2024 (3) TMI 205 - AT - Income Tax

Unexplained cash u/s. 69A - Difference in turnover - CIT(A) deleted addition admitting additional evidences - explanation of the assessee is that this amount is being deposited by the sister concern of the assessee for the purpose of taking a Demand Draft favouring Andhra Pradesh Beverages Corporation for procuring of stock by them - CIT(A) deleted addition as observed that once the cash deposit is treated as turnover, the same shall not be treated as unexplained money HELD THAT - As the sister concern by way of an affidavit has confirmed the cash deposits in the assessee s bank account stating their inability to obtain Demand Draft from their bank account. The details with the dates of cash deposits are also made in the affidavit and it corresponds to the bank statements provided by the assessee. In the light of the peculiar circumstances as stated above, on merits, we are of the considered view that these cash deposits do not belong to the assessee but for only to accommodate the sister concern to obtain the Demand Draft favouring Andhra Pradesh Beverages Corporation for procuring stock for their entity and therefore it cannot be treated as income in the hands of the assessee. Admission of additional evidence by the CIT(A) under Rule 46A(2) and 46A(3) of the Income Tax Rules, 1962 - Act confers powers U/s. 250(4) of the Act to the Ld. CIT(A) to dispose of the appeal by making further enquiry as he thinks fit and if the Ld. CIT (A) thinks fit, he may direct the Ld. AO to make further enquiry and report the same to the Ld. CIT(A). In the instant case, the Ld. CIT(A) has exercised his powers U/s. 250(4) of the Act. In the light of the facts and circumstances of the case as discussed above, we find no infirmity in the order of the Ld.CIT(A) and hence the Grounds raised by the Revenue on the issue are dismissed.

Summary

Issues:
The appeal filed by the Revenue against the order of the Ld. Commissioner of Income Tax under Section 143(3) of the Income Tax Act, 1961 for the AY 2017-18.

Issue 1: Admission of Additional Evidence
The Revenue contended that the Ld. CIT(A) erred in admitting new evidence without following the provisions of Rule 46A(2) and 46A(3) of the Income Tax Rules, 1962. The Ld. DR supported the Ld. AO's order, while the Ld. AR argued that the turnover difference already taxed cannot be treated as unexplained money. The Ld. AR also explained that the cash deposits were used for a Demand Draft by a sister concern. The Tribunal found that the Ld. CIT(A) had the power under Section 250(4) of the Act to make further inquiries, and thus dismissed the Revenue's grounds.

Issue 2: Treatment of Cash Deposits
Regarding the treatment of cash deposits, the Ld. AO added Rs. 32,74,580 under Section 69A of the Act, and Rs. 55,43,977 was treated as unexplained income. The Ld. CIT(A) deleted these additions, stating that once turnover is treated as income, it cannot be considered unexplained. The Tribunal observed that the cash deposits were made by a sister concern for a Demand Draft, as confirmed by an affidavit. The Tribunal held that these deposits were not the assessee's income but were used to facilitate the sister concern's business, thus dismissing the Revenue's appeal.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s decision to delete the additions made by the Ld. AO. The Tribunal found that the cash deposits in question were not the income of the assessee but were utilized to assist a sister concern in obtaining a Demand Draft. The Tribunal also highlighted the powers of the Ld. CIT(A) under Section 250(4) of the Act to conduct further inquiries. The Cross Objection filed by the assessee was dismissed as not pressed, and the appeal of the Revenue was ultimately dismissed.