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Facts
The assessee made a deposit of Rs. 1,30,51,500/- in their bank account and explained the sources as opening cash balance, advance from site sales, and amount received from an HUF. The Assessing Officer (AO) and the CIT(A) made additions to the income based on these deposits, rejecting the assessee's explanations.
Held
The Tribunal noted that the lower authorities did not verify the documents submitted by the assessee. The Tribunal opined that these documents needed to be examined by the AO and remitted the issue back to the AO for de-novo consideration.
Key Issues
Whether the additions made to the assessee's income on account of cash deposits were justified, and if the lower authorities had properly verified the evidence presented by the assessee.
Sections Cited
68, 234A, 234B, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against order of NFAC passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) dated 9.11.2023 for the assessment year 2016-17. The assessee has raised following grounds of appeal: 1. “The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. The learned CIT[A] is not justified in upholding the total addition of Rs.1,20,40,012/- made u/s. 68 of the Act rejecting the bonafide explanation tendered by the appellant for opening balance of cash as on 01/04/2015 and 2 other cash receipts during the year that was in the cash account drawn up and submitted in course of the assessment proceedings under the facts and in the circumstances of the appellant's case.
N.J. Bharthesh, Shimoga Page 2 of 6 2.1 The addition made u/s.68 of the Act with regard to the opening cash balance of Rs. 21 is opposed to law and facts of the appellant's case in as much as, the appellant had duly substantiated the said opening balance of cash with reference to the agricultural income earned in the earlier year and at any rate, no addition could be made in respect of opening balance of cash in the assessment proceedings for the year under appeal and therefore, the addition made ought to have been deleted.
2.2 The additions made u/s. 68 of the Act with regard to the advance received for sale of sites of Rs. 19,80,000/- and amount received from the HUF of the appellant's brother of Rs. 79,31 ,000/- are also opposed to law and facts of the appellant's case in as much as the appellant had produced documentary evidence in support of these cash receipts during the year, which have been rejected on slender and unsustainable grounds and therefore, the additions made of Rs.19,80,000/- and Rs. 79,31 ,000/- ought to have been deleted. 2.3 The learned CIT[A] ought to have appreciated that the entire addition made was purely on suspicion and surmise, assumptions and presumptions and without rebutting the documentary evidence tendered by the appellant that are also supported by duly sworn Affidavits of the creditors especially since these creditors were not examined by the learned A.O. and therefore, the additions made ought to have been deleted.
3. The learned CIT[A] is not justified in upholding the disallowance of Rs.1,95,986/- being the interest paid on housing loan borrowed for house construction under the facts and in the circumstances of the appellant's case.
4. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies himself liable to be charged to interest u/s. 234-A and 234-B of the Act, which under the facts and in the circumstances of the appellant's case and the same deserves to be cancelled.
For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.
N.J. Bharthesh, Shimoga Page 3 of 6 2. Facts of the issue are that the assessee in the assessment year under consideration made a deposit of Rs.1,30,51,500/- to assessee’s bank account. The assessee explained the source of deposit as follows: a) Opening cash balance - Rs. 21,40,012/- b) Advance received from side sales - Rs. 19,80,000/- c) Amount received from M.J. Sarat(HUF)- Rs. 79,31,000/- Total: - Rs.1,20,51,012/- 2.1 In support of this, the above assessee filed the required evidence in the form of balance sheet explaining the opening balance and confirmation letter from the parties and agreement copy showing the amount received from the site sales and also explained the amount received from N.J. Sushrut (HUF) and confirmation letter from him. According to the ld. A.R., the lower authorities have not taken note of this evidence though there was confirmation letter in affidavit. As such, he prayed that due credence to be given to the various evidences submitted before lower authorities and addition to be deleted.
On the other hand, ld. D.R. submitted that the assessee though stated that opening balance available to deposit to bank account at Rs.21,40,012/-, which is not supported by earlier returns filed by the assessee before the department even the parties who has given the advance for sales to the assessee were not income tax assessees. Their source of income is doubtful. Regarding the amount received from N.J. Sushrut (HUF), there was no proper return of income filed by this assessee also and hence, no credence has been given. He submitted that addition to be sustained.
We have heard the rival submissions and perused the materials available on record. In the present case, there was an addition of Rs.1,20,40,012/- to assessee’s bank account. Assessee explained the source as follows:
N.J. Bharthesh, Shimoga Page 4 of 6 a) Opening cash balance - Rs.21,40,012/- 4.1 Advance towards site sales received from various parties as follows: (i) Sri P.S. Rudrappa (ii) Sri Shekarappa (iii) Sri Adarsha (iv) Sri Mahendra 4.2 The assessee has filed various evidences before the lower authorities as follows: Sl.No. Particulars Pages To Filed/availa from ble before AO/CIT(A) Annexure-1:- 3(a) Copy of the statement of Affairs as at 31 31 AO&CIT(A) 31.3.2015. Annexure-2:- 3(b) Copy of the acknowledgement for having 32 32 AO&CIT(A) filed the return of income for the assessment year 2015-16 Annexure-3:-
N.J. Bharthesh, Shimoga Page 5 of 6 4.3 However, the lower authorities have not verified these documents filed by the assessee before ld. AO as well as the ld. CIT(A). Without verifying the genuineness of the above documents, they outrightly made addition which is not proper. In our opinion, these documents are required to be examined at the end of ld. AO. Accordingly, the assessee has to prove the impugned sources of deposit to the bank. Accordingly, the issue in dispute is remitted to the file of ld. AO for de-novo consideration.