2016 (9) TMI 458 - AT - Income Tax

Tribunal confirms most CIT(A) decisions, partially allows addition for loans

The Tribunal upheld the decisions of the CIT(A) on all issues except for partially confirming the addition related to loans from Swapan Kumar Das. The ... Unexplained investment in land, residential flat & shop, etc. - Held that:- It is seen from the material available on record that in the order of assessment, the AO has not disputed the datewise transactions maintained in the cash book by the Assessee. Therefore there should not be any difficulty in calculating the availability of cash on any given day. There were deposits and withdrawals in this cash book. The AO has come to the conclusion here that cash book was not properly maintained. This conclusion of the AO was not based on any discrepancy in the cash book but rather on surmises. The AO does not mention any gaps occurring in the cash book. The AO has not also disputed the source of cash as one from the sale proceeds of business. Therefore rejection of cash book by the AO was not proper. The circumstance that the Assessee is the owner of a retail cloth shop and in that line of business all transactions are wholly in cash cannot also be disputed. The AO has himself noted in the assessment order that the Assessee’s business turnover for the year was ₹ 2,67,54,866/- and that he had no debtors. Therefore, availability of cash with the Assessee does not appear to be in doubt. The correlation between the cash book and the deposit in the bank account has also been accepted by the CIT(A). The source of funds in so far as it relates to the Assessee’s wife has also been given but the same was neither examined nor rejected by the AO. Therefore the conclusion that the Assessee invested the entire funds including the share of the Assessee’s wife was rightly held by the CIT(a) to be incorrect. The fact that the Assessee had taken a loan from M/s. ICICI Bank, is clear from the evidence on record but in his conclusion the AO did not give credit to this loan as funds explained by the Assessee. The above findings of the CIT(A) have not been shown before us to be incorrect based on material available on record. In the given circumstances, we are of the view that the addition made by the AO was rightly deleted by the CIT(a) - Decided in favour of assessee. Addition on account of gift received - failure to prove the creditworthiness of the donors from the party of the assessee - Held that:- As seen from the Record that the AO himself has admitted that the Assessee has submitted the name of the donor, the amount of gift and the mode of transaction which, admittedly, is through cheque. Therefore the CIT(A) has rightly concluded that the initial onus on the party of the Assessee was discharged. Thereafter the onus has shifted onto him once these basic details have been submitted by the Assessee. He is not seen to have conducted any enquiries on these issues. Without an enquiry, the action of the AO bases itself on surmises and cannot be held to be correct. Besides, no adverse comments are seen to have been made by the AO on any of the details submitted. Under the circumstances, we uphold the order of the CIT(A) in this regard and dismiss Gr.No.2 of the Revenue.- Decided in favour of assessee. Addition on account of liabilities for failing to substantiate the same - Held that:- There was no evidence for the AO to come to a conclusion that liability in question was not genuine. On the other hand, the payment to the above said party by the assessee in the subsequent year by cash and the availability of cash to make payment were satisfactorily explained by the assessee - Decided in favour of assessee. Unexplaned loans - Held that:- As far as the loan of ₹ 3 lakhs received from Aparna Banerjee is concerned, the loan in question was given on 15-4-2008 and therefore, no addition could have been made in AY 2008-09, because the credit in question cannot be said to be a credit in the books of account of the assessee for the AY 2008-09. The addition, therefore, is directed to be deleted. As far as, the loan received from Swapan Das is concerned it is seen from the bank account of Sri Swapan Kumar Das that there was cash deposit of ₹ 2 lakhs on 25-03-2008. Immediately, thereafter on 27-28 March 2008 four cheques of ₹ 50,000/- each ws issued to the assessee by Swapan Kumar das. Prior to deposit of cash, Mr. Swapan Kr. Das had a balance of ₹ 2,50,000/- in his bank account. In these circumstances, we are of the view that the assessee failed to satisfactorily explain the loan taken from Swapan Kumar Das. We, therefore, confirm this addition.