2023 (3) TMI 1100 - AT - Income Tax

Tribunal upholds CIT(A)'s decision, dismissing Revenue's appeal on undisclosed income.

The Tribunal dismissed the Revenue's appeal challenging the deletions of additions under Sections 69, 69B, and 69A. The CIT(A)'s decisions to delete the ... Addition u/s 69 - unexplained Cash loans given to various persons & interest earned thereon - CIT-A deleted the addition - HELD THAT:- Assessee had sufficient cash balance available with him for advancing temporary loans to various parties. Accordingly, we are of the considered opinion that there was no rationale for making addition to the total income of the assessee on account of alleged amount of cash loans advanced to various parties - amount of interest income earned by the assessee from such temporary loans was received during the F.Y. 2018-19 and was accordingly offered for tax in the income-tax return for the A.Y. 2019- 20. There was no justification for making addition to the total income of the assessee on account of alleged amount of cash loans given to various persons and interest calculated thereon by treating it as undisclosed income under section 69 of the Act, which has been rightly deleted by the Ld. CIT(A). - Decided in favour of assessee. Unaccounted/ undisclosed investment u/s 69B - Unaccounted cash investment made in the name of various parties and interest calculated thereon - HELD THAT:- All the transactions found noted in the registers, BS-01 and BS-02 actually pertained to the partnership firm, M/s Motilal Gopikishan and did not relate to the assessee in his individual capacity and accordingly, we find that there was no justification for making any addition to the total income of the assessee on account of amounts found noted in the registers, BS-01 and BS-02 against the names of various parties/ projects and notional interest computed thereon by treating it as unaccounted investment of the assessee. We also find force in the alternative contention of the Ld. Counsel that daily balance in the registers found during the course of search and inventorized as BS-01 and BS-02 was either Rs. 10,00,000/- or less on each of these days’ and therefore, the addition in dispute before us should have at most been Rs. 10,00,000/- and not Rs. 1,53,83,960/-. We are of the considered opinion that there was no justification for making addition to the total income of the assessee on account of alleged amount of unaccounted cash investment made in the name of various parties and interest calculated thereon by treating it as unaccounted/ undisclosed investment under section 69B of the Act, which has been rightly deleted by the Ld. CIT(A). - Decided in favour of assessee. Addition of investment made in cash in C K Greens, Burhanpur and profit calculated thereon on sale of such investment - HELD THAT:- We are in agreement with the contentions of assessee did not make any investment towards purchase of plot in C K Greens, Burhanpur and consequently, there arises no occasion for fallaciously presuming that the assessee might have sold the plot in C K Greens, Burhanpur and earned profit thereon. Thus, considering the entire aspect of the matter, we are of the considered opinion that there was no justification for making addition to the total income of the assessee on account of alleged investment made in cash.- Decided in favour of assessee. Unexplained cash receipt by treating it as unexplained/ undisclosed investment u/s 69A - HELD THAT:- Assessee received advance amount against sale of plot executed through him in Phase II of Pranam City and such amount was stated by the assessee to have been handed over to the owner of Pranam City. We further observe that even if the amount of advance received by the assessee ought to have been taxed in his hands, such amount of advance could have been taxed only in the year in which sale registry was executed. AO has failed to bring on record any material to show that actual sale of plot was made by the assessee and that too during the year under consideration. In absence of such findings, we are unable to the accept the contentions of the Ld. AO and accordingly, we are in agreement with the findings of the Ld. CIT(A) having no rationale for making addition - Decided in favour of assessee. Issues Involved:1. Deletion of addition on account of unexplained cash loans and interest under Section 69.2. Deletion of addition on account of unaccounted cash investment and interest under Section 69B.3. Deletion of addition on account of unaccounted investment in C.K. Greens, Burhanpur under Section 69B.4. Deletion of addition on account of cash receipts under Section 69A.Summary:Ground No. 1:The Revenue challenged the deletion of an addition of Rs. 1,88,800/- made by the AO for alleged cash loans and interest as undisclosed income under Section 69. The AO based his addition on seized documents indicating unrecorded cash loans and interest. The assessee contended that the loans were advanced from available cash balances, supported by cash books and capital accounts. The CIT(A) found sufficient cash balance to justify the loans and deleted the addition. The Tribunal upheld the CIT(A)'s findings, noting that the interest income was duly offered for tax in the subsequent year. Thus, Ground No. 1 was dismissed.Ground No. 2:The Revenue contested the deletion of Rs. 1,53,83,960/- added by the AO as unaccounted investments and interest under Section 69B. The AO relied on seized registers showing daily cash transactions, treating the peak value as unaccounted investments. The assessee argued that these transactions pertained to the partnership firm, M/s Motilal Gopikishan, and presented ledger accounts and cash books as evidence. The CIT(A) agreed, stating the documents were 'dumb documents' without corroborative evidence. The Tribunal confirmed that the transactions were related to the firm and not the individual assessee, finding no justification for the addition. Ground No. 2 was dismissed.Ground No. 3:The Revenue appealed against the deletion of Rs. 56,05,000/- added by the AO for alleged investment in C.K. Greens, Burhanpur, under Section 69B. The AO based his addition on loose papers presumed to indicate cash investments and profits. The assessee clarified that the plots were booked through his son, not him, and provided registry documents to support this. The CIT(A) found the documents to be 'dumb documents' and noted the AO's inconsistent approach in taxing the same investment in the son's case. The Tribunal agreed, finding no evidence of the assessee's investment or profit from the plots. Ground No. 3 was dismissed.Ground No. 4:The Revenue challenged the deletion of Rs. 1,07,000/- added by the AO for alleged cash receipts under Section 69A. The AO relied on a seized document indicating cash received from Shri Ashwini Gupta. The assessee explained the amount was an advance for a plot sale, handed over to the plot owner, with no commission received. The CIT(A) found no evidence of the sale being executed and ruled the advance could not be taxed until the sale occurred. The Tribunal upheld this finding, noting the AO's failure to prove the actual sale. Ground No. 4 was dismissed.Conclusion:The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletions of additions under Sections 69, 69B, and 69A, finding no justification or corroborative evidence for the AO's additions.