2014 (8) TMI 270 - AT - Income Tax

Appellate Tribunal Upholds Decision on Income Sources

The Appellate Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal and confirming the acceptance of loans, sources of income not ... Receipt of loans from various persons – Creditworthiness of persons not established – Held that:- Smt. P. Vinodha is mother-in-law of the assessee who filed an affidavit and submitted that she has funds out of retirement, death-cum-retirement benefit of her husband plus income from agricultural land of about ac.6.32 gts - Assessee being son-in-law, she advanced interest free loan and confirmed the amounts - Assessee being a shareholder in the property also, it were accepted by the CIT(A) as a source –the order of the CIT(A) is upheld – Decided against Revenue. Sale of agricultural land – Amount not effected in bank a/c – Held that:- Just because it was not affected to the bank account, it does not mean that assessee did not have a source of funds - CIT(A) has noted that assessee has sold ac.2.12 gts situated at Maheswaram Mandal - copy of the pattadar passbook as noted by the revenue authorities were also filed – there was no reason in not giving credit to the amount, just because the transaction has not routed through the bank account - AO has verified the cash deposits and bank account and the assessee also explained to AO the source of deposit out of sale proceeds received in cash – Decided against Revenue. Advance receipt on sale of land – No evidence adduced – Held that:- There was no reason not to give credit to the amount - Assessee has shown the amount in the Balance Sheet prepared as advance received and furnished necessary evidence in the form of an agreement of sale before the CIT(A) with necessary Annexures vide E & F which was also sent to the AO in the remand - If AO chose to ignore and gives report to the CIT(A) that all the information was available with the AO at the time of assessment, the CIT(A) cannot be faulted for entertaining the evidence and giving a finding - the assessee has submitted necessary evidences in support of contention that it has received advance by virtue of the agreement of sale entered with a company, there was no reason to differ from the finding of CIT(A) – Decided against Revenue. Issues:1. Acceptance of loans without established credit worthiness2. Acceptance of sources of income not reflected in bank account3. Acceptance of advance received without evidence4. Disregarding comments of the Assessing Officer in the remand reportIssue 1: Acceptance of loans without established credit worthinessThe appellant, an individual earning income from dairy and house property, was under scrutiny for substantial cash deposits in bank accounts. The Assessing Officer (A.O.) made an addition of Rs. 42,58,440 after considering only Rs. 7,71,560 as available resources out of total deposits of Rs. 50,30,000. The appellant contended that the peak cash deposits did not exceed Rs. 35 lakhs. The CIT(A) considered various sources of income, including loans from different individuals, and arrived at a net available cash of Rs. 34,16,766. The CIT(A) rejected the peak credit concept invoked by the appellant and confirmed Rs. 8,41,674 as unexplained, while deleting the balance amount. The Tribunal upheld the CIT(A)'s decision, stating that the evidence provided by the appellant regarding loans was sufficient, including affidavits and confirmations from the lenders, hence dismissing the appeal.Issue 2: Acceptance of sources of income not reflected in bank accountThe appellant explained the source of Rs. 4,60,000 from the sale of agricultural land, which was not reflected in the bank account. The CIT(A) accepted this explanation, noting that the appellant had sold land and received the amount in cash, supported by relevant documents. The Tribunal agreed with the CIT(A), emphasizing that being an agriculturist, the appellant had a valid source of funds from the sale of land, even if not deposited in the bank account. Therefore, the Tribunal rejected the Revenue's argument against accepting this income source.Issue 3: Acceptance of advance received without evidenceRegarding the advance of Rs. 10 lakhs received on the sale of land at Mohabbat Nagar, the appellant provided evidence in the form of an agreement of sale and affidavits from involved parties. The Tribunal found that the appellant had adequately substantiated the advance received, contrary to the Revenue's claim of insufficient evidence. The Tribunal noted that the appellant had included the amount in the Balance Sheet and provided necessary documentation to support the transaction. As the Assessing Officer had all the information during assessment but chose to reject it, the Tribunal upheld the CIT(A)'s decision to accept the advance as a legitimate source of income, dismissing the Revenue's objection.Issue 4: Disregarding comments of the Assessing Officer in the remand reportThe Tribunal found Ground No. 5, related to disregarding the Assessing Officer's comments in the remand report, infructuous due to the absence of the remand report on record during the hearing. As the Deputy Registrar failed to provide the remand report despite adjournments, the Tribunal could not adjudicate on this ground. Consequently, the issue was considered irrelevant and not addressed in the judgment.In conclusion, the Appellate Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal and confirming the acceptance of loans, sources of income not reflected in the bank account, and advance received with proper evidence. The Tribunal emphasized the sufficiency of evidence provided by the appellant to support the various income sources, leading to the rejection of the Revenue's contentions.