Tribunal decision: Revenue appeal partly upheld on unexplained money, investments. Assessee explanations accepted for gains, credits.

Income Tax Officer, Ward-3 (2), Visakhapatnam. Versus Sri Mutchuakarla Appa Rao, Visakhapatnam And (Vice-Versa)

Income Tax Officer, Ward-3 (2), Visakhapatnam. Versus Sri Mutchuakarla Appa Rao, Visakhapatnam And (Vice-Versa) - TMI Issues Involved:
1. Unexplained money found in the possession of the assessee.
2. Unexplained investment in the purchase of property at Pendurti.
3. Short Term Capital Gains.
4. Unexplained credits in various bank accounts.

Summary:

1. Unexplained Money Found in Possession:
The Revenue contended that the assessee failed to prove the nexus between cash withdrawals from the bank and the cash found in possession. The assessee argued that the cash was for a real estate transaction that did not materialize. The Tribunal found that the books of accounts submitted by the assessee were an afterthought and upheld the addition of Rs. 12 lakhs by the Assessing Officer (AO).

2. Unexplained Investment in Property:
The Revenue argued that the assessee purchased property in his name and failed to explain the source of Rs. 30 lakhs paid in cash. The assessee contended that the property was purchased by the partnership firm M/s. AR Builders, and the payments were made by the firm. The Tribunal found that the sources for the cash payment were not properly explained and upheld the addition of Rs. 30 lakhs while accepting the explanation for the remaining Rs. 13,59,500/-.

3. Short Term Capital Gains:
The Revenue claimed that the assessee received Rs. 65 lakhs by cheque and Rs. 70 lakhs by cash for the sale of property, which should be taxed as short-term capital gains. The assessee argued that the transaction was stalled by the government and the amounts were refunded. The Tribunal found that the transfer of property did not take place during the assessment year and upheld the CIT(A)'s decision to delete the addition of Rs. 99,00,500/-.

4. Unexplained Credits in Bank Accounts:
The Revenue argued that the assessee failed to explain cash deposits of Rs. 45,37,100/- and cheque deposits of Rs. 9,52,700/-. The Tribunal found that the cheque deposits were explained but upheld the addition of Rs. 45,37,100/- as unexplained cash deposits.

Conclusion:
The Tribunal partly allowed the Revenue's appeal, upholding certain additions made by the AO while accepting some explanations provided by the assessee. The cross-objection raised by the assessee was disposed of as supportive in nature. The judgment was pronounced on 17th March 2023.