2022 (4) TMI 1309 - AT - Income Tax

Difference in the rent receipt as appearing in the form 26AS received and as declared by the assessee in its return of income - HELD THAT - Before the ld. CIT(A), the assessee had clearly given the documentary evidences that the property was jointly owned and the rent income which has been received by the assessee for a sum aggregating to ₹ 15,56,136/-, out of which ₹ 6,00,000/- has been paid to other owner, Sri Vallabha Investment Ltd.. It is undisputed fact that the said party had shown it as a rental income in its return of income which is evident from its computation of income. The assessee might have received the rent entirely for the said assessment year but has paid the part of the rent to other co-owner who has also declared it as its income; therefore, we do not find any reason for sustaining the addition on account of difference of rent; firstly, the assessee had shown rental income of ₹ 9,56,136/- and the other owner has also shown rental income of ₹ 6,00,000/-, thus there was no difference in the rental income and accordingly, the addition is deleted. Addition being cash deposited in his bank account - nature of unexplained deposits in terms of section 69A of the Income Tax Act, 1961 - HELD THAT - CIT(A) has deleted the credits for which the source was explained. However, the other cash deposits are concerned the same has been confirmed. Before us, ld. counsel had given the cash flow statement duly supported by the bank statement wherein he has shown that assessee had huge withdrawals during the year itself and day-to-day cash flow chart have also been filed which is appearing at pages 56 to 63 of the paper book. From bare perusal of the same, it cannot be disputed that assessee had availability of cash in the form of withdrawals and the same is shown in the cash flow statement filed before the ld. CIT(A). Thus we do not find any reason to sustain the addition. Accordingly, the same is also deleted.

Summary

Issues:
1. Addition of cash deposited in bank account under section 69A of the Income Tax Act, 1961.
2. Addition of alleged difference in rental income between return and Form 26AS.

Analysis:

Issue 1: Addition of cash deposited in bank account under section 69A of the Income Tax Act, 1961:
The appeal was filed against an order passed by the ld. CIT(A)-XXV, New Delhi for the assessment year 2009-10. The AO made additions totaling to &8377; 94,71,300, including &8377; 60,34,410 and &8377; 23,47,102 on account of cash deposits in the bank account under section 69A. The assessee argued that the cash deposits were made from withdrawals during the relevant assessment year. The ld. CIT(A) confirmed the addition u/s 68. However, the ITAT Delhi found that the assessee provided a cash flow statement and bank statements showing significant withdrawals, proving the availability of cash. Consequently, the ITAT deleted the addition of &8377; 8,98,620 related to cash deposits.

Issue 2: Addition of alleged difference in rental income between return and Form 26AS:
Regarding the addition of &8377; 4,20,000 for the alleged difference in rental income, the AO compared the rent shown by the assessee with Form 26AS. The ld. CIT(A) upheld this addition, stating that the explanations provided lacked documentary support. However, the ITAT noted that the property generating rental income was jointly owned by the assessee and another entity. The ITAT observed that the rental income was shared between the co-owners, with each declaring their respective shares. As the other owner had declared their share of rental income, the ITAT concluded that no additional income should be attributed to the assessee. Therefore, the ITAT deleted the addition of &8377; 4,20,000.

In conclusion, the ITAT allowed the appeal of the assessee, deleting both the additions made by the AO and confirmed by the ld. CIT(A). The judgment was pronounced on 11th April 2022.