2023 (6) TMI 931 - AT - Income Tax

Unexplained cash deposits - undisclosed income of the assessee - CIT-A held as cash deposit has already been added and confirmed and held that estimated addition, which is only a source based addition and gets telescoped against the application based additions of cash deposits in bank account, is not required and deleted the same - HELD THAT - We note that there was AIR information of cash deposit - In absence of source of deposits, the authorities below have made the addition thereof. We find that the same is quite correct in view of non-cooperation and lack of details provided by the assessee. CIT (A) has been quite judicious in his approach when he deleted the addition - Hence, no infirmity in the order of the ld. CIT (A) and the same is a well-reasoned order and does not require any interference on our part. Appeal filed by the assessee is dismissed.

Summary

Issues:
The issues involved in this case are the assessment of undisclosed income based on cash deposits in the bank account, estimation of business income, and disallowance of deductions u/s 80C & 80D.

Assessment of Undisclosed Income:
The Assessing Officer (AO) noted cash deposits of Rs. 78,74,870 in the assessee's bank account based on AIR information for AY 2014-15. The assessee failed to explain the source of this deposit, leading the AO to treat it as undisclosed income and add it to the total income. Additionally, the AO estimated the business income at Rs. 7,50,000 due to lack of detailed evidence, resulting in another addition of Rs. 1,39,493. Deductions u/s 80C & 80D were withdrawn in the absence of proper documentation.

Proceedings Before CIT (A):
The assessee appealed before the ld. CIT (A) who observed a lack of cooperation from the assessee and his counsel. Despite the assessee's claim of setting off cash withdrawals against deposits, no bank statements or evidence were provided to support this. Consequently, the ld. CIT (A) confirmed the addition of Rs. 78,74,870 as unexplained cash deposit. Regarding the ad hoc addition of Rs. 1,39,493, it was deleted by the ld. CIT (A) as the entire cash deposit had already been confirmed.

Appellate Tribunal Decision:
The appeal reached the Appellate Tribunal where the assessee did not appear during the hearing. The Tribunal noted the cash deposit information and upheld the additions made by the lower authorities due to the lack of cooperation and evidence from the assessee. The Tribunal found the ld. CIT (A)'s decision to delete the ad hoc addition reasonable and well-justified. Consequently, the Tribunal dismissed the appeal, affirming the order of the ld. CIT (A).

This judgment highlights the importance of providing necessary documentation and cooperation during tax assessments to avoid adverse inferences and additions to income.