2016 (4) TMI 579 - AT - Income Tax

Appeal dismissed for unexplained cash deposits in bank account for 2008-09 assessment year

The appellate tribunal dismissed the appeal of the assessee regarding the addition of unexplained cash deposits in the bank account for the assessment ... Addition on account of unexplained cash deposits in bank account - Held that:- Only a photocopy of agreement cannot be held as sufficient corroborative evidence for the explanation. During the course of hearing ld. Counsel on queries contended that the possession of plot was given at the time of agreement after receiving the cash from Mangilal Jalan of Gauhati. Though sale transaction was completed capital gains were not offered in the return as assessee assumed that sale was not liable for capital gains. Thereafter, assessee has lost track of close relative who has never legally demanded registration of sale deed. Since the assessee received sale amount of plot no further efforts or care was taken. It is contended that except copy of agreement here is no other correspondence, evidence or exchange of any letters between relatives for sale deed registration or mutation of title. In my considered view the assessee’s explanation is bereft of any credible corroboration of evidence, surrounding circumstances, human conduct and preponderance of probabilities which are sine qua non of the income tax proceedings as held by Hon’ble Supreme Court in the case of Sumati Dayal [1995 (3) TMI 3 - SUPREME Court ] . The explanation canvassed by assessee defies logic and fails to invoke any confidence. In view of the foregoing have no hesitation to hold that assessee failed to discharge burden cast by I T Act in this behalf. - Decided against assessee Issues:1. Addition of unexplained cash deposits in bank account2. Addition of short term capital gains from sharesIssue 1: Addition of unexplained cash deposits in bank accountAnalysis:The case involves an appeal against the order of the ld. CIT(A)-II, Jaipur for the assessment year 2008-09. The assessee declared total income of &8377; 1,42,300/- and was selected for scrutiny. The Assessing Officer (AO) observed cash deposits exceeding &8377; 10.00 lacs in the bank account, questioning the source. The assessee claimed the cash receipt of &8377; 7,45,500/- as advance against land sale, supported by an agreement. However, discrepancies in the agreement raised doubts. The AO added the amount as unexplained cash credit, citing lack of original agreement, unproven identity and creditworthiness of the purchaser. The ld. CIT(A) upheld the addition, emphasizing discrepancies in the agreement execution date and lack of original agreement submission. The appellant contended the validity of the agreement, absence of expiry date for stamp paper, and non-production of original agreement due to strained relations with the purchaser. The Tribunal noted the absence of credible evidence supporting the explanation, leading to failure in discharging the burden of proof. While acknowledging the stamp paper validity beyond six months, the Tribunal emphasized the lack of authenticity in the photocopy of the agreement. The Tribunal dismissed the appeal, highlighting the questionable transaction and absence of verification, leading to the addition being upheld.Issue 2: Addition of short term capital gains from sharesAnalysis:During the proceedings, the ld. AR did not press Ground No. 2 related to short term capital gains from shares, leading to its dismissal. Therefore, this issue was not further discussed or analyzed in the judgment.In conclusion, the appellate tribunal dismissed the appeal of the assessee concerning the addition of unexplained cash deposits in the bank account for the assessment year 2008-09. The judgment highlighted the importance of credible evidence, authenticity of documents, and the burden of proof in income tax proceedings. The Tribunal emphasized the need for corroborative evidence and verification to support explanations in tax matters, ultimately upholding the addition due to insufficient proof provided by the assessee.