2024 (2) TMI 1339 - AT - Income Tax

Addition u/s 68 - unexplained cash credit - Onus to prove - HELD THAT - We note that assessee has sufficient evidence and document to prove the claim and for that assessee also submitted bank statement and cash-flow statement, which clearly shows the availability of cash balance. Assessee has submitted relevant documents and evidence to prove his claim and Assessing Officer has not made any adverse finding in any of these documents even though all the details were furnished by the assessee before Assessing Officer. AO ought to have examined all these documents and rebutted them with a cogent adverse findings and discernable line of reasoning in order to arrive at conclusion and to make addition on account of unexplained cash credit. We also find merit in the submission of the assessee that since assessee is not maintaining books of accounts, therefore addition made by the AO u/s 68 of the Act, is not tenable. Therefore, we note that AO has just brushed aside the documents and evidences submitted by the assessee, without even a word on why they are not acceptable. It is a well settled law that when assessee has all plausible evidence in support of his claim, they cannot be brushed aside on surmise and conjecture. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence, this ground of assessee is allowed.

Summary

Issues involved:
The issues involved in the judgment are related to the addition of unexplained cash credit, confirmation of additions by the CIT(A), charging of interest under various sections of the Income Tax Act, initiation of penal actions, and the availability of cash balance for deposit.

Addition of Unexplained Cash Credit:
The assessee, an Individual, filed a return of income declaring Rs. 19,09,260. The Assessing Officer noted that the assessee received exempt income from a partnership firm and introduced capital amounting to Rs. 10,77,708 during the year, out of which Rs. 5,00,000 was in cash. The Assessing Officer added Rs. 76,808 as unexplained cash credit, resulting in a total addition of Rs. 5,76,808. The CIT(A) confirmed this addition. However, the Tribunal found that the assessee had sufficient evidence, including bank statements and cash-flow statements, to prove the source of the cash deposit. As the Assessing Officer did not provide any adverse findings on the documents submitted by the assessee, the Tribunal concluded that the addition under section 68 of the Act was not justified and deleted the addition.

Confirmation of Additions by CIT(A):
The CIT(A) confirmed the additions made by the Assessing Officer regarding the unexplained cash credit without giving cognizance to the audit report of the partnership firm or considering the substantial income sources of the assessee and his wife. The Tribunal, however, found in favor of the assessee based on the evidence provided, concluding that the additions were not justified.

Charging of Interest and Penal Actions:
The Assessing Officer charged interest under sections 234A, 234B, and 234C of the Act, and initiated penal actions under section 271(1)(1). The Tribunal did not find merit in these actions and held that the interest should not have been charged and penal actions should not have been initiated.

Availability of Cash Balance for Deposit:
The assessee argued that he had sufficient cash-in-hand to deposit the amount in the bank from genuine sources. The Tribunal considered the evidence presented by the assessee, including bank statements and cash withdrawals, and concluded that the Assessing Officer did not provide a valid reason for the addition of unexplained cash credit. As the assessee had submitted relevant documents and the Assessing Officer did not rebut them with adverse findings, the Tribunal allowed the appeal, deleting the addition.