2021 (7) TMI 617 - AT - Income Tax

Tribunal remits case back to Assessing Officer for fresh examination under Income Tax Act Section 68.

The Tribunal remitted the case back to the Assessing Officer as neither the assessee nor Mr. Prasanth adequately explained the source of the cash deposits ... Addition u/s 68 - unexplained cash credit - HELD THAT:- Neither the assessee nor Shri. S. Prasanth has explained the impugned credits neither before the AO nor before the appellate authority as required u/s. 68 of the Act. However, considering the totality of the facts and circumstances, we are of the view that the issues in this appeal are to be remitted back to the AO for a fresh examination. The assessee/Shri. S. Prasanth, as the case may be, shall place all material based on which they rely in support of their contentions before the AO and comply with requirements of the AO in accordance with the law. AO after affording adequate opportunity to the assessee/Shri. S. Prasanth, as the case may be, and after considering the material etc placed before him shall pass an order in accordance with law. Assessee's appeal is treated as partly allowed for statistical purposes. Issues Involved:1. Addition of Rs. 55,00,000 as unexplained cash deposit under Section 68 of the Income Tax Act.2. Failure to produce individuals linked to the cash deposit.3. Contradictory statements and lack of corroborative evidence.Detailed Analysis:Addition of Rs. 55,00,000 as Unexplained Cash Deposit under Section 68:The primary issue in this case is the addition of Rs. 55,00,000 to the assessee's income as unexplained cash deposits under Section 68 of the Income Tax Act. The Assessing Officer (AO) received information regarding significant cash deposits in the assessee's bank account and initiated an investigation. The assessee claimed that the cash did not belong to him but to one Mr. Prasanth, who used the assessee's bank account to facilitate the deposit and subsequent issuance of demand drafts (DDs) to four individuals: S. Sridharan, T. Sethna, S. Sundaramoorthy, and P.L. Manjunath. Despite this explanation, the AO added the cash deposits as unexplained credits, as the assessee failed to substantiate his claim with sufficient evidence.Failure to Produce Individuals Linked to the Cash Deposit:The AO summoned the four individuals mentioned by Mr. Prasanth to verify the source of the cash deposits. However, neither the assessee nor Mr. Prasanth could produce these individuals before the AO. The failure to produce these individuals and the lack of concrete evidence to support the claim that the cash belonged to Mr. Prasanth led the AO to conclude that the cash deposits were unexplained and should be added to the assessee's income.Contradictory Statements and Lack of Corroborative Evidence:During the proceedings, Mr. Prasanth provided a sworn statement claiming that the cash belonged to the four individuals involved in a construction business in Trichy. However, in a separate assessment, Mr. Prasanth stated that the cash was from the sale of agricultural land and advances received from the same four individuals. This contradiction raised doubts about the credibility of the explanations provided. Additionally, the bank statements indicated that the assessee was also involved in the construction business, further complicating the case.The CIT(A) upheld the AO's decision, noting several inconsistencies and the lack of corroborative evidence. The CIT(A) highlighted that the assessee failed to explain why his bank account was used for the cash deposits and why Mr. Prasanth did not use his own account. The CIT(A) also questioned the prudence of using the assessee's account for such a significant transaction without proper documentation and verification.Conclusion:The Tribunal observed that neither the assessee nor Mr. Prasanth satisfactorily explained the source of the cash deposits as required under Section 68 of the Income Tax Act. Given the contradictory statements and lack of evidence, the Tribunal decided to remit the case back to the AO for fresh examination. The AO is instructed to provide adequate opportunity to the assessee and Mr. Prasanth to present their evidence and explanations. The AO will then make a determination based on the material presented in accordance with the law.Final Order:The appeal is treated as partly allowed for statistical purposes, and the case is remitted back to the AO for a fresh examination.Pronouncement:Order pronounced on 06th July, 2021 at Chennai.