2013 (3) TMI 713 - AT - Income Tax

Addition of cash deposits made in the bank account treating as undisclosed income - Held that - Assessee withdrew cash from his own bank account for the purpose of purchase of land - assessee filed paper book which includes copy of bank account and copy of salary account - merely because there was time gap between withdrawal of cash and cash deposits explanation of assessee could not be rejected and addition on account of cash deposit could not be made - Held in case of ACIT vs. Shri Joginder Singh ITA No. 2942 (Del) of 2011 - Decided in favor of assessee

Summary

Issues: Appeal against addition of cash deposits as undisclosed income.

Analysis:
1. The appellant, a salaried individual, filed a return for A.Y. 09-10 at Rs. 3,56,272/-. The Assessing Officer (A.O.) noted cash deposits of Rs. 10,37,500/- in the Kalupur Commercial Cooperative Bank during the year based on AIR details. The A.O. considered the cash withdrawals from the same bank in January and March 2008, followed by deposits in May, September, and October 2008, as suspicious. The appellant's explanation of keeping cash at home due to rumors about the bank's financial position and for purchasing land was not accepted by the A.O., leading to the addition of Rs. 10,37,500/- as undisclosed income.

2. The CIT(A) upheld the A.O.'s decision, stating that the appellant's explanation lacked credibility. The CIT(A) emphasized the lack of detailed cash flow to support the cash deposits. The appellant then appealed to the ITAT, providing evidence including bank account statements, salary account details, and submissions made before the A.O. and CIT(A). The appellant cited precedents where similar additions were deleted by the ITAT, emphasizing the CIT(A)'s powers and specific findings on the issue.

3. The ITAT considered the appellant's withdrawals and subsequent deposits in the same bank, along with withdrawals from another bank and deposits in the Kalupur Bank. Noting the absence of evidence to suggest the cash was used for any other purpose, the ITAT relied on the appellant's explanations and previous ITAT decisions. Consequently, the ITAT allowed the appeal, emphasizing that no addition could be made based on the appellant's explanations and the precedents cited.

4. The ITAT's decision highlighted the importance of supporting explanations with evidence and precedent. By considering the appellant's transaction details, explanations, and legal precedents, the ITAT concluded that the addition of Rs. 10,37,500/- as undisclosed income was unwarranted. The ITAT's judgment underscored the need for assessing officers to establish a clear link between transactions and undisclosed income before making additions, ensuring fair treatment of taxpayers based on credible evidence and legal principles.