009-10. The assessee appealed for credit for an opening cash balance of ?14,90,000 as of 01.04.2005, which was rejected by the Ld. CIT(A) due to lack of evidence and non-filing of returns for earlier years. The Tribunal upheld the Ld. CIT(A)'s decision, stating that the assessee failed to provide evidence of the opening cash balance and did not maintain books of accounts. The appeals of the assessee for the assessment years 2006-07, 2007-08, and 2008-09 were dismissed. Conclusion: The Tribunal allowed the Revenue's appeals for statistical purposes, remitting the matters back to the assessing officer for further verification regarding the unexplained cash deposits and the nature of the property for Section 54F deduction. The assessee's appeals regarding the opening cash balance were dismissed due to lack of evidence.
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