2017 (12) TMI 526 - AT - Income Tax

Unexplained cash credit on account of unexplained money u/s 69A - Held that - We are of the view that certified copies of the sale deeds provided by the Additional District Sub-Registrar, Khanna are acceptable documents and since the said official had obtained photo identities of the parties (buyer and seller of land), hence, there remains no doubt about the existence of the buyers and sellers. We also note that cash deposit in the bank to the extent of ₹ 4,25,000/- is claimed to be the amount received from the cultivation of the land during 2005-2008, prior to its sale. The AO did not bring any cogent evidence to disprove the same. We note that AO had raised a controversy about the receipt of the money from the assessee by his father. The assessee s father has categorically stated in his affidavit that he has received the amount. In respect of non-filing of return by the assessee s father for the A.Y 2009-10, we are of the view that this cannot result in any taxation in the assessee s hand because sale was agricultural land and does not attract capital gain tax. Therefore, based on the factual position, the addition of ₹ 54,20,000/- made by the AO has been rightly deleted by CIT(A). Hence, we do not find any infirmity in the order passed by the ld. CIT(A) and therefore, we confirm the order passed by the ld. CIT(A). Regarding the addition of ₹ 14,00,000/-, we are of the view that assessee during the assessment proceedings had provided to the AO a copy of the sale bill in respect of the household articles of his father. The AO did not bring on record and cogent evidence to prove that sale bills of household articles are bogus. Based on the factual position, we are of the view that order passed by the CIT(A) does not contain any infirmity. Therefore, we confirm the order passed by the ld. CIT(A). - Decided against revenue Addition under the head of unexplained expenditure - Held that - AO during the assessment proceedings made his own estimate of what the assessee would have spent but we observe that the assessee had been supported by his son and his father was getting tax free pension which was sufficient to meet the family expenses. Therefore, considering the factual position, we are of the view that the order passed by the CIT(A) does not contain any infirmity. Therefore, we confirm the order passed by the CIT(A). Addition under the head concealed income earned from security charges - Held that - If the security service charges of ₹ 1,62,536/- shown in the profit and loss account were increased by ₹ 71,937/-, the payment made to security personnel shown as expenditure in the profit and loss account would also have to be increased by the like amount. The AO, however, treated the sum of ₹ 71,937/- as concealed income ignoring the explanation that the amount paid to security personnel had to be increased by the like amount and consequential there would be no effect on the income. We note from the remand report that the AO has not controvert the fact that payment of ₹ 71,937/- to security personnel was debited to the security service charges received account resulting in netting off of the receipts to that extent. Therefore, the assessee s explanation that if the security charges received were to be increased by ₹ 71,937/- to ₹ 2,34,473/-, the payment made to security personnel of ₹ 65,364/- was also required to be correspondingly increased by ₹ 71,937/- with no effect on the taxable income is quite acceptable and therefore, we confirm the order passed by CIT(A).

Summary

Issues Involved:
1. Addition of ?54,20,000/- as unexplained cash credit under Section 68.
2. Addition of ?14,00,000/- as unexplained money under Section 69A.
3. Addition of ?93,484/- as unexplained expenditure under Section 69C.
4. Addition of ?71,937/- as concealed income from security charges.

Detailed Analysis:

1. Addition of ?54,20,000/- as Unexplained Cash Credit under Section 68:

The Assessing Officer (AO) added ?54,20,000/- under Section 68, considering it as unexplained cash credit. The assessee explained that this amount was the sale proceeds of four lands owned by his father, Hardev Singh Kler, and the sale of agricultural crops. The assessee provided sale deeds and an affidavit from his father to substantiate the claim. However, the AO found the genuineness of the sale deeds doubtful and noted discrepancies such as the absence of responses from the power of attorney holder and the lack of evidence for crop sales.

The CIT(A) deleted the addition, noting that the assessee's father was a decorated soldier and that the sale of household goods and agricultural land was credible. The CIT(A) emphasized the importance of the background and the direct correspondence with the Additional District Sub-Registrar, Khanna, who provided certified copies of the sale deeds. The CIT(A) found no discrepancy in the contents of the sale deeds and concluded that the AO's approach was unreasonable.

The Tribunal upheld the CIT(A)'s decision, noting that the certified copies of the sale deeds were acceptable, and the AO did not provide cogent evidence to disprove the assessee's claims. The Tribunal confirmed the deletion of the addition of ?54,20,000/-.

2. Addition of ?14,00,000/- as Unexplained Money under Section 69A:

The AO added ?14,00,000/- under Section 69A, considering it as unexplained money. The assessee explained that this amount was from the sale of household goods, including silver, by his father. The AO found discrepancies in the affidavits provided by the assessee's father and questioned the genuineness of the sale.

The CIT(A) deleted the addition, noting that the assessee's father was 84 years old and had accumulated household goods over his lifetime. The sale bill provided by the assessee contained particulars of the buyer and the payment was received by cheque. The CIT(A) found the second affidavit explaining the omission in the first affidavit credible.

The Tribunal upheld the CIT(A)'s decision, noting that the AO did not provide evidence to prove that the sale bills were bogus. The Tribunal confirmed the deletion of the addition of ?14,00,000/-.

3. Addition of ?93,484/- as Unexplained Expenditure under Section 69C:

The AO added ?93,484/- under Section 69C, considering it as unexplained expenditure due to low drawings for family expenses. The CIT(A) deleted the addition, noting that the assessee was supported by his son and received a tax-free pension.

The Tribunal upheld the CIT(A)'s decision, noting that the AO's estimate of the assessee's expenditure was unreasonable. The Tribunal confirmed the deletion of the addition of ?93,484/-.

4. Addition of ?71,937/- as Concealed Income from Security Charges:

The AO added ?71,937/- as concealed income from security charges, noting that the assessee received more than declared in his return. The CIT(A) deleted the addition, stating that the payment to security personnel should also be increased by the same amount, resulting in no effect on the income.

The Tribunal upheld the CIT(A)'s decision, noting that the AO did not controvert the fact that the payment to security personnel was debited to the security service charges received account. The Tribunal confirmed the deletion of the addition of ?71,937/-.

Conclusion:

The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s order, confirming the deletion of the additions made by the AO under Sections 68, 69A, 69C, and for concealed income from security charges. The Tribunal found the CIT(A)'s order to be reasoned and supported by credible evidence.