2021 (4) TMI 1162 - AT - Income Tax

Unexplained cash credit - sources for the advances - HELD THAT - As far as the receipt of return of advance by Smt. G. Surekha is concerned, when summons were issued to her, her husband Shri G. Ratna Rao appeared and submitted the explanation. Therefore, the identity of Smt. G. Surekha is established. As far as the explanation given that the cheques were given in the name of her husband s friend Mr.Mohd Abdul Samad is concerned, find that it is supported by the Bank statement. It is also established that Smt.G.Surekha is not in any way related to the assessee. Therefore, the confirmation given by Smt. Surekha is to be examined and considered on its own legs. It is to be noted that the assessee has not filed the confirmation of Mr Mohd Abdul Samad, but the cheques are undisputedly issued in the name of Mr.Abdul Samad. In the earlier A.Y, the assessee has explained the sources for the advances given for purchase of the property and the said assessment was reopened and the sources were accepted by the Assessing Officer. Therefore, the transaction of giving advance by the assessee is proved. What is left to be proved is that the said amount has been returned by Smt. G. Surekha. All the cash deposits to the extent of ₹ 14.00 lakhs are allegedly made by Smt. G. Surekha. When the Assessing Officer for the A.Y 2008-09 has accepted that the assessee has given advance for purchase of a property and since there is no purchase of property during the relevant A.Y, the circumstantial evidence is in favour of the assessee that he has received back the advance paid in the earlier A.Y. Therefore, the sources for the extent of ₹ 14.00 lakhs is to be deemed as explained by the assessee. With regard to the other balance i.e. cash withdrawals which were utilized for other purposes than the deposits into the Bank, I do not find any reason to interfere with the order of the CIT (A). The addition of such an account is accordingly confirmed. Assessee s appeal is partly allowed.

Summary

Issues involved:
1. Jurisdictional error in transfer of case between ranges during appeal.
2. Addition of unexplained cash deposits.
3. Claim of deduction under section 80GG.
4. Treatment of cash withdrawals as sources for cash deposits.
5. Validity of confirmation of advance received back.

Issue 1: Jurisdictional error in transfer of case between ranges during appeal
The appellant contended that the case was transferred from Range 6 to Range 12 during the appeal, questioning the jurisdiction of the CIT (A) in the matter. However, the Tribunal did not find this transfer to affect the validity of the proceedings.

Issue 2: Addition of unexplained cash deposits
The Assessing Officer identified significant cash deposits in the appellant's bank accounts and sought explanations for the sources of these deposits. Discrepancies were found in the cash book entries and explanations provided by the appellant, leading to additions as unexplained cash deposits. The CIT (A) partially granted relief by accepting certain opening balances but upheld additions related to unexplained cash credits.

Issue 3: Claim of deduction under section 80GG
The appellant sought a deduction under section 80GG, providing additional evidence to support the claim. The Tribunal admitted the additional evidence and remanded the issue to the Assessing Officer for reconsideration in accordance with the law.

Issue 4: Treatment of cash withdrawals as sources for cash deposits
The Assessing Officer scrutinized cash withdrawals and deposits in the appellant's bank accounts, concluding that certain cash deposits remained unexplained despite explanations provided. The CIT (A) confirmed the assessment order on this matter, leading to the appellant's appeal before the Tribunal.

Issue 5: Validity of confirmation of advance received back
The appellant contended that advances given to a party in a previous assessment year were returned during the relevant year, supported by a confirmation letter. The Tribunal analyzed the evidence presented, including the confirmation and explanations provided, ultimately deeming a portion of the amount as explained and confirming the addition related to unexplained cash credits.

This detailed analysis of the judgment covers the various issues raised by the appellant, the findings of the Assessing Officer and CIT (A), and the final decision rendered by the Tribunal on each issue.