2022 (9) TMI 1234 - AT - Income Tax

Unexplained money u/s 69A - unexplained deposits - HELD THAT - As there was no cash involved in inter-banking deposit or rejection of return of cheques. The bank details have been submitted before us and it is seen that ICICI Bank out of total bank transaction except for an amount in respect of rejection of cheque, the remaining amount was on account of transfer of funds from Majumder Hosiery the proprietorship concern of the appellant. The details of the date wise transfer with narration and amount is seen to be matching with the bank entries as per record and therefore there is not discrepancy in the matter as alleged. As in respect of ICICI Bank and Bandhan Bank out of inter-bank transactions details of date wise transfer with narration and amount is seem to be matching with the bank entries and there are no discrepancies found as alleged by the AO in his order. The view taken by the AO in respect of impugned addition as unexplained deposit u/s 69A of the Act was deleted by the ld. CIT(A) since assessee clearly explained the transaction by furnishing details of date-wise transfer with narration and amounts are matching with bank entries and no discrepancies found in the transactions and therefore, we do not want to interfere in respect of this issue and view taken by the ld. CIT(A) is affirmed. Addition on account of realization from sundry debtors account from the order - The books of accounts were not disturbed and on the settled principle that once books of assessee are not rejected and explanation furnished is reasonable no addition can be made. The ld. CIT(A) also relied on the various decisions pronounced by the Hon ble High Court as well as Hon ble Apex Court and stand taken by the AO was deleted. We also going through the facturl matrix of the case, we do not want to interfere in the findings given by the ld. CIT(A) since one goods have been sold the buyer became the debtor and such in respect of money from him is nothing but realization of such debt. As such section 68 cannot be applied in the case of assessee and the addition made by the AO stand deleted by the ld. CIT(A) and we do not want to interfere in the order passed by the ld. CIT(A) in respect of this issue and ground taken by the revenue is dismissed. Unexplained deposits - On perusal of the assessment order as well as the order passed by the ld. CIT(A), we noticed that the AO never rejected the books of accounts of the assessee and without rejecting the books of accounts, the addition made by the AO cannot be sustained and it is settled principle of law that without rejecting books of accounts, the addition made by the AO cannot be sustained and as such the addition confirmed by the ld. CIT(A) is hereby deleted. Appeal of assessee allowed.

Summary

Issues Involved:
1. Addition of Rs. 65,52,478/- on account of inter-banking transactions.
2. Addition of Rs. 40,05,654/- on account of realization from sundry debtors.
3. Addition of Rs. 3,58,428/- due to unexplained differences in accounts.

Detailed Analysis:

1. Addition of Rs. 65,52,478/- on Account of Inter-Banking Transactions:
The Assessing Officer (AO) added Rs. 65,52,478/- as unexplained deposits under Section 69A of the Income-tax Act, 1961, despite the assessee's detailed explanation and reconciliation of inter-bank transactions amounting to Rs. 1,96,38,478/-. The AO accepted Rs. 1,30,86,000/- but added back Rs. 65,52,478/-. The CIT(A) found that there was no cash involved in these transactions, which were purely inter-bank deposits or cheque rejections. The bank statements and details matched the records, showing no discrepancies. The CIT(A) deleted the addition, referencing the Supreme Court's decision in Mehta Parikh & Co vs. CIT, which held that reasonable explanations should be accepted if the books of accounts are not rejected. The Tribunal affirmed the CIT(A)'s decision, finding no grounds to interfere.

2. Addition of Rs. 40,05,654/- on Account of Realization from Sundry Debt:
The AO added Rs. 40,05,654/- as unexplained deposits, questioning the confirmations of sundry debtors because they were printed in the same manner. The CIT(A) noted that the sundry debtors' balance as of 31.03.2016 was Rs. 55,13,058/-, out of which Rs. 40,05,654/- was received during the year. These amounts were part of the accepted sales for AY 2016-17, as per audited accounts. The CIT(A) cited several judicial precedents, including the Delhi High Court's decision in CIT v. Kailash Jewellery House, which held that once sales are accepted, their realization from debtors cannot be added again as unexplained income. The Tribunal upheld the CIT(A)'s order, agreeing that Section 68 cannot be applied to the realization of debts from sales already accounted for.

3. Addition of Rs. 3,58,428/- Due to Unexplained Differences in Accounts:
The AO added Rs. 3,58,428/- due to unexplained differences in various accounts. The CIT(A) confirmed this addition, noting that the assessee failed to satisfactorily explain the difference. However, the Tribunal found that the AO did not reject the assessee's books of accounts and that without such rejection, the addition could not be sustained. The Tribunal deleted the addition, emphasizing that it is a settled principle of law that additions cannot be made without rejecting the books of accounts.

Conclusion:
The Tribunal dismissed the revenue's appeal and allowed the assessee's cross-objection, upholding the CIT(A)'s deletion of additions amounting to Rs. 65,52,478/- and Rs. 40,05,654/-, and also deleting the addition of Rs. 3,58,428/-. The Tribunal emphasized the importance of reasonable explanations and proper verification of records, aligning with established judicial precedents.