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2015 (10) TMI 315 - AT - Income TaxUnexplained cash deposits found to be made in the bank account - CIT(A) deleted the addition - Held that - In the submissions made before the Ld. CIT(A), a reference was made by the assessee only to his bank account with Development Credit Bank Ltd. The Ld. Counsel for the assessee therefore was directed by us to file copy of the bank account of the assessee maintained with Development Credit Bank Ltd., in order to establish the nexus between the amounts stated to be received by the assessee in cash from the students and the demand drafts drawn in favour of various foreign universities. He however has filed a letter stating that there is no bank account maintained by the assessee with Development Credit Bank Ltd. A perusal of the copy of certificate issued by Development Credit Bank Ltd., placed at page No.20 of the paper book however shows that the said certificate is issued at the request of the account holder i.e., assessee. Thus the matter has to go back to the A.O. for verifying the trail of Mr. Venugopal Reddy, Hyderabad. funds stated to be received from different students by the assessee in cash and drawing of demand drafts by the assessee on behalf of the said students. Even the explanation of the assessee as regards the cash deposits of ₹ 14,62,719 having been made from the contract receipts of his business requires verification by the A.O. We therefore, set aside the impugned order of the Ld. CIT(A) and restore the matter to the file of the A.O. for deciding the same afresh after verifying the explanation of the assessee. Needless to observe that the A.O. shall afford proper and sufficient opportunity of being heard to the assessee before deciding this issue finally in set aside proceedings. - Decided in favour of revenue for statistical purposes.
Issues Involved:
1. Deletion of the addition of Rs. 47,86,800 by the CIT(A) on account of unexplained cash deposits in the assessee's bank account. Issue-wise Detailed Analysis: 1. Deletion of the Addition of Rs. 47,86,800 by the CIT(A) on Account of Unexplained Cash Deposits Background: The assessee, an individual contractor, filed a return of income declaring Rs. 1,50,240. During scrutiny, the A.O. found unexplained cash deposits totaling Rs. 47,86,800 in the assessee's bank account. The assessee did not respond to the A.O.'s notices, leading to an ex-parte assessment under section 144, adding the entire amount as unexplained income. Assessee's Explanation before CIT(A): The assessee claimed that the deposits were made by students purchasing demand drafts (DDs) for foreign universities. Specific details were provided, including names, amounts, and corresponding universities. Additionally, the assessee claimed Rs. 12,27,955 was from private contracts and provided evidence of cash withdrawals and re-deposits. CIT(A)'s Decision: The CIT(A) accepted the explanation, noting that the deposits were for DDs for students and not the assessee's income. The CIT(A) considered the contract receipts and cash withdrawals, concluding that the deposits were properly explained and deleted the addition of Rs. 47,86,800. Revenue's Appeal to ITAT: The Revenue challenged the CIT(A)'s decision, arguing that the assessee failed to provide satisfactory reasons and cogent evidence for allowing his account to be used by students. ITAT's Analysis: The ITAT reviewed the evidence, including bank statements and certificates. However, discrepancies were noted, particularly the lack of initial reference to an ICICI Bank account and conflicting information about a Development Credit Bank account. The ITAT found that the trail of funds and the explanation of contract receipts required further verification. ITAT's Decision: The ITAT set aside the CIT(A)'s order and remanded the case to the A.O. for fresh verification of the assessee's explanations regarding the cash deposits and contract receipts. The A.O. was directed to provide the assessee with a proper opportunity to present evidence before making a final decision. Conclusion: The ITAT allowed the Revenue's appeal for statistical purposes, emphasizing the need for thorough verification of the assessee's claims and proper documentation to substantiate the sources of the cash deposits. The matter was remanded to the A.O. for a fresh assessment.
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