2020 (4) TMI 18 - AT - Income Tax

Unexplained cash deposits - At the time of hearing, the assessee furnished a certificate obtained from Kanataka Bank as additional evidence to show that cash deposits made into the savings bank account of the assessee was out of withdrawals made from the current account of the assessee - HELD THAT - Since the assessee has filed additional evidence, we are of the view that this issue requires fresh examination at the end of the AO. The claim of the assessee that deposits made consisted of business receipts and withdrawals made earlier and this claim also requires verification. Accordingly we set aside the order passed by ld CIT- A on this issue and restore the same to the file of the AO for examining it afresh. Addition of sundry creditors - assessee did not furnish confirmation letters and also he did not produce the creditors before the AO - HELD THAT - We noticed from the paper book that the assessee has furnished confirmation letters claimed to have been produced before ld CIT(A). Those confirmation letters are addressed to Ld CIT(A) only. However the ld CIT(A) has observed that the assessee has not furnished the confirmation letters which is contradictory to copies of confirmation letters available on record. In any case the confirmation letters have not been furnished before the AO and hence there was no occasion for the AO to examine this letters. This issue also requires fresh examination at the end of the AO. Accordingly we set aside the order passed by ld CIT(A) on this issue and restore the same to the file of AO for examining it afresh by duly considering the confirmation letters filed by the assessee. While examining this issue, the AO should also keep in mind that the assessee has not maintained books of accounts, income has been declared by the assessee on estimated basis and the Statement of Affairs have been prepared on estimated basis only. Disallowance of deduction claimed u/s 80C - HELD THAT - Assessee did not furnish any evidence to support the claim and hence we have no other option but to confirm the order passed by the ld CIT(A) on this issue.

Summary

Issues:
1. Unexplained cash deposits - ?47.73 lakhs
2. Unexplained sundry creditors - ?40 lakhs
3. Unproved HDFC bank loan - ?0.84 lakhs
4. Disallowance of deduction claimed u/s 80C - ?0.61 lakh

Unexplained Cash Deposits:
The appellant, a civil contractor, challenged the addition of ?47.73 lakhs as unexplained cash deposits. The appellant claimed the deposits were business receipts and partly from earlier withdrawals. The Tribunal found the issue required fresh examination by the Assessing Officer (AO) due to the additional evidence presented. The Tribunal directed the AO to verify the appellant's claim that the deposits were business-related and withdrawals were made earlier.

Unexplained Sundry Creditors:
Regarding the addition of ?40 lakhs as unexplained sundry creditors, the appellant argued that the statement of affairs, prepared on an estimated basis, should not be equated with financial statements based on books of accounts. The Tribunal noted that the appellant did not maintain books of account and offered income on an estimated basis. The Tribunal set aside the order, directing the AO to reexamine the issue considering the confirmation letters provided by the appellant and the estimated nature of the statement of affairs.

Unproved HDFC Bank Loan:
The addition of ?0.84 lakh as an outstanding HDFC bank loan was challenged with a certificate obtained from the bank. The Tribunal deemed this new evidence requiring examination by the AO. The Tribunal set aside the order for fresh consideration based on the certificate provided by the appellant.

Disallowance of Deduction u/s 80C:
The disallowance of the deduction claimed u/s 80C was upheld as the appellant failed to furnish any evidence supporting the claim. Consequently, the Tribunal confirmed the order passed by the lower authority on this issue.

In conclusion, the appeal by the appellant was treated as partly allowed for statistical purposes, with specific directions for the AO to reexamine the issues of unexplained cash deposits, unexplained sundry creditors, and the unproved HDFC bank loan, while upholding the disallowance of the deduction claimed u/s 80C.