2013 (4) TMI 61 - AT - Income Tax

Tribunal upholds CIT(A)'s decision on unverifiable loans & cash deposits

Shravan Singh Arora Versus Department of Income Tax

The Tribunal upheld the CIT(A)'s decision to delete additions related to unverifiable loans and cash deposits from undisclosed sources. The Revenue's ... Addition u/s 68 - unverifiable loan from Shri Satish Chopra and Smt.Chand Rani - Held that:- As fresh evidences before the CIT(A) were produced who forwarded the same to the AO and called for the remand report who furnished the remand report in which his only comment with regard to Smt.Chand Rani was 'Reply received from legal heir Sh. Partha Arora, confirming the loans advanced to the assessee. (copy enclosed as annexure 'E').' With regard to Shri Satish Chopra, no comment was given in the remand report. On these facts, CIT(A) deleted the addition mainly pointing out that in the remand report, the AO has not disputed the correctness of the evidences furnished by the assessee before the CIT(A). Against revenue. Cash deposit in the bank account from undisclosed sources - CIT(A) deleted the addition - Held that:- It is evident that in the remand proceedings, the assessee produced the evidences explaining the source of the deposit of Rs.2 lakhs in cash in the bank account which has not been disputed by the Assessing Officer. In view of the above, we do not find any infirmity in the order of learned CIT(A). The same is sustained and ground No.2 of the Revenue's appeal is also rejected - in favour of assessee. Issues:1. Addition of unverifiable loan amounts from specific individuals.2. Deletion of cash deposit addition from undisclosed sources.Analysis:Issue 1: Addition of unverifiable loan amountsThe Revenue challenged the deletion of additions totaling Rs.4,17,805 and Rs.10,00,000 on account of unverifiable loans from Shri Satish Chopra and Smt. Chand Rani, respectively. The Revenue argued that the genuineness and creditworthiness of the loans were unproved. The CIT(A) considered fresh explanations and evidence presented by the assessee. Regarding the loan from Smt. Chand Rani, it was explained that she was the mother of the assessee, had sufficient funds, and the transaction was through a bank, with no challenge to her creditworthiness. As for Shri Satish Chopra, it was stated that the deposit was previously accepted by the department, and his creditworthiness and identity were not disputed. The CIT(A) forwarded these explanations to the Assessing Officer, who did not dispute the correctness of the evidence provided. Consequently, the CIT(A) deleted the additions, emphasizing the lack of challenge by the Assessing Officer. The Tribunal upheld the CIT(A)'s decision, rejecting the Revenue's appeal on this issue.Issue 2: Deletion of cash deposit additionThe Revenue contested the deletion of an addition of Rs.2 lakhs made by the Assessing Officer on account of a cash deposit in the assessee's bank account from undisclosed sources. The CIT(A) reviewed the case and found that the assessee had submitted bank statements proving the source of the cash deposit. The Assessing Officer, in the remand report, acknowledged the evidence provided by the assessee regarding the cash deposit. As the source of the deposit was adequately explained and not disputed, the CIT(A) deleted the addition. The Tribunal agreed with the CIT(A), sustaining the decision to reject the Revenue's appeal on this issue.In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions to delete the additions related to unverifiable loans and cash deposits from undisclosed sources based on the explanations and evidence provided by the assessee, which were not disputed by the Assessing Officer during the remand proceedings.