2022 (1) TMI 84 - AT - Income Tax

Additions u/s 68 - unexplained cash credit - HELD THAT - CIT(A) has granted substantial relief to the assessee as against the addition of unexplained deposit. In assessment order, the Ld.CIT(A) finally sustained an addition. As evident, even in the remand report also certain amount were found to have remained unconfirmed. The inference drawn by the Ld.CIT(A) on the unconfirmed/unexplained deposit is reasonable. Hence, I do not find any infirmity in the order of the Ld.CIT(A). Accordingly, we uphold the same.- Decided against assessee.

Summary

Issues:
Appeal against order of Commissioner of Income Tax (Appeals) confirming addition under section 68 of the Act of ?3,16,715/- as unexplained cash credit out of original additions made by Assessing Officer.

Analysis:
The appellant, engaged in catering business, had cash deposits in banks amounting to ?34,60,500/-, added to total income as unexplained. The Assessing Officer's order was partly confirmed by the Commissioner of Income Tax (Appeals) for ?3,16,715/-. The appellant contended that the addition was bad in law and should be deleted. The appellant submitted detailed cash summary and annual cash book, explaining sources of ?28,75,750/-. The Commissioner of Income Tax (Appeals) granted relief, deleting ?5,84,750/- due to an error in the assessment order. The remaining unconfirmed purchases of ?10.24 lacs were considered, with 25% disallowed for equity and natural justice.

The appellant cited judicial pronouncements to support their case, arguing that the lapse of time and nature of transactions explained the unconfirmed purchases. The Commissioner of Income Tax (Appeals) upheld ?3,16,715/- as unexplained cash credit under section 68 of the Act. The GP Margin on purchases was analyzed to determine the unexplained cash deposits. Out of the balance cash deposits, ?25,59,035/- was explained from the catering business, while ?3,16,715/- remained unexplained. The ITAT upheld the Commissioner's order, finding no infirmity in the decision. The appeal was dismissed, affirming the addition of ?3,16,715/- as unexplained cash credit.

In conclusion, the ITAT upheld the decision of the Commissioner of Income Tax (Appeals) to confirm the addition of ?3,16,715/- as unexplained cash credit, considering the circumstances and evidence presented. The appellant's arguments regarding the nature of transactions and lapse of time were considered, but the unexplained portion of cash deposits was upheld.