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2024 (7) TMI 1012 - AT - Income TaxUnexplained cash credit - RTGS transfer from the assessee s bank account in IDBI bank to standard chartered bank - HELD THAT - As transpired that there was no deposit of cash in its bank account namely Standard Chartered Bank as alleged by the revenue but there was FD made by the assessee out of the loan obtained from the bank as discussed above. Such amounts of FD cannot be treated as unexplained cash deposit as alleged by the revenue based on the AIR information. Accordingly, the same cannot be made subject to the addition. Thus, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Addition based on the bank statements has submitted that there was no cash deposit in the bank account dated 12 March 2012. The contention of the assessee has nowhere been proved wrong by the revenue by bringing contrary material. The onus lies upon the revenue to bring necessary corroborative material suggesting that there was a deposit in the bank account of the assessee. As such, merely based on the AIR information, there cannot be any addition to the total income of the assessee until and unless some corroborative materials are brought on record. But the revenue failed to do so. Accordingly, no addition is warranted to the total income of the assessee based on the AIR information. Thus, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is hereby allowed. Addition on account of time deposits as unexplained - AO held that the assessee was required to explain the source of the time deposit even assuming such deposits were required to be made for issuance of LOC/Bank Guarantee but failed to do so - HELD THAT - The present case, the assessee has made time deposits/ renewed time deposits and fixed deposits in its bank account out of the bank account disclosed in the books of accounts. The assessee in the year under consideration has shown operating receipts which is commensurate to the amounts of FDs made by the assessee. CIT-A rightly deleted the addition made by the AO after giving detailed reasoning explained somewhere in the preceding paragraph. DR at the time of hearing, has not brought anything contrary to the finding of the learned CIT-A. Accordingly, we do not find any reason to disturb the findings given by the learned CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed. Regarding the renewal of time deposits, we note that the word renewal itself suggests that FDs, were made by the assessee on the earlier occasion which have been matured and renewed as fixed deposits in the year under consideration. The revenue has not doubted on the original source of renewal of these time deposits. In our considered view, the renewal of time deposits cannot be questioned until and unless the original value of the FD is in doubt. The revenue has nowhere doubted the original total value of the FD, therefore in our considered view the matured value of such FD renewed in the year under consideration cannot be questioned. On this reasoning alone, the finding of the learned CIT-A is not sustainable. Renewal of FDs - The books of accounts of the assessee were duly audited and the same are not rejected by the revenue. Thus, what transpired is this that all the entries reflecting in the bank statement were duly disclosed in the audited financial statements. Furthermore, the operating income shown by the assessee for the year under consideration is sufficient to justify the source of such these FDs/ Time Deposits. Accordingly, in our considered view, the finding of the learned CITA is not sustainable. There is a double addition by the revenue with respect to certain FDs which were renewed in the year under consideration. For instance, certain FDs were made by the assessee for the 1st time in the year in dispute and the same was added by the AO to the total income of the assessee. On the maturity of such these FDs/ renewals of such FD s, the revenue has made further addition which leads to the double addition. Such double addition is not desirable under the provisions of law until and unless the provision of law warrants so. Accordingly, we are of the view that, the renewal of the FDs cannot be made subject to the addition. Addition on account of investments in the land property - We find that the cheque numbers as mentioned in sale deed duly debited in the bank of the assessee as on 22 and 23 February 2012 against the name of vendor parties. At the time of hearing, the learned DR could not controvert the facts stated above. Thus, there cannot be drawn any adverse inference against the assessee merely for the clearance of the cheques later. Hence, we set aside the finding of the ld. CITA and direct the AO to delete the addition made by him. Unexplained cash credit u/s 68 - The identity of parties/share applicant/vender/promotors has been duly established by the assessee on strength of the above document. Credit worthiness was also not in doubt as these parties were regularly filing returns of income and showing substantial income. The onus regarding the genuineness of transaction was also discharged by the assessee by furnishing the board resolution, minutes of extraordinary general meeting, ROC filing. Furthermore, the above parties have duly accounted for the transactions in their books on which offered capital gain. It is also pertinent to highlight that the transaction of land for which consideration was paid by allotting share at huge premium was between assessee company and its promotors/owner. If we lift the corporate veil, ultimately, they were still the owners of the land transferred to the assessee. Thus, in given facts and circumstances, the genuineness of the transaction was also duly established. Decided in favour of assessee.
