2023 (3) TMI 859 - AT - Income Tax

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

The Tribunal partly allowed the Revenue's appeal, upholding certain additions made by the AO regarding unexplained money found in possession and ... Addition u/s 69A - In the statement recorded u/s. 131 assessee stated that he has not filed his return of income and also stated that the money found in his possession belongs to him but could not give the details of the sources for the same - HELD THAT:- In the statement recorded by the assessee assessee has clearly stated in response to Q. No. 14 that he has not taken any loan from any person and has also denied to give any detailed sources for the seized amount. The assessee also in response to Q.No. 16 has voluntarily agreed to pay income tax both in his name and in his wife’s name. Since the assessee has not maintained any books of accounts and has accepted that he has not maintained any books of accounts at the time of interception as well as during the survey action, production of books of accounts after a period of 3 months is an afterthought of the assessee and hence the Ld. AO did not consider the books of accounts submitted by the assessee. AO has rightly considered the issue of submission of books of accounts as an afterthought of the assessee and hence we do not find any reason to interfere in the decision. Decided in favour of revenue. Ownership of two immovable properties - HELD THAT:- Cash book submitted by the Ld. AR could not be relied upon on the issue of receipt of advance from Mr. RP Naidu who also happened to be the power holder of the vendor. Hence, we find the cash book of the firm M/s. AR Builders could not be relied upon on the cash payments made by the firm towards purchase of the land from Mr. RP Naidu - sources for the cash paid for the purchase of the land has not been properly explained by the Ld. AR and we hereby uphold the order of the Ld. AO on this ground for the limited amount where the balance paid towards the registration charges has been demonstrated by the Ld. AR. We therefore partly allow the ground raised by the Revenue on this issue. Short term capital gains - Year of assessment - DR argued that the assessee has sold one acre of property / land on outright basis and has entered into a development agreement with M/s. MVV Builders for the construction of flats - HELD THAT:- Since the “transfer” as defined U/s. 2(47) of the Act has not taken place during the impugned assessment year, the computation of short term capital gains does not arise and the Ld. CIT(A) has rightly directed the Ld. AO to delete the addition - We therefore find no infirmity in the order of the Ld. CIT(A) and do not wish to interfere in the order of the Ld. CIT(A) on this issue. Unexplained cash deposits - HELD THAT:- In the absence of any proper explanation with substantiated evidence by the Ld. AR, we find that these cash deposits remain unexplained and the additions made by the Ld. AO to this extent as assessee denied to explain the sources for the cash deposits into the Karur Vysya Bank savings account are being upheld. Accordingly, this ground raised by the Revenue is partly allowed. 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.