2018 (10) TMI 1034 - AT - Income Tax

Undisclosed investment in money lending business - Assessee is an individual having only source of income from agriculture - Held that - As far as the addition on unaccounted investment is concerned the assessee had sufficient accumulated funds, opening bank balance as well as income earned during the year which could justify the source of the cash deposited on various dates and also to explain the source of alleged unaccounted investment of ₹ 4,65,024/- and in our view the same needs to be deleted. As regards the interest income addition is concerned, we do not find any reason to interfere in the findings of the lower authorities as no plausible reasons have been given by the Ld. Counsel for the assessee for giving such short term advances which are ranging from 1 month to 6 month without changing any interest and therefore the addition for alleged interest income of ₹ 55,083/- needs to be confirmed. - Decided partly in favour of assessee

Summary

Issues involved:
1. Assessment of alleged income from money lending.
2. Justification of addition made by the Assessing Officer.
3. Appeal against the orders of lower authorities.

Detailed Analysis:
Issue 1: Assessment of alleged income from money lending
The appeal pertains to the assessment year 2008-09 and challenges the order of the Commissioner of Income Tax (Appeals) upholding an income of ?5,20,830 on account of alleged income from money lending. The assessee argued that financial assistance provided to small agriculturalists was interest-free and aimed at regularizing their accounts. The Assessing Officer (AO) contended that the assessee was engaged in money lending business based on bank account transactions and calculated a peak debit balance of ?4,65,024 as undisclosed investment, adding an interest income of ?55,803 to the total income.

Issue 2: Justification of addition made by the Assessing Officer
The AO's addition was based on cash deposits in the bank account, which the assessee attributed to agriculture income and loans given to friends and relatives for short periods. The Tribunal observed that the assessee had sufficient accumulated funds, opening bank balance, and declared agriculture income to justify the source of cash deposits. However, the addition for interest income was upheld as the assessee failed to provide plausible reasons for interest-free short-term advances, ranging from 1 to 6 months, to various individuals.

Issue 3: Appeal against the orders of lower authorities
The assessee appealed to the Tribunal, reiterating that no addition was warranted for unaccounted investment and interest income. The Departmental Representative supported the lower authorities' orders, highlighting details provided by the assessee. The Tribunal, after considering both sides, partly allowed the appeal by deleting the addition related to unaccounted investment but confirming the addition for interest income. The general grounds of appeal were not adjudicated, and the overall appeal was partly allowed.

In conclusion, the Tribunal's judgment addressed the issues of alleged income from money lending, justification of additions made by the Assessing Officer, and the appeal against the orders of lower authorities, providing a balanced decision based on the evidence and arguments presented during the proceedings.