2024 (9) TMI 632 - AT - Income Tax

Tribunal Upholds Rs. 54.5 Lakh Addition as Unexplained Cash Credit; No Evidence Found for Double Taxation or Legitimate Sources.

The Tribunal dismissed the assessee's appeal, affirming the Ld. CIT(A)'s decision to uphold the addition of Rs. 54,50,000 as unexplained cash credit under ... Unexplained cash credit u/s 68 - assessee contended that parties returned the amount of donation back to assessee in cash after deducting 10% commission and he had withdrawn the said deduction u/s 35AC and the paid taxes thereon in all those assessment years - Further stated that the cash, which was received back was kept with him and deposited in ICICI Bank on 12.11.2016 i.e. during the demonetization period HELD THAT:- The lower authorities have rejected the contention of the assessee on the basis of the circumstantial. According to the Ld. CIT(A) in normal circumstances no one will keep the cash currency for 3 to 8 years and therefore, rejected the contention of the assessee as not reasonable or logical. Before us, no evidences have been filed in support contention that assessee withdrawn the deduction in respect of corresponding years and cash was returned back by those trusts to the assessee. Assessee has not filed any such affidavit from those trusts supporting it contention the cash was received back. No infirmity in the order of the CIT(A) on the issue in dispute and accordingly, we uphold the same. The grounds of the appeal of the assessee are rejected. Appeal of the assessee is dismissed. Issues:1. Lack of personal hearing provided by the National Faceless Appeal Centre (NFAC), CIT (Appeals), Mumbai.2. Addition of Rs. 54,50,000 as unexplained cash credit under section 68 of the Income-tax Act.3. Double taxation due to sustaining the addition of cash deposits during demonetization period.Issue 1: Lack of Personal HearingThe appeal was filed by the assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals) at the National Faceless Appeal Centre, Mumbai, for the assessment year 2017-18. The primary contention was the absence of a personal hearing provided to the appellant, which was deemed a violation of the principles of Natural Justice. The appellant argued that the order was passed under section 250 of the Act without granting an opportunity for a personal hearing, thereby challenging the procedural fairness of the decision-making process.Issue 2: Addition of Unexplained Cash CreditThe case involved a cash deposit of Rs. 54,50,000 made by the assessee during the demonetization period, which was treated as unexplained cash credit under section 68 of the Income-tax Act. The assessee claimed that the cash was generated from donations received from trusts against which deductions were claimed under sections 35AC and 35AC (ii) of the Act. However, the Assessing Officer rejected this explanation, citing the lack of documentary evidence to substantiate the claim. The addition was made following the decision of the Bombay High Court in a relevant case.Issue 3: Double Taxation ConcernAnother aspect of the case was the contention of double taxation raised by the assessee regarding the cash deposits made during the demonetization period. The assessee argued that the amount had already been assessed to tax in previous assessment years, leading to the possibility of double taxation. However, the authorities upheld the addition, emphasizing the lack of evidence supporting the claim that the cash received back from trusts was deposited during the demonetization period.The Assessing Officer and the Ld. CIT(A) both rejected the explanations provided by the assessee regarding the source of the cash deposit, emphasizing the lack of supporting evidence and the circumstantial implausibility of the claims made. The Ld. CIT(A) relied on the decision of the Supreme Court in a relevant case to uphold the addition. Despite the absence of the assessee during the appeal proceedings, the Tribunal examined the material on record and affirmed the decision of the Ld. CIT(A), dismissing the appeal. The Tribunal found no infirmity in the order of the Ld. CIT(A) concerning the disputed cash deposit issue, leading to the dismissal of the assessee's appeal.