2018 (2) TMI 872 - AT - Income Tax

Undisclosed cash deposits in bank account - Held that - The enquiries of the A.O. revealed that the parties who have purportedly made the impugned advances were related parties and they did not have the creditworthiness to make the advances. The lack of financial capacity of the parties clearly shows an indication that the sale agreements were only make believe arrangements. Since the assessee failed to furnish the evidence to establish the genuineness of the advance, we do not find any reason to interfere with the order of the CIT(A) and the same is upheld. Ground No.1.1 of the assessee s appeal on this issue is dismissed. Unexplained cash deposit by cheque - A.R. stated that these deposits were the business receipts but no evidence was furnished with regard to the source of deposits as well as expenditure incurred in connection with the earning of this money. Therefore it is established that the cheque deposits were from unexplained sources and the Ld.CIT(A) has rightly confirmed the addition. Hence, we do not find any infirmity in the order of the CIT(A) and the same is upheld. In the result, the appeal of the assessee on this ground is dismissed. Estimation of income @ 5% - A.O. has rejected the books of accounts and estimated the income - Held that - A.R. did not make out a case for estimation of income @ 4% with relevant evidences except arguing that earlier percentage of income required to be adopted. We are unable to consider the request of the assessee to reduce the estimation of income without placing the material to substantiate that the estimation of profit @5% was unreasonable. Therefore, we uphold the order of the CIT(A) and dismiss the appeal of the assessee. Allowance of telescopic benefit of estimated income for the additions made independently i.e. cash credits and cheque deposits - Held that - As A.R. did not make out a case for allowing the telescopic benefit by furnishing the necessary details. Therefore, we do not find any justification for allowing the telescopic benefit and request of the Ld. A.R. is hereby rejected.

Summary

Issues involved:
1. Cash deposits in bank account amounting to ?10.00 lakhs explained as advances received for sale of land.
2. Unexplained cash deposits of ?19,30,930/- by cheque.
3. Estimation of income at 5% by the assessing officer.

Issue 1: Cash deposits in bank account amounting to ?10.00 lakhs
The appellant's appeal was against the Commissioner of Income Tax-1's order for the assessment year 2010-11 regarding cash deposits of ?10.00 lakhs in an undisclosed bank account. The appellant claimed the deposits were advances for land sales but failed to provide substantial evidence. The agreements presented were unregistered and lacked authenticity. The CIT(A) upheld the AO's decision, stating the agreements were fabricated to justify the cash deposits. The ITAT concurred, noting the absence of supporting evidence and upheld the CIT(A)'s order, dismissing the appellant's appeal on this issue.

Issue 2: Unexplained cash deposits of ?19,30,930/- by cheque
The appellant deposited ?19,30,930/- by cheque in an undisclosed bank account, failing to disclose the source to the department. The AO treated this amount as unexplained income, which the CIT(A) confirmed due to the lack of evidence provided by the appellant. During the appeal, the appellant's representative claimed these were business receipts but failed to substantiate with evidence. The ITAT upheld the CIT(A)'s decision, stating the appellant didn't provide proof of the source of deposits, affirming the dismissal of the appeal on this ground.

Issue 3: Estimation of income at 5% by the assessing officer
The appellant contested the estimation of income at 5% by the CIT(A), requesting a reduction to 4% based on the previous year's assessment. However, the CIT(A) found 5% estimation reasonable due to the lack of verifiable expenses and increased turnover. The ITAT upheld the CIT(A)'s decision, noting the appellant's agreement to 5% estimation before the AO and the failure to provide substantial evidence for a lower estimation. The ITAT dismissed the appeal, affirming the decision on the income estimation issue.

In conclusion, the ITAT upheld the decisions of the CIT(A) and the AO regarding the cash deposits, unexplained cheque deposits, and income estimation issues. The appellant's failure to provide concrete evidence to support their claims led to the dismissal of the appeal on all grounds.