2022 (1) TMI 726 - AT - Income Tax

Unexplained investment u/s. 69 - Non maintenance of books of accounts - assessee had returned her income from real estate business u/s. 44AD - assessee argued that once the provisions of section 44AD is covered she is not required to maintain books of account and she was not under any obligation to explain individual cash deposits in the bank account - HELD THAT - Though the assessee admitted the income u/s. 44AD with regard to the sources of cash deposits made in the bank account initially she submitted that her nature of business of Spoken English Coaching Class Profession and gave certain sources for the cash deposits made on 18.10.2010 and explained the sources for the cash deposits made on 21.10.2010. When the AO accepted part of her explanation and required the assessee to prove the sources of the remaining deposits the assessee took a different stand and canvassed that her income is from real estate business and it is covered u/s 44AD etc. However she has not let any material/ evidences before the lower authorities to prove that she was in the real estate business. It is clear that the assessee has been inconsistent about the nature of sources of the impugned cash credits. She has not let in any material/ evidence either before the lower authorities or before us to establish that the nature of her activities are falling within the realm of business etc and the impugned transactions are part and parcel of her turnover etc but for a fact that she was a trustee in a school which was brought on record through an enquiry . Therefore the sources of the impugned deposits were not explained by the assessee - assessee has not dislodged the findings recorded by the AO on the inconsistencies in her stand supra. In the facts and circumstances we do not find any reason to interfere with the orders of the lower authorities and hence the assessee s appeal is dismissed.

Summary

Issues:
1. Delay in filing the appeal
2. Addition of unexplained investment under section 69 of the Income Tax Act
3. Applicability of section 44AD to the assessee's income

Analysis:
1. Delay in filing the appeal:
The appellant filed an appeal against the Commissioner of Income Tax (Appeals) order after a delay of 11 days due to being away on a pilgrimage. The delay was condoned by the tribunal as it was deemed beyond the control of the assessee.

2. Addition of unexplained investment under section 69 of the Income Tax Act:
The dispute revolved around the addition of Rs. 25 lakhs as unexplained investment under section 69 of the Act. The appellant contended that the cash deposits were explained and formed part of the total turnover under section 44AD. However, the Assessing Officer (AO) and the Commissioner did not find the explanations satisfactory. The tribunal upheld the lower authorities' decision, noting inconsistencies in the appellant's explanations and lack of evidence to support the claims.

3. Applicability of section 44AD to the assessee's income:
The appellant claimed that her income was covered under section 44AD, and hence, individual cash deposits did not need separate explanations. However, the AO found discrepancies in the appellant's claims regarding the nature of her business activities, leading to the conclusion that the cash deposits did not represent business receipts. The tribunal upheld this decision, emphasizing the appellant's failure to provide evidence supporting her varying explanations.

In conclusion, the tribunal dismissed the appeal, upholding the lower authorities' decision to treat the Rs. 25 lakhs cash deposits as unexplained income due to inconsistencies in the appellant's explanations and lack of supporting evidence.