2020 (2) TMI 415 - ITAT DELHI

Unexplained cash credits u/s 68 - Admission of additional ground - cash deposited in savings bank account covered under section 68 or not? - assessee does not maintain the books of account - HELD THAT:- Identical issue has been decided in SHRI JANAK GOEL VERSUS DCIT, CENTRAL CIRCLE-4, NEW DELHI [2019 (5) TMI 887 - ITAT DELHI] to hold that the cash deposited by the assessee in his bank account is also covered under section 68 of the income tax act. Thus the additional ground raised by the assessee is dismissed.

Enhancement of income by the CIT(A) u/s 251 - Held that:- before making any enhancement to the income of the assessee determined by the learned Assessing Officer, the learned CIT(A) should have granted the assessee an opportunity of showing that the order of the learned CIT(A) making an addition u/s 68 of the Income Tax Act should not be enhanced. - Relief granted to assessee.

Addition u/s 68 - According to section 251(2) the learned Commissioner of Income Tax(A) is empowered to enhance in assessment order penalty or reduced the amount of refund. However, there is a basic precondition that the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction.

Before making any enhancement to the income of the assessee determined by AO, the learned CIT(A) should have granted the assessee an opportunity of showing that the order of the learned CIT(A) making an addition u/s 68 of the Income Tax Act should not be enhanced.

On careful reading of the order of the CIT(A) we do not find that any such notice has been issued by CIT(A) proposal enhancement of the income of the assessee. In view of this the enhancement made by the learned CIT(A) of the addition is not sustainable in law on the principles of natural justice not followed by him. Therefore we direct the learned assessing officer to restricted the addition to the extent u/s 68 of the Act and assessee is granted relief to that extent. Accordingly ground number 2 of the appeal of the assessee is allowed.

Addition of gifts of loans - assessee has also failed to show the genuineness of the transaction of receipt of the sale of land for the reason that there is no sale taken place of any agricultural land by the assessee against the above advance. Further, the learned assessing officer as well as the learned CIT(A) has examined the creditworthiness of each and every credit shown by the assessee. Looking to the meagre income shown by the depositors, absence of any evidence and source of deposit of cash available with them, failure to produce evidence of the consequent sale of land, failure to show the names of the witness to the sale agreement, shows that assessee has failed to show the creditworthiness of the depositors against sale of land as well as of the gift. In view of this we do not find any infirmity in the order of the learned assessing officer in making the addition u/s 68 of the income tax act to the extent of INR 1,975,000 out of the total cash deposit of ₹ 24.50 Lacs in the bank account of the assessee. In view of this ground No. 1 of the appeal of the assessee is dismissed.

Addition on account of bank interest - assessee has a savings bank interest income which is chargeable to tax under that income from other sources - HELD THAT:- No arguments were advanced by the assessee on this ground of appeal. We also do not find any infirmity in making the addition in the hands of the assessee as assessee has earned net bank interest of ₹ 22365/-. Accordingly ground No. 3 of the appeal of the assessee is dismissed.