2015 (12) TMI 120 - AT - Income Tax

Unexplained cash deposits in the Saving Bank Account with Centurion Bank of Punjab which was later merged with HDFC bank - Held that - We do not find any force in the submissions of Ld. Counsel for the assessee. Even if it is assumed that certificate is correct and bearer of this property Shri Rajiv Kalra issued two bearer cheques No. 684557 and 684558, then how it is possible that assessee has been able to encash the cheque on 14.7.2007 itself. The sale deed is also executed on 14.9.2007 which must have taken sometime. Thereafter assessee got time to exchange the cheques. Assuming for argument sake that this is possible, still the problem is that on 14.9.2007 the assessee has deposited ₹ 4,05,000/- only. So, if the assessee has cash of ₹ 10 lakhs on 14.9.2007 i.e. ₹ 9 lakhs from encashment of two cheques and ₹ 1 lakh as cash payment, then why only ₹ 4.5 lakhs was deposited and then money has been deposited in various installments as stated above. No explanation was given for this discrepancy. Therefore, in our opinion, the assessee has not a been able to satisfactorily explain the deposits of cash and accordingly we confirm the order of CIT(A). - Decided in favour of assessee.

Summary

Issues:
1. Addition of unexplained income in the assessment.
2. Failure to establish nexus between cash availability and bank deposits.

Analysis:
1. The appeal was filed against the addition of &8377; 12,12,000 to the income of the assessee by the CIT (Appeals) for unexplained deposits. The Assessing Officer noted that the assessee, running a boutique, made cash deposits without maintaining proper books of account. The source of the deposit was questioned as it did not align with the income from the boutique or the sale of a property. The appellant claimed the cash was from the sale proceeds of a plot and boutique sales. However, the Assessing Officer found discrepancies and added the sum to the income.

2. Before the ITAT, the appellant reiterated the explanation that the cash deposits were from the sale of a plot, supported by a certificate from the buyer. The appellant claimed that bearer cheques were issued against the sale, which were then encashed. The appellant argued that the cash deposits were legitimate and explained the discrepancy in the deposit amounts on different dates. The DR supported the CIT(A)'s decision, questioning the feasibility of encashing bearer cheques on the same day as claimed by the appellant.

3. The ITAT carefully considered the submissions but found the appellant's explanation lacking. It was deemed implausible that bearer cheques were encashed on the same day as the sale deed execution. The deposit amounts did not align with the claimed source of income, raising doubts about the explanation provided. The ITAT upheld the CIT(A)'s decision, dismissing the appeal due to the inability to satisfactorily explain the cash deposits. The order was pronounced on 06.03.2014, confirming the addition of &8377; 12,12,000 to the income of the assessee.