Issues Involved:
1. Addition of Rs. 1,21,50,000 as unexplained cash credit. 2. Addition of Rs. 7,33,07,611 as unexplained time deposits. 3. Addition of Rs. 3,25,08,000 as unexplained investment in land property. 4. Deletion of Rs. 13,05,35,880 under section 68 of the Act and unexplained investment in land. Detailed Analysis: 1. Addition of Rs. 1,21,50,000 as Unexplained Cash Credit: The assessee contested the addition of Rs. 1,21,50,000, arguing that the deposits were not cash but inter-bank transfers. The AO, based on AIR information, insisted on the addition, claiming the assessee failed to provide adequate evidence. The CIT(A) upheld the AO's decision, noting inconsistencies and lack of documentary proof from the assessee. Upon appeal, the tribunal found that: - Rs. 37.50 lakhs was an inter-bank transfer from IDBI to Standard Chartered Bank, as evidenced by bank statements. - The Rs. 75 lakhs deposit was part of a loan from Standard Chartered Bank, with Rs. 4.25 crores transferred to IDBI and Rs. 75 lakhs as margin money. - The Rs. 9 lakhs deposit was not traceable in the bank statements, and the revenue failed to provide contrary evidence. The tribunal directed the AO to delete the addition of Rs. 1,21,50,000, as the assessee's explanations were corroborated by documentary evidence. 2. Addition of Rs. 7,33,07,611 as Unexplained Time Deposits: The AO added Rs. 13,14,31,431 as unexplained time deposits, questioning the source of these deposits. The assessee explained that these were margin money for bank guarantees, supported by operating income and bank statements. The CIT(A) partially accepted this, deleting Rs. 5,81,23,820 but sustaining Rs. 7,33,07,611 due to lack of supporting evidence for renewals and misunderstandings. Upon appeal, the tribunal found: - The renewal of time deposits (Rs. 6,66,83,815) should not be questioned without doubting the original deposits. - The remaining amount (Rs. 66,23,796) had errors in the AO's calculations and was not supported by AIR information. The tribunal directed the AO to delete the addition of Rs. 7,33,07,611, as the renewals and errors were sufficiently explained. 3. Addition of Rs. 3,25,08,000 as Unexplained Investment in Land Property: The AO added Rs. 3,25,08,000, alleging the assessee failed to prove the source of investment in land. The CIT(A) confirmed this, noting discrepancies in cheque clearances. Upon appeal, the tribunal found: - The cheques for Rs. 3,25,08,000 were cleared later, as evidenced by bank statements. - The delay in cheque clearance did not warrant the addition. The tribunal directed the AO to delete the addition of Rs. 3,25,08,000, as the investment was explained through banking channels. 4. Deletion of Rs. 13,05,35,880 under Section 68 of the Act and Unexplained Investment in Land: The AO added Rs. 13,05,35,880 under section 68, alleging unexplained share capital/premium and investment in land. The CIT(A) deleted this, accepting the assessee's documentary evidence and explanations regarding share allotment at a premium for land purchase. Upon appeal, the tribunal found: - The share allotment at a premium was genuine, supported by board resolutions, meeting minutes, and ROC filings. - The promoters' identity and creditworthiness were established, and the transactions were reflected in their returns. The tribunal upheld the CIT(A)'s deletion of Rs. 13,05,35,880, confirming the genuineness of the transactions. Conclusion: The tribunal allowed the assessee's appeal, directing the deletion of all contested additions, and dismissed the revenue's appeal, upholding the CIT(A)'s decisions where applicable. The order was pronounced on 07/05/2024 at Ahmedabad.
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