- Decided against assessee. Issues Involved:1. Delay in filing the appeal by the Revenue.2. Deletion of addition of Rs. 30,44,387/- on account of unexplained investment.3. Deletion of addition of Rs. 4,51,516/- on account of gift received.4. Deletion of addition of Rs. 2,82,618/- on account of liabilities.5. Addition of Rs. 5,00,000/- to the total income of the assessee being genuine loans advanced by the loan creditors.Detailed Analysis:1. Delay in Filing the Appeal by the Revenue:The Revenue filed the appeal with a delay of 5 days, citing administrative delay. After reviewing the condonation petition and hearing both parties, the delay was condoned.2. Deletion of Addition of Rs. 30,44,387/- on Account of Unexplained Investment:The Assessing Officer (AO) added Rs. 30,44,387/- to the assessee's income, citing unexplained investments in land, a residential flat, and a shop. The AO argued that the assessee's withdrawals exceeded the available capital and that cash deposits in the bank were not properly accounted for. The assessee explained the sources of funds, including bank accounts, loans, and withdrawals from business. The Commissioner of Income Tax (Appeals) [CIT(A)] found that the AO's conclusions were based on surmises and not on discrepancies in the cash book. The CIT(A) noted that the assessee's business, being a retail cloth shop with a turnover of Rs. 2,67,54,866/-, operated mostly in cash, which explained the cash deposits. The CIT(A) also noted that the AO did not examine the investments made by the assessee's wife, who was separately assessed. The Tribunal upheld the CIT(A)'s decision, finding no material evidence to contradict the CIT(A)'s findings.3. Deletion of Addition of Rs. 4,51,516/- on Account of Gift Received:The AO disallowed Rs. 4,51,516/- claimed as gifts from relatives, stating that the assessee failed to prove the creditworthiness of the donors. The assessee provided details of the donors, amounts, and modes of transaction, all through cheques. The CIT(A) held that the onus shifted to the AO once these details were provided, and the AO did not conduct further inquiries. The CIT(A) deleted the addition except for the gift from Swapan Das, as his relationship with the assessee did not fall under the definition of 'relative' as per Section 56(1)(iv) of the Income Tax Act. The Tribunal upheld the CIT(A)'s decision, noting that the AO did not dispute the basic details provided by the assessee. The Tribunal also allowed the assessee's cross-objection regarding the gift from Swapan Das, recognizing him as a relative under the applicable provisions.4. Deletion of Addition of Rs. 2,82,618/- on Account of Liabilities:The AO added Rs. 2,82,618/- shown as payable to Amit Traders, citing insufficient address and lack of documentary evidence for cash payments. The assessee provided purchase bills and ledger entries showing cash payments in the subsequent year. The CIT(A) found the AO's adverse view based on cash payments unjustified and noted that the AO could have asked for a full address. The CIT(A) deleted the addition, finding the payments and availability of cash satisfactorily explained. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere with the findings.5. Addition of Rs. 5,00,000/- to the Total Income of the Assessee Being Genuine Loans Advanced by the Loan Creditors:The AO added Rs. 5,00,000/- as unexplained cash credits, questioning the creditworthiness of Aparna Banerjee and Swapan Kumar Das. The assessee provided bank statements and affidavits, explaining the sources of funds. The CIT(A) upheld the AO's addition, citing lack of evidence for the creditworthiness of the creditors. The Tribunal partially allowed the assessee's cross-objection, deleting the addition of Rs. 3,00,000/- from Aparna Banerjee, as the loan was given in the subsequent year. The Tribunal confirmed the addition of Rs. 2,00,000/- from Swapan Kumar Das, finding the explanation for the cash deposit unsatisfactory.Conclusion:The Tribunal upheld the CIT(A)'s decisions on all issues except for the partial confirmation of the addition related to loans from Swapan Kumar Das. The Revenue's appeal was dismissed, and the assessee's cross-objection was partly allowed.