2016 (6) TMI 1478 - AT - Income Tax

Assessee fails to explain cash deposits and jewellery investments during search proceedings under section 292C

ITAT Chandigarh upheld CIT(A)'s order sustaining various additions made by AO during search proceedings. Court dismissed assessee's appeals regarding ... Cash deposits in bank account - CIT(A) deleted the addition - HELD THAT:- On perusal of the order of the CIT (Appeals), we do not find any infirmity in the same as his decision is based on Remand Report filed by the Assessing Officer. In the remand proceedings, the Assessing Officer had called for information from the bank and verified the contention raised by the assessee. In this view, we do not intend to interfere with the order of the CIT (Appeals). Deposits in bank account - CIT (Appeals) decided the issue against the assessee stating that the stance of the assessee linking up the withdrawals from one account to the other account is not plausible because of the time gap as well as involvement of different bank accounts - HELD THAT:- We do not find any infirmity as it is a fact on record that the assessee did not furnish any of the bank accounts before the AO even when he kept on asking for the same. The Assessing Officer had requisitioned these accounts under section 133(6) of the Act from the bank itself. At the time of assessment proceedings, the assessee did not come out with the explanation which he offered before the CIT (Appeals) and even the evidence in the form of bank account No.6678 being filed before the CIT (Appeals) for the first time was not available readily. In the said circumstances, we do not find any infirmity in the order of the CIT (Appeals) Investment made by the assessee in jewellery - CIT (Appeals) dismissed the ground of the assessee stating that investments were found at the residence of the assessee and the presumption was against him, which he had not been able to rebut - HELD THAT:- No infirmity in the order of the CIT (Appeals) as there is no dispute to the fact that three retail invoices of M/s Tanishq were found during the course of search from the residence of the assessee. The presumption of the documents found during the course of search is against the assessee. It is presumed that the document belong to the assessee though the presumption is a rebuttable one but we observe that nowhere during the proceedings before the Assessing Officer as well as the CIT (Appeals) the assessee had been able to rebut the same with the cogent evidence. Therefore, we do not find ourselves inclined to interfere in the order of the CIT (Appeals). The ground of the assessee is dismissed. Cash deposits in the bank account in the name of the assessee - CIT(A) sustained addition only to the extent of peak credit - HELD THAT:- When we observe that the bank account is having frequent deposits and withdrawals, there is no justification in making the addition of all the deposits as the benefit of withdrawal also may be given to the assessee. The theory of peak credit is to be applied. Therefore, we do not intend to interfere in order of the CIT (Appeals). Addition of expenses incurred on construction only on the ground that since the same was surrendered and not declared while filing of return - HELD THAT:- No infirmity as the assessee himself during the course of search has disclosed both the amounts - The stand was changed at the time of assessment proceedings. Furthermore, the behavior of the assessee during the course of search and changing stances before the Assessing Officer also casts aspersions in the submissions made by the assessee. Therefore, we are not inclined to interfere with the order of the CIT (Appeals). The ground of appeal is decided against the assessee. Jewellery found at the time of search - HELD THAT:- No infirmity as the CIT (Appeals) was fair enough to give the assessee relief of Rs. 5 lacs considering the fact that he has been married for a long time and his parents are also living with him. The jewellery may also form part of istri dhan of his wife and his mother. However, it is a fact on record that the assessee has made very general explanation with regard to the source of jewellery and has not given any specific source of acquiring the said jewellery. Therefore, we are not inclined to interfere with the order of the CIT (Appeals). The ground of appeal raised by the assessee is dismissed. Cash found during the course of search - HELD THAT:- No infirmity since the assessee has given only bald submission to the effect that the cash was sourced out of the income generated by him as per the statement recorded at the time of search, while the fact is that the assessee has not been able to substantiate the source of cash before the AO even before the CIT (Appeals). Therefore, we are not inclined to interfere with the order of the CIT (Appeals). The ground of appeal raised by the assessee is dismissed. Addition on the basis of seized documents on account of purchase of jewellery from the residence of assessee - HELD THAT:- We do not find any infirmity since the assessee has not been able to substantiate the source of acquisition of jewellery and in view of the presumption under section 292C of the Act being against the assessee as the documents were found during the course of search from the premises of the assessee, the addition is to be sustained. We are not inclined to interfere with the order of the CIT (Appeals). The ground of appeal raised by the assessee is dismissed. Issues Involved:1. Deletion of addition on account of cash deposits in bank accounts.2. Deletion of addition on account of deposits in bank accounts.3. Sustaining addition on account of deposits in bank accounts.4. Sustaining addition on account of jewellery found during search.5. Sustaining addition on account of cash found during search.6. Sustaining addition on account of alleged expenses incurred on construction.Issue-wise Detailed Analysis:1. Deletion of Addition on Account of Cash Deposits in Bank Accounts:The Revenue challenged the deletion of an addition of Rs. 9,50,000/- on account of cash deposits in the bank account. The Assessing Officer (AO) observed that the assessee made a total deposit of Rs. 24,50,292/-, with only Rs. 15,00,292/- surrendered. The AO added Rs. 9,50,000/- assuming it was from cash deposited. The assessee contended that this amount was a cash withdrawal re-deposited later. The CIT (Appeals) deleted the addition based on a Remand Report from the AO, which verified that no fixed deposit was made from the cash withdrawal. The Tribunal upheld the CIT (Appeals)’ order, finding no infirmity.2. Deletion of Addition on Account of Deposits in Bank Accounts:The Revenue also challenged the deletion of additions of Rs. 27,00,000/- and Rs. 11,00,300/- on account of deposits in bank accounts. The AO made these additions, considering the deposits as undisclosed. The assessee argued for the addition of only peak credit, which the CIT (Appeals) accepted, directing the AO to determine the peak credit. The Tribunal upheld this decision, noting regular deposits and withdrawals in the accounts, justifying the peak credit method.3. Sustaining Addition on Account of Deposits in Bank Accounts:The assessee contested the sustaining of additions of Rs. 27,00,000/- and Rs. 11,00,300/- despite the benefit of peak credit. The Tribunal dismissed these grounds, referencing its decision in the Revenue’s appeal, where it upheld the CIT (Appeals)’ order on peak credit.4. Sustaining Addition on Account of Jewellery Found During Search:The AO added Rs. 3,53,645/- based on invoices found during a search. The assessee claimed the invoices did not belong to him. The CIT (Appeals) upheld the addition, stating the presumption against the assessee was not rebutted. The Tribunal agreed, noting the assessee failed to provide evidence to disprove the presumption.5. Sustaining Addition on Account of Cash Found During Search:The AO added Rs. 13,91,570/- for cash found during a search, which the assessee claimed was from his business activities. The CIT (Appeals) upheld the addition, finding the assessee’s explanation unsubstantiated. The Tribunal concurred, noting the lack of evidence supporting the assessee’s claims.6. Sustaining Addition on Account of Alleged Expenses Incurred on Construction:The AO added Rs. 58,37,500/- for expenses on construction, which the assessee claimed was already included in a surrender amount. The CIT (Appeals) upheld the addition, noting the assessee’s inconsistent statements and lack of evidence. The Tribunal agreed, highlighting the assessee’s failure to substantiate his claims.Conclusion:The Tribunal dismissed both the assessee’s and the Revenue’s appeals, upholding the CIT (Appeals)’ orders on all issues. The Tribunal found no infirmity in the CIT (Appeals)’ decisions, which were based on remand reports and consistent legal principles. The Tribunal emphasized the importance of evidence and substantiation in tax matters, particularly in cases involving undisclosed income and assets.