2019 (4) TMI 96 - AT - Income Tax

Tribunal Confirms Assessment Order, Upholds Additions Under Section 68.

The Tribunal upheld the validity of the assessment order under section 143(3) r.w.s. 153C, rejecting the assessee's challenge. The addition of unexplained ... Assessment u/s 143 r.w.s. 153C - additional grounds of assessee that assessment order passed under section 143 r.w.s. 153C is not correct and AO ought to have been passed assessment order under section 153A - Search was not conducted in the case of assessee - HELD THAT:- Warrant was issued in the case of M/s. R.K. Real Estates and not in the name of the assessee. In the assessment order, it has been mentioned that “search & seizure operations were conducted in the case of M/s. R.K. Real Estate Group on 06/10/2006. During the course of search & seizure proceedings some incriminating documents and cash relating to the assessee were found and seized. Hence, notice under section 153C was issued to the assessee on 14/08/2007 for asking him to file returns of income for the six assessment years i.e. 2001-02 to 2006-07.” From the above, it is clear that search was not conducted in the case of assessee, it is only conducted in the case of M/s. R.K. Real Estates, therefore, the Assessing Officer has passed assessment order under section 143(3) r.w.s. 153C of the Act. We find that the order passed by the Assessing Officer is in accordance with law. We find that the AR of the assessee submitting that the assessment order passed by the Assessing Officer under section 143(3) r.w.s. 153C is not correct, is no basis and deserves to be rejected. Addition u/s 68 - ingenuity of bank deposits - HELD THAT:- We find that the assessee except confirmation letters, no relevant details are filed either before the ld. CIT(A) nor before us to show that the creditworthiness of the creditors, genuineness of the transaction, simply filing the details in a tabular form which shows the extent of land and business carried by the assessee is not sufficient to discharge the burden casted upon him to show that the deposits in his bank account are a genuine transactions and the same is received from the creditor who is having a sufficient funds. Under these facts and circumstances of the case, we are of the opinion that the Assessing Officer and the ld. CIT(A) has considered the issue in detail and addition was made under section 68 correctly Addition sale of lorry as unexplained income - why the sale of lorry is not to be treated as his income as he is filing his return of income under section 44AE? - whether it is a case fallen u/s 44AE of the Act or otherwise? - HELD THAT:- The assessee has not filed any details such as, date of purchase of lorry, date of sale of lorry and details of depreciation like, what is the depreciation claimed and upto what date depreciation claimed and total depreciation claimed, therefore we find that the assessee neither filed any details before the Assessing Officer nor before the ld. CIT(A), even before us. Therefore, the argument of the assessee cannot be considered. We find no infirmity in the order passed by the CIT(A). Addition u/s 68 - the assessee's wife has received money from Margadarshi chit fund and the same is deposited in the assessee‟s bank account - HELD THAT:- Assessee has deposited various amounts as in the nature of cash deposits. From the details filed by the assessee and also the order of the ld. CIT(A), it is very clear that the amounts have been withdrawn from the bank. We find that the assessee has failed to establish a fact that the amount received by the assessee on account of Margadarshi chit fund, the very same amount has been received by the assessee and deposited in the bank. Due to cash amount was deposited and immediately withdrawn the same. Therefore, the argument of the ld. counsel for the assessee is rejected. Unexplained deposits - as per assessee the amount is not belonging to him and was received from his niece, who is residing in USA for the purpose of repayment of her educational loan - HELD THAT:- The assessee has not explained anything, simply stated that he has withdrawn and he wanted to repay the very same amount to clear educational loan of his niece. We find that no reasons in the submissions of the assessee. That apart, when parents of the assessee‟s niece are residing at Vijayawada, why this amount was deposited in the account of the assessee, no explanation is offered and therefore we find that the Assessing Officer has rightly made the addition, which was rightly confirmed by the CIT(A) Assessee's appeal dismissed. Issues Involved:1. Validity of assessment order under section 143(3) r.w.s. 153C.2. Addition of unexplained cash credits under section 68.3. Treatment of sale proceeds of a lorry as unexplained income.4. Addition of amount received from Smt. C. Varalakshmi under section 68.5. Addition of amount received from niece for repayment of educational loan.Issue-wise Analysis:1. Validity of assessment order under section 143(3) r.w.s. 153C:The assessee challenged the assessment order under section 143(3) r.w.s. 153C, arguing that it should have been passed under section 153A. The Tribunal found that the search was conducted in the case of M/s. R.K. Real Estates, not the assessee. Thus, the notice under section 153C was correctly issued, and the assessment order was validly passed under section 143(3) r.w.s. 153C. The additional ground raised by the assessee was rejected due to lack of justifiable reasons for not raising it earlier.2. Addition of unexplained cash credits under section 68:The assessee failed to prove the identity, creditworthiness, and genuineness of the loan creditors. Despite submitting confirmation letters and details in a tabular form, no supporting documents were signed by the assessee or his AR. The Assessing Officer and the CIT(A) found the evidence insufficient to establish the genuineness of the transactions. The Tribunal upheld the addition of Rs. 5,00,000 as unexplained income under section 68, concurring with the findings of the lower authorities.3. Treatment of sale proceeds of a lorry as unexplained income:The assessee claimed the sale proceeds of a lorry amounting to Rs. 3,20,000 should not be treated as income since the return was filed under section 44AE. However, no evidence regarding the purchase, sale, or depreciation of the lorry was provided. The Assessing Officer and the CIT(A) noted conflicting statements from the assessee about his business activities. The Tribunal found no infirmity in the addition made by the Assessing Officer and confirmed by the CIT(A).4. Addition of amount received from Smt. C. Varalakshmi under section 68:The assessee claimed that Rs. 4,00,000 received from Smt. C. Varalakshmi was from a chit fund. However, multiple cash deposits totaling Rs. 19,05,500 were found in the assessee's bank account, with immediate withdrawals. The Tribunal found the assessee failed to establish a clear link between the chit fund and the deposits, and upheld the addition under section 68, agreeing with the detailed analysis by the CIT(A).5. Addition of amount received from niece for repayment of educational loan:The assessee claimed that Rs. 2,28,690 was received from his niece in the USA for repaying her educational loan. The Assessing Officer and the CIT(A) found the explanation impractical, as the niece's parents resided in Vijayawada, making it unnecessary to deposit the amount in the assessee's account. The Tribunal upheld the addition, finding no convincing reasons in the assessee's submissions.Conclusion:The Tribunal dismissed all appeals filed by the assessee, finding no reason to interfere with the orders passed by the CIT(A). The additions made under sections 68 and 143(3) r.w.s. 153C were upheld, and the assessee's grounds were rejected due to lack of sufficient evidence and justifiable reasons.