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2016 (8) TMI 458 - ITAT HYDERABAD

2016 (8) TMI 458 - ITAT HYDERABAD - TMI - Addition u/s 68 - undisclosed cash credits and investments - Held that:- Most of the withdrawals from the Bank of Baroda and other banks were held to be available for investment in the land and accordingly, the deposits made in Vijaya Bank were accepted by the Ld. CIT(A). With regard to hand loans taken from 14 persons, the assessee has not even given PAN etc., and in the absence of maintenance of books of account it was difficult for the tax authorities .....

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isputed by the Ld. CIT(A). Similarly, separate addition of ₹ 3,84,400 is also not warranted since it is a running account having cash deposits. No doubt there are some instances which prove that some of the amounts were utilised for monthly credit card bills or repayment of loans but in the absence of any proof that assessee utilised the entire income earned from the business only for payment towards credit cards bills etc., it is not a fit case for making separate addition of ₹ 3,84 .....

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D SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Mr. D.V. Anjaneyulu For The Revenue : Mr. M. Sitaram ORDER PER D. MANMOHAN, V.P. This appeal by the assessee is directed against the order passed by the CIT(A)-V, Hyderabad and it pertains to the A.Y. 2007-2008. 2. In this case, assessee filed statement of facts and elaborate grounds of appeal which were not in accordance with Rule-8 of the Appellate Tribunal Rules and therefore, he filed revised set of grounds on 16.03.2016 which wer .....

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inally processed under section 143(1) of the Act but later on, it was selected for scrutiny under CASS and notice under section 143(2) of the Act was issued on the assessee and thereupon, the assessment was completed under section 143(3) of the Act wherein the A.O. completed the assessment by determining the total income at ₹ 15,17,105. We are concerned herein with the unexplained credits under section 68 and unexplained investment of ₹ 1,74,644. 4. During the course of assessment pr .....

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rs and bank statement of Bank of Baroda into which the loans from City Bank and GE Countrywide are credited. However, the A.O. noticed that the assessee has not filed any explanation for the source of purchase of agricultural land for a sum of ₹ 11.18 lakhs. He also noticed that there are cash deposits of ₹ 4,37,000 and ₹ 3,50,000 in Vijaya Bank on 10.05.2006 and 14.06.2006 respectively. The source for the deposit of ₹ 4.37 lakhs were stated to be out of withdrawals from .....

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purpose or investment and hence, claim of availability of the amount withdrawn from Bank of Baroda for deposit in Vijaya Bank, as claimed by the assessee, is not tenable. Even with regard to cash loans from 14 parties, the A.O. noticed that none of them maintained any record on transactions and hence, the claim of cash loans from friends and relatives was rejected. Accordingly, he treated the cash deposit of ₹ 4,37,000 and ₹ 3,50,000 as unexplained credit under section 68 of the Act .....

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m ICICI Bank is taken in the month of March, 2007 and hence, it was not taken as the source for purchase of the land in the month of May, 2006. Similarly, the City Bank loan, reflected in the balance sheet was utilised for the purpose of business and hence, cannot be taken as a source for investment. He accordingly added a sum of ₹ 1,74,644 referrable to deficit of source of purchase of land (Rs.11,18,000 (-) ₹ 7,87,000 + ₹ 1,56,356). 5. Aggrieved, assessee contended before the .....

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were not properly looked into by the A.O. 5.1. With respect to cash deposit of ₹ 3,50,000 it was contended that a sum of ₹ 1,75,000 was withdrawn from the Bank of Baroda account in June, 2006 and another sum of ₹ 1,22,000 was withdrawn on 14th June 2006. These amounts came to the Bank of Baroda account out of Citi Bank loan amounting to ₹ 3,07,443 which was received in 2nd June, 2006. Remaining amounts were received as cash loan from two persons and out of personal saving .....

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there is no audit trail to link a particular withdrawal with a particular investment. However, considering the proximity of the dates, he assumed that ₹ 8,26,000 withdrawn on 15th May, 2006 might have been invested in purchase of land as the land registration was carried out on the same day. 5.4. Regarding cash deposit of ₹ 4,37,000 on 10th May, 2006, the case of the assessee was, a sum of ₹ 1,82,000 withdrawn from the Bank of Baroda was deposited. Here also considering the pro .....

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h regard to cash deposit of ₹ 3,50,000, the Ld. CIT(A) admitted the source of ₹ 2,97,000 which is withdrawn from Bank of Baroda account and the balance amount of ₹ 53,000, claimed to have been received as hand loan from 2 persons and also out of personal savings was rejected. With regard to balance amount of ₹ 3,84,400, the Ld. CIT(A) observed as under : 4.5. Besides above cash deposits there are several cash deposits on various dates in the bank account of the appellant .....

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nd that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. It appears that whenever there is requirement of fund in banking channel the assessee deposits unaccounted cash in the account to carry out the bank transactions. Thus, I agree with the Assessing Officer that cash deposit of ₹ 3,84,400/- is not explained. 5.6. Similarly, with regard to unexplained inv .....

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6. Further aggrieved, the assessee is in appeal before the Tribunal. Ld. Counsel appearing on behalf of the assessee, filed paper book and a brief chart to submit that under section 68 of the Act, assessee has to prove the source of funds and identity of the creditor which was also proved in this case and hence, addition sustained by the Ld. CIT(A) is not in accordance with law. As regards hand loans taken from 14 parties, the case of the Ld. A.R. is that confirmation letters were filed along w .....

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erted our attention to pages 4 to 9 and pages 33 onwards. Similarly, with regard to the unexplained investment to the tune of ₹ 1,35,644, the Ld. Counsel for the assessee adverted our attention to pages 27 of the paper book as well as page 32 to submit that the A.O. has made the addition, being difference in investment of ₹ 11.18 lakhs and cash deposits of ₹ 7,87,000, which is not permissible. He also submitted that no enquiry was made by the A.O. to crossverify the confirmatio .....

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eposit after the date of purchase were rightly not taken into consideration by the CIT(A). In this case, the CIT(A) observed that even during the course of hearing the assessee has not given any explanation regarding the balance cash deposits in the bank to the tune of ₹ 3,84,400 and further contended that assessee claimed cash loans during the period April to June, 2006 whereas the registration of the land was carried out on 15th May, 2006 and to the extent of proximity of dates of withdr .....

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