2012 (9) TMI 648 - AT - Income Tax

Addition on account of unexplained cash credit u/s 68 in bank account - Assessee has deposited huge cash in various bank accounts of his family members The assessee claims that he was LIC agent, the cash was deposited out of the payment received from the respective LIC customers Confirmation from these customers was not furnished before the AO - Held that - As the onus lied on the assessee to explain the source of cash and, therefore, the confirmation from persons from whom cash was received was required to be furnished before the Revenue Authorities. The assessee also show before CIT(A) that the amount of cash so received and deposited in the personal bank account of assessee was ultimately utilized for issuing cheque in favour of LIC with respect to the payment due from such clients. Therefore issue remand back to AO for fresh consideration.

Summary

Issues:
Appeal against deletion of addition made on account of unexplained cash credit in bank account under Section 68 of Income-tax Act, 1961.

Analysis:
The appeals were filed by the Revenue challenging the deletion of additions made by the Assessing Officer on account of unexplained cash credit in the assessee's bank account. The issue revolved around the failure of the assessee to provide satisfactory explanations about the nature and source of the cash credits, as required by Section 68 of the Income-tax Act, 1961. Despite registered notices, the assessee did not appear, leading to the disposal of appeals based on the materials on record.

During the search and seizure action conducted under Section 132 of the Income-tax Act, 1961, it was discovered that the assessee and family members had deposited significant amounts of cash in their bank accounts. The Assessing Officer requested details regarding the source of these cash deposits, but the assessee failed to provide adequate evidence or confirmations from clients. The onus was on the assessee to explain the source of the cash, which they failed to do, resulting in the Assessing Officer treating the cash deposits as undisclosed income.

The CIT(A) deleted the additions, stating that there was sufficient cash available in the cash book for the bank deposits. However, the Revenue contended that the deletion was incorrect as the assessee did not provide confirmations from the cash sources. The Tribunal noted that while cash was available in the cash book, the assessee needed to substantiate the source of the cash deposited in the bank accounts. Since no confirmations were provided, the Tribunal directed the issue back to the Assessing Officer for a fresh decision.

The Tribunal emphasized that the onus was on the assessee to explain the source of the cash deposits and directed the Assessing Officer to determine if the cash received from clients was used to pay LIC premiums. The assessee was instructed to produce bank statements and client confirmation letters to support the utilization of cash for premium payments. The appeals of the Revenue were allowed in part for statistical purposes, and the issue was remanded back to the Assessing Officer for further examination in line with the Tribunal's observations.