2013 (6) TMI 596 - AT - Income Tax

Unexplained credits in the bank account - Held that - Before coming to the conclusion that the assessee has utilised the withdrawn amount of Rs.44,44,412/- for some specific purpose, it was incumbent on the part of the revenue authorities to establish on record with supporting evidence what are the specific purposes for which the amount was utilised by the assessee. Without bringing any material on record, assessee s explanation regarding availability of cash cannot be rejected on presumption and surmises when there is no material on record to prove that the assessee had acquired any asset or utilised such funds for any purpose. Presumption and suspicion however strong may be cannot take the place of evidence. Therefore the explanation submitted by the assessee that the amounts withdrawn from the bank was again re-deposited in to the bank account has to be accepted when there is no other material brought on record to show that the assessee has utilised it for some other purpose. Accordingly, the addition made cannot be sustained - appeal filed by the assessee allowed.

Summary

Issues:
- Addition of unexplained credits in the bank account

Detailed Analysis:
1. The appeal was against the addition of Rs.36,93,565 as unexplained credits in the bank account for the assessment year 2009-10. The Assessing Officer found credits in the bank accounts of the assessee and concluded that the cash deposits of Rs.35,43,565 were unexplained investments under section 69 of the Act. The CIT (A) accepted that the assessee paid Rs.26,66,000 for property acquisition, not Rs.56 lakhs as assessed by the AO. The CIT (A) also noted that withdrawals of Rs.44,44,412 were not used for loan repayment of Rs.18,91,000.

2. The CIT (A) observed that the assessee's withdrawals were not for specific purposes as claimed, citing precise withdrawals after significant cash withdrawals. The CIT (A) upheld the addition, stating that the withdrawals were utilized for specific purposes and not available for subsequent deposits. The CIT (A) found it implausible for the assessee to make petty withdrawals when allegedly holding substantial cash balances throughout the year.

3. The authorized representative argued that the CIT (A) erred in rejecting the explanation for deposits when the source was clarified. Referring to section 69 of the Act, it was argued that the burden was on the department to prove the utilization of withdrawn amounts. Case laws were cited to support the contention.

4. The Departmental Representative supported the CIT (A) and argued that since the source of deposits was unproven, they were rightly treated as unexplained investments. Legal precedents were cited to justify this stance.

5. The Tribunal analyzed the submissions and evidence. It noted that the CIT (A) accepted the payment of Rs.26,66,000 for property acquisition and that the loan repayment was not from the cash withdrawals. The Tribunal found the CIT (A)'s conclusion based on presumption and suspicion rather than concrete evidence. It emphasized that without evidence of specific purposes for withdrawals, the explanation provided by the assessee should be accepted. The Tribunal directed the Assessing Officer to delete the addition.

6. In conclusion, the Tribunal allowed the appeal, emphasizing the importance of concrete evidence over presumption and suspicion in determining the utilization of withdrawn amounts for deposits. The decision was pronounced on 17-06-2013.