TaxTMI 
TaxTMI 
2026 (1) TMI 618
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....uring the period under consideration for AY: 2011-12 and further of ITD enquiry it was noticed that assessee had filed ITR for AY: 2011-12 on 29.09.2011 declaring total income of Rs. 15,45,372/- after deduction under Chapter VI amounting to Rs. 1,00,000/-. During the assessment an addition of Rs. 15,00,000/- was made on account of transaction with Gopal IT International to be found as bogus expenditure. Further addition of Rs. 7,50,000/- was made on account of cash deposits in the bank statement. Further an addition of Rs. 26,50,000/- was made on account of unexplained investment in the property as reflected in the balance sheet and Rs. 24,15,000/- were added on account of cost of improvement in the property being not explained in terms of source of the transaction. The same stand sustained by ld. CIT(A) of which the assessee is in appeal before this Tribunal and after hearing the contentions of both sides and statements filed on behalf of the assessee ground wise findings is as follows. 3. Ground 1: Addition of Rs. 26.50 lakh as Unexplained Investment in Property under Section 69 of the Act. The AO observed that the assessee purchased a property or made an addition to property ....
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....enditure under Section 69C of the Act. The assessee had furnished a copy of the invoice from M/s Unity Builders for renovation (flooring, furnishing, interiors, etc.) of the flat, asserting that this was a genuine expense. However, the AO noted that the bank statement did not reflect any payment to M/s Unity Builders, and the source of funds for this expenditure was not clarified. The CIT(A) confirmed the addition, observing that merely providing the contractor's bill was insufficient and no proof of actual payment or source of the Rs. 24.15 lakh was produced, so the assessee failed to discharge the onus of explaining the funding of the improvement. The entire Rs. 24.15 lakh was thus added as unexplained expenditure. 4.1 Ld. AR asserts that the improvement expenditure was in fact incurred and funded through accounted sources. The assessee's books contain bank withdrawal entries correlating to this Rs. 24.15 lakh outlay. Specifically, the assessee withdrew substantial FDRS from his bank/OD account which were used to pay M/s Unity Builders in cheque. These withdrawals correspond closely to the dates and amounts of the improvement work stages, establishing a clear money trail. Thus....
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....re for website development/hosting services, paid to M/s Gopal I.T. International by cheque and invoice. The AO, however, treated this as a bogus expenditure on the premise that Gopal I.T. International was found by the Investigation Wing to be an accommodation-entry provider. The AO noted that Mr. Gopal Kumar, proprietor, did not file an ROI for AY 2011-12 and could not be found at his address and that the assessee failed to demonstrate that he actually had a functional website or that Gopal I.T. had the capability to deliver such services, and that no TDS was deducted on the payment. Based on these factors, the AO disallowed the Rs. 7.50 lakh and added it under Section 69C as unexplained/bogus outflow. The CIT(A) upheld the addition, concurring that the genuineness of the payment was not established and citing the above investigative findings treating the transaction as an accommodation entry. 5.1 Ld. AR has submitted that the disallowance is based on suspicion and third-party information, not on any cogent evidence that the assessee's transaction was bogus. On the contrary, the assessee has furnished: (a) a tax invoice from M/s Gopal I.T. International for the web services, (....
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.....02082090000119. From the account opening form of these accounts it is seen that M/s Gopal IT International is into the business of Trading of Computer Hardware and software and M/s Gopal International is into the business of Electronic Goods & Computer Accessories. The details of credit entries appearing in the bank accounts of Shri Gopal Kumar during the F.Y. 2010-11 is as below. S. No. Name of the Account Holder Account No. Bank & Branch Total Credits including Cash Deposits 1 Gopal kumar 01740120030406 Kotak Mahindra Bank, Punjabi Bagh NIL 2 Gopal IT International Proprietorship Concern of Shri Gopal Kumar 01852090002593 Kotak Mahindra Bank, Model Town 18,30,940/- 3 Gopal International Proprietorship Concern of Shri Gopal Kumar 0208209000Q119 Kotak Mahindra Bank, Pitam Pura 16,35,115/- 4 Gopal Kumar 003083800000179 Yes Bank, Rajouri Garden, HP NIL 5 Shri Siddhi Sales Corporation (proprietorship Concern of Shri Gopal Kumar) 1631414 RBS, Gurgaon 11,54,000/- Total 46,20,055/- 8. As per the details available on the ITBA System, Shri Gopal Kumar has not filed his Income Tax Ret....
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....ailed to show the same at any stage. Thus mere payment and invoice are not evidence of an expenditure which creates an intangible asset unless its existence is proved by some out put and user. Same is not the case here, so the addition is not based on suspicion but a reasonable belief, which need not be disturbed. The ground deserves to be rejected. 6. Ground 4: Addition of Rs. 7.50 lakh as Unexplained Cash Deposit made under section 68/69 of the Act. The assessee deposited Rs. 7.50 lakh in cash on 08.06.2010 into his bank account. The AO treated this sum as unexplained cash credit, income from undisclosed sources under Section 68 or as unexplained money under Section 69A on the ground that the assessee did not satisfactorily explain the source. The assessee contended that this cash came out of his regular business receipts including an opening cash balance and small cash advances from clients during the year - i.e. it was accumulated business cash, not untaxed income. The AO, however, found the explanation unsubstantiated by documents and added the entire Rs. 7.50 lakh. The CIT(A) agreed, stating that merely claiming the cash was generated from business (opening cash and client....