2016 (3) TMI 171 - AT - Income Tax

Undisclosed cash deposited to the bank - income from undisclosed sources - Held that - We find merit in the contention of assessee that there is no dispute that the amount which was withdrawn by the assessee on various dates during the year 2006 was available with him for making deposits. In the absence of finding that the amount which was previously withdrawn by the assessee had been utilised for any other purpose merely on the basis of conjecture that the amount might have been utilised for any other purpose and was not available with the assessee for making the deposits we are unable to accept the reasoning of the authorities below. In our considered view when the assessee has demonstrated that he had withdrawn cash from the bank and there is no finding by the authorities below that this cash available with the assessee was invested or utilised for any other purpose in that event it is not open to the authority to make the addition on the basis that the assessee failed to explain the source of deposits. Moreover the authorities below have not disputed the fact that the assessee had withdrawn an amount of Rs. 9, 10, 000 before the deposits made on various dates during the financial year 2007-08. Therefore the orders of the authorities below are set aside and the Assessing Officer is directed to delete the addition - Decided in favour of assessee

Summary

Issues:
1. Addition of cash deposited to the bank as income from undisclosed sources.

Analysis:
The appeal was against the order of the Commissioner of Income-tax (Appeals) confirming the addition of cash deposited to the bank as income from undisclosed sources. The Assessing Officer had made the addition based on cash deposits in the savings bank account, which the assessee claimed were from withdrawals from the same account. The Commissioner of Income-tax (Appeals) reduced the addition, but the assessee appealed further.

The assessee argued that the cash source was established through cash book and bank passbook submissions, indicating a clear positive balance from which the cash was deposited. The assessee contended that the authorities failed to appreciate this fact and erred in following precedents. The Departmental representative supported the lower authorities, highlighting discrepancies in withdrawal and deposit dates.

The Tribunal noted the cash deposits and withdrawals, finding that the assessee had withdrawn sufficient cash before the deposits. The Tribunal observed a gap in some amounts but emphasized that the authorities had not proven the cash was used for other purposes. As the assessee demonstrated withdrawing cash and no evidence showed it was used otherwise, the Tribunal ruled in favor of the assessee, directing the deletion of the addition.

Ultimately, the Tribunal allowed the appeal, setting aside the lower authorities' orders and instructing the Assessing Officer to delete the addition. The judgment was delivered on September 21, 2015, in Ahmedabad.