2019 (9) TMI 1231 - AT - Income Tax

Unexplained investment - deposit of cash made by the assessee in the bank accounts investment in the lands and the loan provided to KIT - HELD THAT - Regarding the argument of the AR for the availability of cash in his hands out of the earlier years from the source of agricultural activity we note that the assessee failed to file any documentary evidence suggesting that there was some cash available with him out of the agricultural operations carried on by him. Therefore in the absence of such documentary evidence we reject the contention of the assessee. Regarding the surplus cash of Rs. 21, 45, 000 as claimed by the ld. AR available with the assessee we note that the benefit for all the deposit of cash has already been provided by the ld. CIT-A. Therefore we are of the view that the same cannot be adjusted against the deposit of cheques in the central bank of India. Therefore we reject the contention of the ld. AR for the assessee. Regarding the addition of Rs.33.50 lakhs we note that these payments were made through the banking channel by the assessee. It is also not in dispute that the entire credit entries reflecting in the Central Bank of India has been added to the total income of the assessee therefore we are of the view further addition of the impugned amount will result the double addition to the income of the assessee. Therefore we are inclined to delete the addition of Rs.33.50 lakhs. Regarding the investment made by the daughter in law namely Ms. Margi Darpan Shah of the 57 Lacs we note that the assessee has vide letter dated 24-12-2012 has admitted that the impugned fund was provided by the assessee to his daughter in law. Moreover the assessee has not explained the source of such investment before the authorities below. Even before us the ld. AR could not controvert the finding of the ld. CIT-A. Accordingly we reject the contention of the assessee. Regarding the addition of Rs.15 lakhs we note that there was no addition made on account of the deposit of cheque of Rs.15 lakhs in the State Bank of India. Therefore we reject the contention of the assessee. Hence the ground of appeal of the assessee is partly allowed. Appeal filed by the assessee is partly allowed.

Issues Involved:
1. Addition of Rs. 4,32,13,153/- out of the total addition of Rs. 4,75,71,951/- for unexplained investment.
2. Cash deposits in various bank accounts.
3. Unsecured loans provided to the company.
4. Purchase of land.
5. Duplication of additions.

Detailed Analysis:

1. Addition of Rs. 4,32,13,153/- for Unexplained Investment:
The primary issue raised by the assessee was the partial confirmation by the CIT (A) of the addition made by the AO, reducing it to Rs. 4,32,13,153/- from Rs. 4,75,71,951/-. The CIT (A) found that the AO had wrongly added Rs. 55,99,400/- instead of Rs. 5.2 Lakhs deposited in cash in the SBI account. The assessee was also given the benefit of agricultural income of Rs. 20,00,000/- for the year, with only 50% considered for tax computation. The CIT (A) further observed that the total unexplained credits amounted to Rs. 2,88,84,153/- after adjusting for explained FDs and cash deposits.

2. Cash Deposits in Various Bank Accounts:
- HDFC Bank Account: The AO added Rs. 19,00,000/- as unexplained cash credits, rejecting the assessee's claim of agricultural income due to lack of disclosure in the ITR.
- Central Bank of India Account: The AO added Rs. 32,35,000/- as unexplained cash credits, rejecting the assessee's explanation of interbank transactions and student fees due to unverifiable deposits.
- State Bank of India Account: The AO added Rs. 55,99,400/- as unexplained cash credits, which was later corrected by the CIT (A) to Rs. 5.2 Lakhs.

3. Unsecured Loans Provided to the Company:
The AO noted that the assessee provided unsecured loans of Rs. 75.26 Lakhs to KIT Pvt Ltd and Rs. 57.00 Lakhs through his daughter-in-law, which were unexplained. The CIT (A) confirmed these additions, noting that the total unexplained investment including these loans amounted to Rs. 4,21,10,153/-.

4. Purchase of Land:
The AO added Rs. 2,36,11,550/- for the purchase of land as unexplained investment. The CIT (A) observed that part of the investment was made from the bank accounts of the assessee and his wife, Vandana Shah, and from the premature encashment of FDs. The total investment in land directly and indirectly aggregated to Rs. 1,82,54,275/-, which was already added by the AO as unexplained investment.

5. Duplication of Additions:
- Rs. 33,50,000/-: The CIT (A) confirmed the addition for investment in KIT Pvt Ltd, but the assessee argued that this amount was already included in the total credit entries added to the income, resulting in double addition. The tribunal agreed and deleted the addition.
- Rs. 57,00,000/-: The assessee argued that this amount was already assessed in the individual case of Margi Darpan Shah. The tribunal rejected this contention as the assessee admitted providing these funds to his daughter-in-law, and the source remained unexplained.
- Rs. 15,00,000/-: The tribunal found no addition made on account of this deposit in the State Bank of India and rejected the contention of duplication.

Conclusion:
The tribunal partly allowed the appeal, deleting the addition of Rs. 33,50,000/- due to duplication but upheld the other additions made by the CIT (A). The final order was pronounced on 25/09/2019 at Ahmedabad.

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