2018 (5) TMI 230 - AT - Income Tax

Unexplained credits - addition u/s 68 - Held that - The primary burden in this regard is on the assessee. However, we may clarify that where the assessee satisfies that money had been paid to a particular person in an earlier year, and it is he who has paid back the same, including as to the manner of transmission of funds, the initial onus on the assessee gets discharged. The credit/s under such circumstances is liable to regarded as reasonably explained unless the Revenue brings any adverse or contrary material on record. The matter, accordingly, to afford an opportunity to the assessee to state and present its case; we having delineated the scope of the onus as well as the parameters on which the essentially factual matter needs to be examined and determined, is restored back to the file of AO. As regards the balance sum (of ₹ 22.25 lacs), the assessee s case is that the non-spelling out of the nature and source of the cash deposits in its bank account - as required u/s. 69A of the Act, is that the same is the cash (in hand) as per its cash book. Is it by way of cash withdrawals from the bank (either the same or another) itself - an unlikely situation as an assessee would not withdraw funds from the bank only to deposit it back; or sales - which are thus a revenue receipt; or cash receipt/s from other person/s, in which case it is this person/s who is the actual (real) source of funds the cash-in-hand being only an ostensible (illusory) source, etc. - addition is thus also set aside to the AO for fresh determination, by issuing definite findings of fact, and adjudication in accordance with the law. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Delay in filing appeal, unexplained credits in bank account, disallowance under section 40A(3).

Delay in filing appeal:
The appeal was delayed by 22 days, but the assessee provided a notarized affidavit explaining the delay, which was found to be reasonable. The delay was condoned, and the hearing proceeded.

Unexplained credits in bank account:
The assessee, a Government contractor, deposited ?38.85 lacs in cash into its bank account. Of this, ?16.60 lacs were explained as loans received from individuals in the preceding year. However, notices to these individuals remained unanswered, and their PAN details did not match. The remaining ?22.25 lacs were unexplained and added under section 68. The Tribunal found the explanations unsatisfactory and set aside the matter to the Assessing Officer for further examination.

Disallowance under section 40A(3):
The third ground of disallowance under section 40A(3) for ?1,14,692 was not pressed during the hearing and was dismissed. The Tribunal allowed the appeal for statistical purposes, setting aside the additions and directing the Assessing Officer to reexamine the issues and provide factual determinations in accordance with the law.