2014 (12) TMI 883 - AT - Income Tax

Tax Tribunal Decision: Unexplained Cash Deposits Upheld, Appeals Dismissed

Shri Anurag Pandey And Others Versus Dy. CIT., Central Circle-V, Kanpur

The Tribunal found additions for cash in hand as opening balance, unexplained loans, and construction expenses unsustainable due to lack of incriminating ... Addition of opening balance of cash in hand – Held that:- Search u/s 132 was carried out in Pandey group of cases on 19/04/2006 – as decided in All Cargo Global Logistics vs. DCIT [2012 (7) TMI 222 - ITAT MUMBAI(SB)] - in those AYs where the assessment has not abated, the assessment u/s 153A will be made on the basis of incriminating material found during search - this is not the case of the AO that any incriminating material was found during the course of search for this assessee - The addition has been made on the basis of cash flow statement filed in course of assessment proceedings - such an addition cannot be made in the absence of any incriminating material having been found in course of search because the assessment of this year has not abated – thus, the addition made by the AO is not sustainable – Decided in favour of assessee. Addition on the basis of cash flow statement – Held that:- It is noted by the AO that in response to notice issued u/s 153C, it was submitted by the assessee that original return of income was filed on 31/10/2001, which may be treated as return filed in response to this notice - Hence, in this case also, the assessment has not abated and therefore on the same basis, the addition made by AO is not sustainable – Decided in favour of assessee. Addition of unsecured loans – Held that:- The AO made addition of ₹ 51,000/- in respect of three unsecured loans of ₹ 15,000/- from Ram Babu, ₹ 18,000/- from Shri Surendra Kumar and ₹ 18,000/- from Rajesh Kumar totaling to ₹ 51,000/- on the basis that the assessee could not file confirmation from these persons - the original return was filed on 06/08/2002 - the assessment for this year has also not abated and the addition made by AO is not sustainable because the same is not on the basis of any incriminating material found in search. Addition of amount estimated as cost of boundary wall – Held that:- The AO asked the assessee to explain the source of investment - the basis of making this addition is also not this that any incriminating material was found during the course of search and the same is on the basis of post search enquiry and in such enquiry also, the facts are not brought on record as to whether the flat was purchased along with the boundary wall or the boundary wall was constructed afterwards - the assessment has not abated and no addition can be made except on the basis of any incriminating material found in search - Since no incriminating material was found in search in respect of construction of boundary wall, the addition is not sustainable – decided in favor of assessee. Issues:- Addition of cash in hand as opening balance in financial years- Addition of unexplained loans- Addition of unexplained construction expenses- Addition of unexplained cash deposits in bank accountAnalysis:1. Addition of Cash in Hand as Opening Balance:- The appeals involved different assessees from the same group with additions made by the Assessing Officer for cash in hand as the opening balance in financial years. The Tribunal reviewed each case separately.- In the case of Anurag Pandey for assessment year 2001-02, the Tribunal found that the addition made by the Assessing Officer was not sustainable as no incriminating material was found during the search, and the assessment had not abated.- Similar decisions were made in the cases of Smt. Asha Pandey and Sunil Kumar Pandey for the same assessment year, where the additions were held to be unsustainable due to lack of incriminating material found during the search.2. Addition of Unexplained Loans:- In the case of Sunil Kumar Pandey for assessment year 2002-03, the Assessing Officer made an addition for unsecured loans without confirmation from the lenders. The Tribunal ruled that since no incriminating material was found during the search, the addition was not sustainable.3. Addition of Unexplained Construction Expenses:- For assessment year 2003-04, Sunil Kumar Pandey faced an addition for unexplained construction expenses. The Tribunal noted that the basis of the addition was not incriminating material found during the search, and therefore, the addition was deemed unsustainable.4. Addition of Unexplained Cash Deposits in Bank Account:- Sandeep Pandey faced an addition for unexplained cash deposits in the bank account for assessment year 2005-06. The Tribunal upheld the addition as the assessee failed to provide any explanation for the entry.5. Overall Decision:- The Tribunal allowed the appeals of Anurag Pandey, Smt. Asha Pandey, Sunil Kumar Pandey for various assessment years, where additions were deemed unsustainable due to lack of incriminating material found during the search.- However, the appeals of Sunil Kumar Pandey for assessment year 2007-08 and Sandeep Pandey for assessment year 2005-06 were dismissed as the additions were upheld by the Tribunal based on the evidence provided and lack of explanations.This detailed analysis showcases how the Tribunal assessed each issue separately and made decisions based on the legal principles and evidence presented in each case.