2018 (6) TMI 1047 - AT - Income Tax

Addition representing cash deposited in the Bank account of the assessee maintained with Yes Bank Ltd. - Held that - The payment transaction is also evidenced from a copy of the assessee s bank account with Yes Bank Ltd., which is available on record. The genuineness of this Agreement has not been doubted by the AO in remand proceedings. This shows that the assessee received cash of ₹ 2,00,000/- from Sri Bhupinder Singh and returned the same with damages of ₹ 50,000/- again through his bank account. Both the transactions are recorded in the same bank account. Thus, it is palpable that the source of deposit of ₹ 2,00,000/- in the bank account of the assessee is properly explained. As such, no addition is warranted on this score. The same is directed to be deleted. Agreement for purchase of a plot cancelled - Held that - only a receipt of ₹ 6,00,000/-, which was deposited by the assessee in his bank account but the payment by the assessee to Sri Harjeet Singh for a sum of ₹ 6,60,000/- was also through the same bank account. Both the transactions of receipt and payment of cash are evidenced from a copy of the bank statement placed on record. As such, as satisfied that the assessee has successfully explained the source of deposit of ₹ 6,00,000/-, for which no addition is warranted Enhancement in respect of two loans raised - Held that - CIT(A) has made enhancement of ₹ 6,60,000/- in respect of two loans raised from Sri Iqbal Singh and Sri Harjeet Singh, which were not the subject matter of assessment proceedings. There is no whisper, much less any discussion in the assessment order on these two loan transactions. Respectfully following the ratio decidendi flowing from the Full bench judgment SARDARI LAL & CO 2001 (9) TMI 1130 - DELHI HIGH COURT hold no enhancement could have been made in respect of such two loans.

Summary

Issues:
1. Addition of cash deposited in the bank account of the assessee.
2. Enhancement of income by the Commissioner of Income Tax (Appeals) regarding loans raised by the assessee from two parties.

Analysis:

Issue 1: Addition of Cash Deposited in Bank Account:

The appeal was against the Commissioner of Income Tax (Appeals) order related to the assessment year 2010-11. The Assessing Officer initiated reassessment proceedings based on certain information and found a peak balance of cash deposited in the bank account of the assessee. The assessee explained the source of cash deposits, involving transactions related to property dealings. The Ld. CIT(A) confirmed certain additions but deleted others after considering the explanations provided by the assessee. The Vice President examined the details presented by the assessee and concluded that the source of the cash deposits was adequately explained. The additions were directed to be deleted, as the transactions were properly accounted for and evidenced.

Issue 2: Enhancement of Income Regarding Loans Raised:

The Ld. CIT(A) enhanced the income by adding loans raised by the assessee from two parties, which were not part of the original assessment order. The Vice President referred to legal precedents stating that the first appellate authority cannot enhance the assessment by introducing new sources of income not considered by the Assessing Officer. Following this principle, the Vice President held that the enhancement made by the Ld. CIT(A) regarding the loans raised was not justified. The addition related to the loans was ordered to be deleted, as it was beyond the scope of the original assessment and not discussed in the assessment order.

In conclusion, the appeal was allowed, and the additions made by the Ld. CIT(A) were deleted based on the explanations provided by the assessee and the legal principles regarding the scope of enhancements in appellate proceedings.

This detailed analysis covers the issues raised in the judgment, providing a comprehensive understanding of the legal reasoning and outcomes related to the additions and enhancements in the assessment.