2015 (10) TMI 1449 - AT - Income Tax

Undisclosed cash deposits in the bank account - Unexplained income from undisclosed sources - Held that - Matter requires reconsideration at the level of the Assessing Officer. The assessee specifically submitted that he has withdrawals from the bank account, which were redeposited. Copy of the cash-flow statement was filed, which supports the contention of the assessee. The assessee has stated specifically that the amount was redeposited on withdrawal from the bank and sufficient cash was available. Therefore, it was the duty of the Assessing Officer to examine this fact. Further nothing is brought on record that the amount was utilised by the assessee on withdrawal from the bank account. Considering the facts of the case in the light of the decision of the hon ble Punjab and Haryana High Court in the case of Shiv Charan Dass 1980 (4) TMI 74 - PUNJAB AND HARYANA High Court we set aside the orders of the authorities below and restored the issue to the file of the Assessing Officer with directions to redecide this issue - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Addition of unexplained income from undisclosed sources.
2. Treatment of cash deposits in the bank account as income of the assessee.

Issue 1: Addition of unexplained income from undisclosed sources

The appeal challenged the addition of Rs. 7,51,499 by the Assessing Officer as unexplained income from undisclosed sources. The assessee had made deposits of Rs. 13,48,838 in the bank account, with various withdrawals resulting in a closing balance of Rs. 77,339. The Assessing Officer identified cash deposits of Rs. 12,11,499 and asked for an explanation. The assessee argued that withdrawals and redeposits were not considered, presenting bank account details and additional fund receipts. The Commissioner of Income-tax (Appeals) upheld the addition, stating that the frequent withdrawals and redeposits were not adequately explained, questioning the logic behind keeping withdrawn cash for later redeposits. The Tribunal found the addition unjustified, emphasizing the need for a reassessment by the Assessing Officer considering the cash-flow statement and the availability of funds with the assessee.

Issue 2: Treatment of cash deposits in the bank account as income of the assessee

The second ground of appeal focused on the contention that the Assessing Officer treated cash deposits in the bank account as the assessee's income without considering corresponding withdrawals. The assessee highlighted the continuous withdrawals and redeposits, supported by a cash-flow statement showing sufficient cash availability. The Revenue representative argued that the source of cash remained unexplained, justifying the addition. The Tribunal observed that the matter required reconsideration, referring to a High Court decision emphasizing the burden on the Department to disprove the assessee's explanation. Relying on the assessee's claim of redeposits and available cash, the Tribunal set aside the lower authorities' orders and directed a reevaluation by the Assessing Officer with a fair opportunity for both parties to present their case.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of a thorough reassessment by the Assessing Officer considering the explanations and evidence provided by the assessee regarding the cash deposits and withdrawals in the bank account.