Tribunal modifies tax additions: Cash deposit Rs. 55k, rental income Rs. 2.31k set aside, professional income Rs. 53k.

Dheeraj Thakran, C/o Nagesh Bhel & Co., CAs, New Delhi Versus ITO, Ward-1 (4), HSIIDC Building, Udyog Vihar-V, Gurgaon.

Dheeraj Thakran, C/o Nagesh Bhel & Co., CAs, New Delhi Versus ITO, Ward-1 (4), HSIIDC Building, Udyog Vihar-V, Gurgaon. - TMI Issues Involved:
1. Addition of Rs. 50,40,000/- on account of cash deposited in the bank account.
2. Addition of Rs. 2,31,000/- on account of rental income.
3. Addition of Rs. 4,20,000/- on account of professional income.

Detailed Analysis:

1. Addition of Rs. 50,40,000/- on Account of Cash Deposited in the Bank Account:
The Assessing Officer (AO) made an addition of Rs. 50,40,000/- due to non-submission of details during the assessment proceedings. The assessee explained that the deposits were from an opening cash balance of Rs. 5,55,000/-, cash withdrawn from the bank amounting to Rs. 41,15,000/-, and gifts received from family members totaling Rs. 9,25,000/-. The Commissioner of Income Tax (Appeals) [CIT(A)] rejected the opening cash balance due to its non-disclosure in the previous year's return and doubted the genuineness of the gifts.

Upon review, the Tribunal accepted the assessee's argument that there is no legal requirement to show cash in hand in the return of income. However, due to the lack of evidence, only Rs. 5,00,000/- of the opening cash balance was accepted as explained, adding Rs. 55,000/- as unexplained cash. The Tribunal also accepted the cash withdrawals of Rs. 36,39,000/- as re-deposited, as there was no evidence from the Department that the money was spent elsewhere. Regarding the gifts, the Tribunal found that the gifts from family members were genuine and properly documented, thus accepting the source of Rs. 9,25,000/-. Consequently, the Tribunal modified the addition to Rs. 55,000/- as unexplained cash.

2. Addition of Rs. 2,31,000/- on Account of Rental Income:
The AO added Rs. 2,31,000/- after allowing a 30% deduction from the rental income of Rs. 3,30,000/- under Section 24 of the Income Tax Act, treating it as income from house property. The assessee contended that the rental income was from gym equipment given on hire, not from house property.

The Tribunal found that the AO incorrectly treated the rental income from gym equipment as income from house property. Since the rental income was from equipment hire, the Tribunal set aside the addition of Rs. 2,31,000/-, allowing the assessee's claim.

3. Addition of Rs. 4,20,000/- on Account of Professional Income:
The AO added Rs. 4,20,000/- as professional income without allowing any expenses claimed by the assessee, which included rental income from gym equipment and professional fees totaling Rs. 7,50,000/-.

The Tribunal noted that the professional income was not doubted by the lower authorities. However, due to insufficient documentary evidence, the Tribunal did not accept the full claim of expenses amounting to Rs. 5,29,355/-. Instead, it allowed an estimated disallowance of Rs. 53,000/- out of the expenses, reducing the addition from Rs. 4,20,000/- to Rs. 53,000/-.

Conclusion:
The appeal filed by the assessee was partly allowed. The Tribunal modified the addition on account of cash deposits to Rs. 55,000/-, set aside the addition of Rs. 2,31,000/- on account of rental income, and reduced the addition on account of professional income to Rs. 53,000/-.