2018 (11) TMI 506 - AT - Income Tax

Unexplained deposits made in the bank accounts of the assessee with HDFC and Kotak Mahindra Bank - claim of the assessee of having redeposited cash from the withdrawals - amount claimed to be received by the assessee from his mother-in-law for payment of the air ticket and hotel booking - Held that - As mentioned by Ld. CIT(A) in his impugned order, the mother-in-law of the assessee was doing her independent business and was having her own bank account and the alleged payment was made by her to the assessee almost one year after the journey performed. On the same ground, the claim of the assessee of having received a sum of ₹ 49,000/- from his wife for payment of credit cards expenses was not found acceptable by the authorities below. Keeping in view these cogent and convincing reasons given by the authorities below, we are of the view that the source of deposits found to be made in his bank account with HDFC Bank as explained by the assessee to the extent of ₹ 3,06,150/- was rightly rejected by the authorities below. In that view of the matter, we find no justifiable reason to interfere with the impugned order of Ld. CIT(A) confirming the addition made by the AO on this issue and dismiss Ground No.2 of the assessee s appeal. Deposits found to be made in the bank account of the assessee with Kotak Mahindra Bank -there is no evidence whatsoever brought on record before us in the form of relevant purchase bills, confirmations of the parties etc. to support and substantiate the contention of the Ld. Counsel for the assessee that the said cheques were issued against purchases of the business of the assessee s wife. Moreover, such cheques claimed to be issued against purchases are very few and the debits appearing in the said bank account appear to be towards personal expenses such as credit cards expenses, club expenses, telephone expenses, schools fee etc. It is also noted that payments are frequently made from the said accounts to one party namely Media Content & Communication Services (India) Pvt. Ltd. for which no explanation whatsoever is offered on behalf of the assessee - no infirmity in the impugned order of Ld.CIT(A) confirming the addition - Decided against assessee.

Summary

Issues Involved:
1. Addition of ?3,06,150/- made by the AO and confirmed by the CIT(A) on account of deposits in the assessee's HDFC Bank account.
2. Addition of ?18,11,765/- made by the AO and confirmed by the CIT(A) on account of deposits in the assessee's Kotak Mahindra Bank account.

Issue-Wise Detailed Analysis:

1. Addition of ?3,06,150/- in HDFC Bank Account:

The assessee, an individual, filed a return of income declaring ?52,00,251/-. During assessment, the AO found deposits totaling ?4,36,150/- in the assessee's HDFC Bank account. The assessee provided explanations for these deposits, including cash received from selling old jewelry, redeposit of cash withdrawals, and amounts received from family members for various expenses. However, the AO did not accept the explanations for ?3,06,150/- due to lack of credible evidence and inconsistencies in the claims.

The CIT(A) upheld the AO's decision, citing reasons such as the high net worth of the assessee, making it unlikely that he would need to sell personal items for funds. The explanations were deemed afterthoughts to justify the cash deposits. The Tribunal also found the explanations unconvincing, noting specific flaws such as the timing of transactions and the lack of supporting evidence. Consequently, the addition of ?3,06,150/- was confirmed.

2. Addition of ?18,11,765/- in Kotak Mahindra Bank Account:

The AO found deposits totaling ?18,11,765/- in the assessee's Kotak Mahindra Bank account. The assessee claimed ?2,00,000/- as consultancy charges and the remaining as proceeds from his wife's business. The AO rejected these explanations due to lack of documentary evidence and discrepancies in the claims. The CIT(A) noted that the deposits were not reflected in the wife's business turnover as shown in her tax return, and found the explanations unconvincing.

The Tribunal reviewed the case and upheld the CIT(A)'s decision, noting the absence of evidence such as purchase bills and confirmations to substantiate the business-related deposits. The Tribunal also observed that the bank account showed personal expenses rather than business transactions. Therefore, the addition of ?18,11,765/- was confirmed as unexplained income.

Conclusion:

The Tribunal dismissed the appeal, confirming the additions of ?3,06,150/- and ?18,11,765/- made by the AO and upheld by the CIT(A) due to lack of credible evidence and inconsistencies in the explanations provided by the assessee. The judgment emphasized the importance of substantiating claims with proper documentation and the need for credible explanations for cash deposits in bank accounts.