2012 (9) TMI 618 - AT - Income Tax

Addition made on account of substantial cash in bank account Assessee receive cash from family settlement agreement Inspite of giving so many opportunities, the assessee did not furnish any documentary evidence nor the explanation for deposit of huge cash in the bank account Held that - Cash so deposited in the bank account was received by him out of family settlement and deed executed between the assessee and his brothers was duly submit before CIT(A). Bank entries are also duly supported by confirmation. Appeal decides in favour of assessee. Advance against sale of land Assessee enter into an agreement for sale of agriculture land - Advance money was also received Advance was repaid due to breach of agreement - As per family settle deed brothers of the assessee willing to retain the immovable properties and other assets and in turn compensated the assessee by making payment Held that - As the advance was repaid is not supported by proper evidence on record. When the agricultural land was alleged to be given in family settlement to other brothers, no question arises for the assessee selling any ancestral agricultural land. Nothing was also brought on record as to when this agricultural land was bought by the assessee and the consideration paid for the same. AO has not given any positive remand report nor the CIT(A) has recorded any of his own finding to the effect that he has examined the proposed buyer of the agricultural land. Therefore issue remand back to AO Assessee receive gift by way of Demand draft from 2 persons Receive gift of Rs. 1 lacs drawn on three drafts Receive another gift of Rs. 4 lacs drawn on ten demand drafts i.e. Rs 40000 each - Gift deed submit before CIT(A) - Held that - Gift have been shown as given in the form of demand drafts which seem to have been purchased in cash as more than or equal to Rs.50,000/- drafts are prepared by banks normally only after the draft purchaser quotes his PAN no. Therefore, Gifts so received were not genuine and the credit worthiness of the donors was not proved. Nothing was brought on record to persuade us to deviate from the findings recorded by lower authorities. Accordingly upheld the addition. Decides in favour of revenue

Summary

Issues Involved:
1. Unexplained cash deposits in the bank accounts of the assessee and his minor daughter.
2. Receipt of gifts amounting to Rs. 5,00,000/-.
3. Family settlement and advance against the sale of agricultural land as sources of cash deposits.

Issue-wise Detailed Analysis:

1. Unexplained Cash Deposits:
The Assessing Officer (AO) observed substantial cash deposits in the bank accounts of the assessee and his minor daughter, totaling Rs. 34,77,529/- and Rs. 29,60,421/-, respectively. The AO issued notices and summons to the assessee for verification and examination of the sources of these deposits. The assessee claimed that the deposits were from grain business receipts, for which no books of accounts were maintained. The AO assessed these deposits as unexplained and added them to the assessee's income under section 64(1) of the Income Tax Act, 1961, as the minor's income was clubbed with the parent having higher income.

During the appellate proceedings before the CIT(A), the assessee provided additional evidence, including a family settlement agreement and a sale agreement for agricultural land, claiming these as sources of the cash deposits. The CIT(A) accepted the family settlement amount of Rs. 28,00,000/- and the advance of Rs. 26,00,000/- against the sale of agricultural land as genuine sources of the deposits, based on the inspector's report and other documents. Consequently, the CIT(A) deleted the additions related to these cash deposits.

However, the tribunal noted that the assessee did not provide documentary evidence during the original assessment proceedings. The tribunal confirmed the CIT(A)'s acceptance of Rs. 28,00,000/- from the family settlement but found insufficient evidence to support the claim of Rs. 26,00,000/- as an advance against the sale of agricultural land. The tribunal set aside this part of the CIT(A)'s order and remanded the issue back to the AO for fresh examination, including verification of the proposed buyer and the availability of funds.

2. Receipt of Gifts:
The assessee claimed to have received gifts totaling Rs. 5,00,000/- from two individuals. The AO treated these gifts as non-genuine, citing discrepancies such as the dates on the gift declarations and the impracticality of purchasing multiple drafts for the same amount. The CIT(A) upheld the AO's findings, concluding that the gifts were not genuine and the creditworthiness of the donors was not proved. The tribunal affirmed the CIT(A)'s decision, as no new evidence was presented to challenge the findings of the lower authorities.

3. Family Settlement and Advance Against Sale of Agricultural Land:
The assessee argued that the cash deposits were sourced from a family settlement and an advance against the sale of agricultural land. The family settlement allegedly resulted in a payment of Rs. 28,00,000/- to the assessee, while the advance for the agricultural land sale amounted to Rs. 26,00,000/-. The CIT(A) accepted these sources based on the inspector's report and supporting documents provided by the assessee.

The tribunal agreed with the CIT(A) regarding the family settlement amount but found the evidence for the agricultural land sale advance insufficient. The tribunal noted inconsistencies, such as the lack of documentation for the purchase of the agricultural land and the absence of records showing the repayment of the advance. Consequently, the tribunal remanded this issue to the AO for further investigation, including examination of the proposed buyer and verification of the cash flow.

Conclusion:
The tribunal dismissed the assessee's appeal and partly allowed the Revenue's appeal. The tribunal upheld the CIT(A)'s deletion of additions related to the family settlement amount but remanded the issue of the advance against the sale of agricultural land for further examination. The tribunal also confirmed the addition of Rs. 5,00,000/- on account of non-genuine gifts.