2023 (12) TMI 93 - AT - Income Tax

Addition under Section 68 upheld for unexplained cash deposits during demonetization period despite offered income

ITAT Mumbai upheld addition under Section 68 for cash deposits made during demonetization period. Assessee offered additional income before ITSC but ... Addition u/s 68 - cash deposited during the demonetisation period - additional income offered before Hon’ble ITSC - Addition made as assessee failed to furnish the documentary supporting and corroborative evidence in respect, of sources of the cash deposits - despite sufficient opportunity being granted, the assessee could not prove the live link/nexus between the additional income offered to tax before the Hon’ble ITSC and the cash deposited in its bank account - HELD THAT:- We find no merits in the submissions of the assessee. The entire basis of arguments of the assessee appears to be a mere afterthought after receipt of the order dated 30/01/2018, passed by the Hon’ble ITSC u/s 254D(4) - As from the aforesaid table of additional income offered by the assessee before the Hon’ble ITSC, it is evident that the amount pertains to the assessment years 2009-10 to 201617. We are of the considered view that when the said additional income was not at all disclosed earlier by the assessee, the onus cannot be cast on the AO to prove its utilisation by the assessee for any other purpose. Rather, the onus is on the assessee to prove that the said undisclosed additional income was not utilised by it for any other purpose in the aforesaid years and was the source of the deposit in its bank account on 25/11/2016. We find that the decisions relied upon by the AR are factually distinguishable and thus not applicable to the present case. Accordingly, we find no merits in the findings of the CIT(A) and thus the impugned order is set aside. As the assessee failed to establish beyond doubt with any cogent evidence the nature and source of the cash deposit in its bank account, the addition made by the AO u/s 68 of the Act is affirmed. As a result, grounds raised by the Revenue are allowed. Issues involved:The appeal challenges the deletion of addition under section 68 of the Income Tax Act related to cash deposits during the demonetisation period.Summary:1. Issue 1: Deletion of addition under section 68 - Lack of documentary evidenceThe Revenue challenged the deletion of the addition of Rs. 1,63,92,000 made under section 68 of the Income Tax Act due to cash deposits during demonetisation. The Assessing Officer found the assessee's explanations vague and lacking in supporting evidence. The AO emphasized the failure to establish the link between income offered before the Income Tax Settlement Commission and the cash deposits. Consequently, the AO treated the cash deposit as unexplained credit under section 68 and added it to the total income.2. Issue 2: CIT(A)'s decision on the deletion of additionThe Commissioner of Income Tax (Appeals) (CIT(A)) deleted the addition, stating that the assessee had earned unaccounted income from the sale of land and brokerage, which was offered before the Income Tax Settlement Commission. The CIT(A) noted that the Settlement Commission had accepted the additional income offered by the assessee. The CIT(A) emphasized that the cash deposited was from the income earned and accepted by the Settlement Commission, thus justifying the deletion of the addition under section 68.3. Judgment and DecisionThe ITAT Mumbai considered the submissions and material on record. Despite the assessee's claims, the ITAT found that the assessee failed to establish a clear link between the additional income offered before the Settlement Commission and the cash deposits during demonetisation. The ITAT noted that the cash was deposited before the application to the Settlement Commission, and the assessee could not provide concrete evidence of the link. As a result, the ITAT set aside the CIT(A)'s decision and affirmed the addition made by the AO under section 68. The appeal by the Revenue was allowed, and the addition of Rs. 1,63,92,000 was upheld.This judgment highlights the importance of providing concrete evidence and establishing a clear link between income sources and cash transactions to avoid additions under the Income Tax Act.