Tribunal dismisses Revenue's appeal on unexplained investment, upholds rental income additions, remands bank deposit for verification.

The Tribunal dismissed the Revenue's appeal regarding the unexplained investment addition of Rs. 7,25,00,000/-. The issue of unexplained bank deposit addition of Rs. 1,66,00,000/- was remanded back to the Assessing Officer for verification. The additions on account of deemed rental income and undisclosed rental income were upheld. The addition on account of deemed dividend was confirmed. The issue of unexplained cash deposit addition of Rs. 25,89,356/- was also remanded back to the Assessing Officer for verification.

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Issues Involved:
1. Unexplained investment addition of Rs. 7,25,00,000/-.
2. Unexplained bank deposit addition of Rs. 1,66,00,000/-.
3. Addition on account of deemed rental income.
4. Addition on account of undisclosed rental income.
5. Addition on account of deemed dividend.
6. Unexplained cash deposit addition of Rs. 25,89,356/-.

Detailed Analysis:

1. Unexplained Investment Addition of Rs. 7,25,00,000/-
The Revenue's appeal sought to reverse the CIT(A)'s deletion of an addition of Rs. 7,25,00,000/- made by the Assessing Officer based on incriminating material found and seized during a search. The CIT(A) had found that the notings on the seized document were related to a proposed transaction that did not materialize. The document did not contain any specific details about the property, parties involved, or actual payments. The Tribunal upheld the CIT(A)'s decision, stating that the seized document was a "dumb" document and did not satisfy the presumption of correctness under Section 292C of the Act. Therefore, the addition was deleted.

2. Unexplained Bank Deposit Addition of Rs. 1,66,00,000/-
The Tribunal referred to a coordinate bench decision in a similar case and restored the issue back to the Assessing Officer for verification. The CIT(A) had previously accepted the assessee's contention that the deposits were transferred from another bank account. However, the Tribunal found that the CIT(A) had not given the Assessing Officer an opportunity to verify this claim. The issue was remanded for factual verification of the bank account details.

3. Addition on Account of Deemed Rental Income
The assessee's appeal contested the CIT(A)'s confirmation of an addition of Rs. 3,09,357/- on account of deemed rental income under Section 23(4) of the Act. The Tribunal noted that the assessee did not press this ground during the hearing. Therefore, the addition was upheld in favor of the Revenue.

4. Addition on Account of Undisclosed Rental Income
The assessee also contested an addition of Rs. 5,229/- on account of undisclosed rental income. This ground was similarly not pressed during the hearing, and the addition was upheld.

5. Addition on Account of Deemed Dividend
The assessee challenged the addition of Rs. 1,06,00,000/- as deemed dividend under Section 2(22)(e) of the Act. The Tribunal upheld the CIT(A)'s decision, stating that the deeming fiction of dividend applies to each sum received by the assessee. The Tribunal referenced the jurisdictional High Court's decision in CIT vs. P.K. Badiani and the Supreme Court's decision in Tarulata Shyam vs. CIT, which support the view that even repayment does not alter the status of deemed dividend. The addition was thus confirmed.

6. Unexplained Cash Deposit Addition of Rs. 25,89,356/-
The Tribunal noted that the CIT(A) had allowed the assessee's corresponding source of deposits for statistical purposes, which is not permissible after the amendment in Section 251(1)(a) vide Finance Act 2001. The issue was remanded back to the Assessing Officer for fresh verification of the details of credit and debit entries provided by the assessee.

Conclusion:
- The Revenue's appeal regarding the unexplained investment addition of Rs. 7,25,00,000/- was dismissed.
- The issue of unexplained bank deposit addition of Rs. 1,66,00,000/- was remanded back to the Assessing Officer for verification.
- The additions on account of deemed rental income and undisclosed rental income were upheld.
- The addition on account of deemed dividend was confirmed.
- The issue of unexplained cash deposit addition of Rs. 25,89,356/- was remanded back to the Assessing Officer for verification.

Order pronounced in the open court on 3rd May, 2022.

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